It revealed that the resource base of African Aura Mining's Putu iron ore project in Liberia had more than doubled to 2.4 billion tonnes. In doing so it cements AAAM's JV with Severstal which needed the resource to be above 2 billion tonnes to be viable. There is the chance Putu is far bigger than first thought perhaps double the current size, so there is plenty of upside.

Russian steel giant Severstal is pouring USD 30 million into the project to earn a 61.5 per stake in the project. In doing so, it will also compile a pre feasibility study that is expected to be completed at some point in 2012.

This is the third piece of positive news from the group in the space of less than a week and paves the way for a successful butterfly split of the company's gold and iron ore assets into two separate companies.

However, Mr Charles Kernot, the respected mining analyst at Evolution Securities, puts a 400 pence valuation on the stock. He said that "The presence of over 2 billion tonnes of mineralization at Putu means that the currently known extent of the deposit has grown beyond the minimum size deemed economically viable by African Aura's JV partners Severstal. We believe this announcement is transformational for the company ahead of the planned butterfly split in a couple of months."

Earlier, African Aura has announced an expansion in the overall resource estimate at Putu, in eastern Liberia, to 2.37 billion tonnes at a grade of 34.1% iron from 1.08 billion tonnes at 37.1% iron. Additionally, the 60,000 metres of drilling that is planned for this year provides scope for further expansions of the resource.

Mr Luis da Silva CEO of African Aura said that "The headline objective of African Aura and our joint venture partner Severstal Resources was a 2 billion tonne resource and I am very pleased that this has rapidly been achieved. We expect to upgrade this resource to the indicated category during 2011. The JV partners are mindful of the importance of moving the project forward as efficiently as possible, for the benefit of the local communities and all other stakeholders, and I look forward to providing updates on progress in due course."

The latest update follows two very positive announcements from African Aura last week, which unveiled a maiden resource for its Nkout iron ore project in Cameroon as well as some very encouraging results from its Ndablama gold prospect in western Liberia.
Mr da Silva explained that "The rationale for the proposed split of the company into separately listed iron ore and gold companies, with shareholders in African Aura receiving one share in each company for each share they hold in African Aura, is a means to allow the market to better measure and reflect the intrinsic value of our assets which is becoming increasingly apparent."

(Sourced from www.proactiveinvestors.com)