Strength of Akanani holds AfriOre’s share price

A weak South African rand and a black empowerment related commitment combined to take a bite out of exploration junior AfriOre‘s (AFO-T, AFO-L) bottom line, but the company’s strong momentum on the market protected its shares from any rollback.

In Toronto on Oct. 10 the British Virgin Islands-based company saw its shares gain 5 to $7.20 on roughly 128,000 shares traded. The company’s shares have gained a staggering $5.80 in the last year — largely on the strength of its Akanani platinum project in South Africa.

Losses for the three-month period ending Aug. 31 were roughly $5 million or 10 per share, compared with a loss of roughly $1.2 million or 3 a share for the same period last year.

While AfriOre gained additional security by converting its old prospecting rights into new rights under the revised minerals act in South Africa, the move had financial repercussions.

That’s because a stock based compensation expense of US$3.7 million took effect as 2.5 million warrants were issued to satisify an agreement with the original black economic empowerment shareholders of Akanani Mining.

The agreement entitles the holders of these warrants to purchase one common share in the capital of AfriOre at an exercise price of $4.00 expiring on May 31, 2008.

The company also blamed the weakening of the South African rand for a foreign exchange loss of $2.1 million for the six months ending August 31, compared with a loss of $503,699 for the six months ended August 31, 2005.

But even with the losses, the power of AfriOre’s flagship project – the Akanani deposit — continued to attract investors.

Akanani is situated on the northern section of South Africa’s Bushveld Complex in South Africa.

Bushveld is the only primary platinum deposit in the world and while only 25% of Akanani has been drilled off (the drill program and prefeasibility program are expected to be completed by the end of the year) the project already has an estimated resource of 26 million oz. of platinum group metals.

And even with the losses AfriOre’s financial position continues to look strong with roughly $22.5 million in the bank and a burn rate of roughly $1.5 million per month.

Akanani has a mineral resource estimate of 250 million tonnes grading of 4.2 grams of platinum, palladium, rhodium plus gold per tonne, plus 0.24% nickel and 0.14% copper in the inferred category.