African Aura Mining - Cameroon Could Add a Third Pillar to Asset Portfolio: Buy with a 202p
Target 
While the Liberian assets of gold at New Liberty and Iron Ore at Putudominate African Aura's portfolio, exploration activity in Cameroonappears to have uncovered a third pillar to the company's portfolio.Nkout, Noga and Akom Hills are the company's principal targets inCameroon, each highly prospective for iron ore, located in a resourcerich area (the 2.5bn tonne Mbalam iron ore deposit is 150 kilometressouth east of Nkout) and 100% owned.
Nkout is the current focus of African Aura's Cameroon exploration withan airborne geophysical survey earlier this year backing up 55 grabsamples taken a couple of years ago (up to 68% iron and averaging 55%).The site hosts an 8 kilometre long geophysical target with a further 12kilometres of targets in close proximity. The company commenced a 10hole, 4,200 metre drilling programme at the end of July with theintention of defining a resource for publication by the end of theyear. Drilling will then continue within the existing budget ($3.8million earmarked in April placing) with a further 3,800 metres as partof phase 2.
The 489 square kilometre Djoum and 997 square kilometre Akonolingalicences are located in the south of the country and, with a possiblerail line set to run through the two licences to the Cameroon sea portof Lolabe, Nkout's positioning couldn't be better. The possible railroad is expected to come from several iron ore targets just over theborder in Congo, with Sundance
Resources' Mbalam deposit the most notable.
While early indications from Cameroon are encouraging, until a resourceis defined we are unable to assign value. However, Cameroon doesprovide another string to African Aura's already impressive bow and,with the evidence suggesting that the new iron ore targets are assetsrather than mere licences, we upgrade our recommendation, at 82p, fromspeculative buy to buy, whilst maintaining our target price at 202p.