Electra Battery Materials Corp. V.ELBM

Front page news - Target price 2 to 3 times curren

[bigchris33]

Great article posted over in the UK on the reputable minesite website. Front page news, and confirms broker's views that we're in for a serious rerating. Current UK SP = 80p. Target = 210p (i.e 339 cents at current exchange rate)


https://www.minesite.com/nc/minews/singlenews/article/african-aura-sets-the-drills-going-at-nkout-and-the-interest-levels-running-high-in-london/1.html

www.minesite.com

August 04, 2010
African Aura Sets The Drills Going At Nkout, And The Interest Levels Running High In London

By Alastair Ford

All of a sudden lots of analysts are interested in African Aura. Why isthis? Perhaps because the company has come on leaps and bounds in themonths and years since Luis da Silva has been at the helm. Quality willout, as they say - in the last couple of years Severstal has beensigned up as a joint venture partner on the Sierra Leone iron oreassets, nearly 1.4 million ounces of gold has been proven up at thecompany’s New Liberty project in north-west Liberia, and now the paceis now picking up on its Nkout iron ore property in Cameroon.

The perception is that African Aura is no longer fumbling around inWest Africa, as it did for so many years under a former name, ManoRiver Resources,but is now getting down to some serious work. The latest news from thecompany, that it has started drilling at Nkout, is a case in point.Ambrian, Fairfax, Evolution and GMP were among the more respectablenames that rushed into print to advise clients of this latestdevelopment, a level of coverage that African Aura chief Luis da Silva concedes the old Mano River would have struggled to get as recently as three years ago.

Three years ago, though, the chief executive of African Aura wouldn’thave been knocking on the doors of New York institutions and finding,not only a friendly reception, but also a prior awareness of AfricanAura’s activities. That being the case, one question that frequentlydid greet Luis on his most recent North American marketing trip relatedto valuation. With its unique mix of gold and iron ore, African Aura iswithout immediate peers, but totting up the iron ore and the gold andlooking around for comparisons, the query that came over and again was“What’s the catch?” No catch, responded Luis. “It’s just the stagewe’re at.”

For an insightinto what the underlying context behind these exchanges, we need lookno further than the research notes of the eminent London analystCharles Kernot, perhaps the most consistent of those following AfricanAura, given that he’s on the staff of the company’s house broker,Evolution. Over the previous 12 months African Aura’s shares have risenby almost precisely a third, from 60p to just over 80p. But CharlesKernot reckons they’re going a lot higher than that. Specifically hereckons they’ll hit 210p, although he’s a bit vague about when. Strongnewsflow, he says, will lead to a large increase in the share price andmove the shares “in the direction of” that target within six months.Still, any such uplift would be welcome.

Ambrian, meanwhile, is slightly more conservative, shooting for 156p,but does provide a helpful breakdown of how it got to that number. Thecompany’s joint venture with Severstal on the Putu iron ore project inLiberia it values at 94p per share. There’ll be more news out on thatlater in the year, says Luis. A further 34.5p per share is derived fromthe New Liberty gold project, on which a scoping study continues. Cash,is cash, continues Ambrian, and currently works out at 19.5p per share,while the company’s stake in Stellar Diamonds is worth 3.2p. Finally,the broker tacks Nkout on at the end, giving it a merely notional US$5million valuation.

It’s that notional valuation that makes the current round of drillingat Nkout interesting. Without wishing to draw a direct comparison, Luismakes the point that on a similar amount of drilling to the first phaseof work that’s planned for Nkout the company was able to prove up overa billion tonnes of ore at Putu. Nkout has the potential to deliver abig uplift in value to the company for relatively little outlay. Thecurrent drill campaign, which allows for an initial 4,200 metres to befollowed by a second phase of 3,800 metres, will cost the companyaround US$4 million. One analyst, this time over at GMP, reckons thatNkout could deliver up a similar amount, that’s to say, between abillion and two billion tonnes, in fairly short order, although Luis daSilva is somewhat shy of agreeing with him at this stage.

But even if the numbers do fall short of the GMP target, it’ll still beworth remembering that while African Aura now only owns a minoritystake in Putu following its joint venture with Severstal, it stillholds 100 per cent of Nkout. What’s more, the infrastructure costs maybe kept low, as other companies with other projects contemplate theconstruction of a rail route through Cameroon, and indeed right throughAfrican Aura’s ground. “It’s an exciting area”, says Luis da Silva.Come the end of the year, when a maiden resourcefor Nkout should hopefully be on the table, it may look as though thatwas putting it mildly. Either way, you can rest assured, London’sanalysts will have plenty to say about it.