recent article5 Jun 2010 13:03
AAAM, From Minesite:-
June 01, 2010
African Aura’s Mix Of Gold And Iron Ore Proves Attractive To Investors In An Uncertain Market.
By Alastair Ford
Plenty of mining companies have suffered a correction in recent weeks, as the markets grapple with the possibility that the eurozone may start to fragment, and with all the consequent ramifications such an event would have for global trade. However, Luis da Silva, chief executive of AFRICAN AURA MINING INC , the West African gold and iron ore specialist, is looking beyond that short-term volatility. There’ll be plenty of newsflow over the next few months from African Aura’s West African projects, and after years legwork the time has now come, he says, for the company to deliver on its promise.
In any case, the recent correction hasn’t hit African Aura particularly hard. At 78p the shares are slightly off the year-high of 88p that they hit in the early part of May. On the other hand, they’re still a long way ahead of the 65p price at which the company raised £11.3 million (C$17.5 million) in April, and shareholders who came in at that point certainly have no grounds for complaint.
The trick, of course, is to be exposed to commodities that ought to do well even if the global economy does take another turn for the worse. Gold is one, and, in Africa Aura’s case, iron ore is the other. Everyone loves gold in times of economic uncertainty, and African Aura’s New Liberty project in Liberia already boasts 1.4 million ounces in the measured and indicated categories, with more to come. Not a bad inducement to investors, when the gold price is consolidating above US$1,200.
The thinking on iron ore is that the Chinese switch to focussing on internal growth should continue to underpin the price, as demand for steel-related metals remains high. African Aura has a certain amount of insurance in any case, as most of the funding for the development of its huge Putu project, also in Liberia will come from joint venture partner Severstal.
In London only Petropavlovsk offers the same mix of gold and iron ore, and it’s perhaps no coincidence that its shares spiked in early May, though not to a 12-month high like African Aura’s. At that time, African Aura was still riding high on the positive momentum generated by the success of its recent fundraising. Luis da Silva explains: “It was a liquidity event for us. It was the first time we raised money properly in the market. We’ve got a strong shareholder base now”. All of which are grounds for renewed confidence, and all of which brought in buyers, before the wider economic issues pared back the gains.
What’s more, as work at New Liberty continues apace the buying interest is unlikely to go away. In the past, the generally accepted target for New Liberty has been two million ounces, and Africa Aura doesn’t seem that far away from hit
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