City analysts greeted positively Afferro Mining news that it had uncovered significant high grade material at its Nkout iron ore project in Cameroon with direct shipping ore potential.

It means that the firm could begin production from the project at an earlier stage, requiring less initial capital expenditure.

The DSO material was found in one minable area in a line of adjacent holes and the headline results include 51 metres at 63.4% Fe, 30 meters at 60.4% Fe and 48 metres with 58.6% Fe. The results support the existence of a high grade cap overlying a BIF deposit.

Analyst Mr Charles Kernot at Evolution which recommends a buy said "An early phase of production would go some way to generating the cash-flow required to fund the later expansion into the larger BIF resource."

He said that "Previous drilling of the potential DSO material left question marks over the suitability of the ore for direct shipment on the basis that it was too low in grade. Today, Afferro has gone some way towards dispelling these concerns with drill results exceeding 60% Fe."

Meanwhile Fairfax said "The degree of DSO resource at the Nkout project will help the project economics. We await the scoping study to be published in October which should provide a basis for evaluating how the company will be able to get value from their resource base at Nkout."

Afferro said today that the results would be included in the forthcoming mineral resource estimate in November together with the revised banded iron formation resource.

It also told investors that it was continuing to make excellent operational progress at Nkout. It delivered the MRE update three months ahead of schedule in June, showing 1.42 billion tonnes at 33.6 per cent Fe and is on track to deliver a further resource update in November.

(Sourced from www.proactiveinvestors.co.uk)