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Afferro Mining, Aura Energy, Bushveld Minerals, Bullabulling Gold news briefs

Contributed by Fox-Davies Capital

Afferro Mining has released an update on its talks with potential strategic partners.

In this news:
- Negotiations with Jindal Steel and Power Limited have been terminated as the Company believes the indicative offer fundamentally undervalued the Company's assets
- Talks with International Mining and Infrastructure Corporation plc. as well as those with potential strategic partners are progressing.

FD Comment:
The news will disappoint shareholders as Jindal was seen as the most likely group to partner the Company. Although discussions with International Mining and Infrastructure Corporation, which holds 6.8% of the Company continue, with a Market Cap. of £16.5M somewhat smaller than Afferros own, it lacks the balance sheet to help develop the project. Given the Company's US$90M cash position, the market only values Afferro's assets at US$30M.

Aura Energy has selected Areva as its preferred strategic partner for Häggån uranium and polymetallic project in Sweden.

In this news:
- Entered into binding co-operation agreement for an initial 4 month period
- Will work together to complete formal documentation to give Areva the right to acquire an interest in the project
- Discussions currently envisage Aura retaining substantial equity and a project valuation in excess of the Company's current market value.

FD Comment:
This will be a huge boost for Aura as we believe it is near impossible for a junior to develop a uranium project without the support of a significant offtake partner. During the next four months the companies will work together to produce a pre-feasibility work programme and conclude the terms of an option agreement and joint venture agreement. If Areva, which is looking for new uranium supplies becomes involved it will de-risk the project for many investors and may help with permitting the project.

Bushveld Minerals Ltd has released a resource update on its VTM iron ore project in Limpopo Province, South Africa. The Company is also hosting a site visit for analysts and investors today.

In this news:
- Updated model including more detailed stratigraphy for the P-Q Zone reinforces the continuity of the mineralisation with robust stratigraphic layers of considerable thickness
- P-Q Zone Resource updated using stratigraphic cut-off, rather than grade cut-off and top-cuts
- 184 million tonnes (indicated and inferred) high grade (39% Fe) layer (10-15m thick) clearly identified with the potential to be mined selectively
- This updated geological and resource model will form the basis of mine planning in the scoping study due to be released later in Q1 of 2013
- 12% increase in P-Q Zone resource from 674 million tonnes to 752 million tonnes whilst retaining the overall grade
- Gross total resource now 818 million tonnes (including the 66 million tonnes Main Magnetite Layer resource).

FD Comment:
By updating the resource model by using stratigraphic horizons rather than modelling a continuous block the Company has been able to delineate thick discrete zones of higher grade material, including 184Mt @39% Fe in a 10-15m thick layer. The use of stratigraphic horizons which should be visible in an open pit should make mining and grade control easier. Although the total resource has increased by 12% this is incidental, it does demonstrate the robustness of the orebody as it has had little impact on the overall grade. This will now form the basis of the scoping study expected later this quarter.

Bullabulling Gold has released the results of its Prefeasibility Study.

In this news:
- 7.5Mtpa open pit mine forecast to produce 1.95Moz of gold over mine life of 10.5 years
- 650Koz produced in first three years at a cost of $891/oz per ounce
- Life of mine operating costs $1,145/oz
- Capital payback within 36 months - seven plus years of subsequent gold production for the benefit of shareholders
- NPV of $177M @ 8% discount rate and pre-tax, equivalent to $0.58/sh
- CAPEX - A$326.4M with $57.5M sustaining.

FD Comment: These results are in line with what we expected with mining costs of $13.90/t and processing costs of $14.02/t, well below the $17/t breakeven thresh hold we were looking at. The PFS was calculated pre-tax which will impact the returns, but the Company may be able to offset its $45M in tax losses against the project. The Company will now commence the DFS which is expect to be complete by the end of the year, and focus on optimisation including looking at operating its own fleet which will reduce opcosts but increase CAPEX. If all goes according to plan the Company is aiming to start production in 4Q'after a 21 month construction period, although we expect it will take a little longer due to the CAPEX the Company will need to fund.