AAAM African Aura

 

TIDMAAAM 
 
RNS Number : 7517V 
African Aura Mining Inc. 
08 November 2010 
 

 NOT FOR DISTRIBUTION IN THE UNITED STATES OR FOR DISSEMINATION TO US NEWS WIRE 
                                    SERVICES. 
 
November 8, 2010 
 
TSX-V:   AUR 
AIM:       AAAM 
                            African Aura Mining Inc. 
 
               PROPOSED RESTRUCTURING OF AFRICAN AURA MINING INC. 
 
November 8, 2010, African Aura Mining Inc. ("African Aura" or the "Company"), 
the TSX V (AUR) and AIM (AAAM) listed exploration and development company with 
divisions focused on iron ore and gold projects in sub-Saharan Africa, announces 
that its Board of Directors has determined, in principle, to proceed with a 
restructuring of its assets. The objective of such restructuring is to enhance 
shareholder value by, among other things, improving the recognition and value of 
its iron ore and gold assets by separating such assets between two companies (as 
described below). 
 
African Aura's current principal assets are: 
Iron Ore Division 
·    the 38.5% owned Putu iron ore project in Liberia, with a National 
Instrument 43-101 ("NI 43-101") Inferred mineral resource estimate of 1.08 Bt @ 
37.6% Fe from 2.6km of strike of a 12-13km target 
·    the 100% owned Nkout iron ore project in Cameroon, an 8km long priority 
magnetic target on which recent (2010) drilling has intersected iron ore 
mineralisation, with a further 12km of magnetic targets to be tested 
·    the 70% owned Ngoa iron ore project in Cameroon which is contiguous to the 
Nkout project 
 
Gold Division 
·    the New Liberty gold project in Liberia, with a NI 43-101 compliant 
measured and indicated mineralresource of 1.38 million ounces at a grade of 3.18 
g/t Au (6.65Mt at 3.49 g/t measured and 6.87Mt at 2.88 g/t indicated) and on 
which a resource estimate to NI 43-101 requirements and a Preliminary Economic 
Assessment are underway 
·    a portfolio of hard rock gold prospects in Liberia within a 457 km2 mining 
licence, including the Ndablama and Weaju projects, which have been subjected to 
artisanal mining activity 
·    a portfolio of hard rock gold prospects in Cameroon, including the Batouri 
project which has been subjected to artisanal mining, and the prospective Ntem 
licence, together totalling 1,074 km2 
 
African Aura's Board believes that: 
·    the Company's current market capitalisation understates the intrinsic value 
of its gold and iron ore assets in west Africa 
·    investors tend to prefer 'pure play' single commodity focused entities for 
undertaking valuations and market comparisons 
·    providing shareholders with a shareholding in a new company that holds the 
gold assets, pro-rata to their shareholding in African Aura (which will hold the 
iron ore assets), will offer exposure to the potential value to be created from 
each set of assets 
·    following the completion of the Arrangement (as defined below), each of 
African Aura and Aureus (as defined below) will be better positioned to finance 
their respective businesses and grow through exploration and acquisition 
 
The Arrangement 
African Aura proposes to complete the reorganization by way of a plan of 
arrangement (the "Arrangement"), which will be subject to regulatory, 
shareholder and court approval. Pursuant to the Arrangement, as currently 
proposed, African Aura's gold assets and any related liabilities (as well as its 
shareholding interest in Stellar Diamonds plc and an amount of cash) will be 
transferred to a new company to be incorporated and proposed to be called 
"Aureus Mining Inc." ("Aureus"), with African Aura retaining its current 
interest in its iron ore assets. Under the Arrangement, holders of African Aura 
common shares will be entitled to receive new common shares of African Aura and 
common shares of Aureus in exchange for the common shares of African Aura held 
by such holders on the record date of the Arrangement. Upon completion of the 
Arrangement, African Aura shareholders will continue to hold a 100% interest in 
the assets of both African Aura and Aureus, through their separate shareholdings 
in each of African Aura and Aureus. It is expected that neither African Aura nor 
Aureus will hold shares in the other. 
 
While the proposed Arrangement remains subject to further review and approval by 
African Aura's Board of Directors, the Company is in the preliminary planning 
stages and has already applied for an advance income tax ruling from the Canada 
Revenue Agency (the "CRA") to confirm that the Arrangement may be completed on a 
tax neutral basis for African Aura, its shareholders and Aureus. 
 
The completion of the Arrangement will be conditional upon, among other matters, 
the Toronto Stock Exchange (the "TSX") and AIM of the London Stock Exchange 
("AIM") having conditionally approved the listing thereon of the Aureus common 
shares to be received by African Aura's shareholders pursuant to the 
Arrangement, subject only to compliance with the usual requirements of the TSX 
and AIM, as applicable. 
 
The Arrangement will also be subject to shareholder approval by at least 
two-thirds of the votes cast by shareholders of African Aura at a meeting of 
shareholders called for such purpose. The Company expects to deliver an 
information circular, describing the proposed Arrangement in greater detail, to 
shareholders, with a view to holding a special meeting of shareholders to 
approve the Arrangement and completing the Arrangement in Q1 2011. Further 
particulars relating to the Arrangement, including the record and meeting dates 
for such shareholders' meeting, will be announced in due course by press 
release. 
 
As announced in the Company's press release dated November 1, 2010, David 
Reading has been appointed as a non-executive director to the Board of Directors 
with immediate effect. Upon completion of the Arrangement, it is anticipated 
that Mr. Reading will be appointed as the Chief Executive Officer of Aureus as 
well as a director, and will be joined by David Netherway (as non-executive 
Chairman), Steven Poulton (as a non-executive director) and Luis da Silva (as a 
non-executive director) on the Board of Directors of Aureus. The Directors of 
African Aura are presently considering additional individuals for nomination to 
the Board of Directors of Aureus. 
 
Luis da Silva, President & CEO of African Aura commented: 
"African Aura is in the enviable position of having advanced potentially 
'company making' assets in two different commodities. The Board recognises that, 
when compared to its peer group, African Aura's current capitalisation can 
conceivably be defended by either its iron ore assets alone or its gold assets 
alone. The Arrangement, if completed as envisaged, is a mechanism designed to 
allow shareholders to benefit from the value of owning a share in each of two 
dedicated pure play entities. Shareholders will be entitled to receive one new 
share in African Aura and one share in Aureus for each share they hold in 
African Aura. We look forward to keeping shareholders updated on the progress of 
the Arrangement". 
 
About African Aura Mining Inc. 
African Aura is an established exploration and development company listed on the 
TSX Venture Exchange (AUR) and London's AIM (AAAM). The Company operates two 
divisions, namely: iron ore and gold: 
 
-     The iron ore division includes a 38.5% interest in the 12-13km long Putu 
iron ore project in Liberia, located approximately 125km inland from the 
deepwater shoreline of eastern Liberia. Putu is moving through pre-feasibility 
managed by African Aura's joint venture partner Severstal Resources (the mining 
division of Moscow listed OAO Severstal), who has invested US$30m to earn a 
61.5% interest in the project. Putu has a NI-43-101 compliant mineral resource 
of 1.08 billion tonnes of iron ore at 37.6% total iron, from drilling undertaken 
on a 2.6km section of the ridge, which is less than 25% of the project's strike 
length. The best drill results to date are 91m at 61.3% Fe oxidised Banded Iron 
Formation ("BIF") hematite and 232m at 40.8% Fe magnetite. A further 21,500m has 
been drilled (as of October 26, 2010) since the mineral resource calculation. 
 
-     The iron ore division also includes a 100% interest in the Nkout iron ore 
project in Cameroon. Nkout is defined by an 8km long geophysical anomaly, 
co-incident with a range of hills, from which surface sampling to date has 
returned an average grade of 55% Fe. A further 12km of modelled BIF has been 
defined by airborne geophysics. Nkout is presently the subject of a 4,500m 
initial mineral resource definition drilling programme, which has intersected up 
to 75m of hematite BIF and 195m of magnetite BIF. The drill programme is 
designed to provide a maiden inferred mineral resource estimate and, subject to 
results, will be followed up by a further 4,000m of drilling. 
 
-     The gold division includes the New Liberty gold deposit, which is a 
classic Archaean shear zone hosted greenstone gold deposit located in western 
Liberia. The project has a mineral resource of 1.38 million ounces (NI 43-101 
compliant 13.533 Mt measured and indicated mineral resource at 3.18 g/t gold) 
projected to a depth of 300m, comprising three zones along a 1.75km strike 
length. The best drill intersect from New Liberty is currently 8.45 g/t Au over 
37m from 55m depth and the deposit, which crops out at surface, remains open at 
depth. Metallurgical testwork undertaken by the Company on drill core from New 
Liberty has indicated a non-refractory ore with excellent expected recoveries of 
up to 93%. A Resource Statement and Preliminary Economic Assessment by AMC 
Consultants (UK) Limited are presently underway, both of which will contribute 
to a Definitive Feasibility Study for an open pit followed by an underground 
gold mine, targeting 100,000oz annual production. 
 
-     New Liberty is one of a series of gold deposits located within the 
Company's 457km2 'Class A' 25 year renewable Mining Licence. At the Ndablama 
prospect, located 40km north east of New Liberty, it is estimated by the Company 
that over 4,000 artisanal miners are actively mining gold during the rainy 
season. Geologically, Archaean greenstone belts are known to host major gold 
mines in Canada, Australia, the Democratic Republic of the Congo and Tanzania. 
The Company considers that the Archaean geology of the Man Craton of west Africa 
is one of very few provinces globally that is highly prospective, but has yet to 
be systematically explored. 
 
In addition, the Company has an approximate 22% interest in AIM-listed diamond 
producer Stellar Diamonds plc (AIM: STEL, www.stellar-diamonds.com). 
 
The Company has a highly motivated and experienced team with a track record of 
discovering mines and taking projects through development and into production. 
As a pioneer, African Aura has attracted some excellent strategic partners and 
shareholders, always with the objective of preserving or enhancing shareholder 
value. For further information on the Company you are invited to visit its 
website at www.african-aura.com, or SEDAR's website at www.sedar.com, or contact 
one of the following: 
 
African Aura Mining Inc. 
Luis da Silva, President & CEO                                 Tel: +44 (0) 20 
7257 2930 
 
Evolution Securities Limited 
Simon Edwards / Tim Redfern                                   Tel: +44 (0) 20 
7071 4300 
 
Pelham Bell Pottinger 
Charles Vivian / James MacFarlane                           Tel: +44 (0) 20 7861 
3232 
 
 
Forward-Looking Information 
This press release contains certain forward-looking information. All 
information, other than information regarding historical fact, that addresses 
activities, events or developments that the Company believes, expects or 
anticipates will or may occur in the future is forward-looking information. 
Forward-looking information contained in this press release includes, but may 
not be limited to: the future plans and objectives of African Aura, including 
the completion of the proposed Arrangement and the terms, timing and 
consequences relating thereto; the anticipated management and Board of Directors 
of Aureus; the listing on the TSX and AIM of the Aureus common shares to be 
received by African Aura shareholders in connection with the proposed 
Arrangement; mineral resource estimates; information relating to the continued 
exploration and development of African Aura's mineral properties; statements 
relating to the application for an advance income tax ruling from the CRA; 
future production at the Company's New Liberty gold deposit; and expectations 
relating to the completion of an inferred mineral resource estimate on the 
Company's Nkout project. The foregoing and other forward-looking information 
contained in this press release reflects the current expectations, assumptions 
or beliefs of African Aura based on information currently available to African 
Aura. With respect to the forward-looking information contained in this press 
release, African Aura has made assumptions regarding, among other things: 
general business, economic and mining industry conditions; African Aura's 
mineral resource estimates; the completion of the Arrangement, including the 
receipt of all necessary approvals to proceed therewith; the Company's ongoing 
exploration and development activities; and it has also been assumed that no 
material adverse change in the price of precious and/or base metals occurs and 
no significant events occur outside of African Aura's normal course of business. 
 
Such forward-looking information is subject to a number of risks and 
uncertainties that may cause actual results or events to differ materially from 
current expectations, including: delays in obtaining, or a failure to obtain, 
required regulatory approvals (including the approval of the TSX and AIM with 
respect to the listing of the Aureus common shares to be received by African 
Aura's shareholders as part of the proposed Arrangement); the Company's 
inability to complete the proposed Arrangement or obtain a favourable 
confirmation from the CRA regarding the tax consequences of the Arrangement; 
risks normally incidental to exploration and development of mineral properties; 
uncertainties in the interpretation of drill results and mineral resources 
estimates; adverse changes in precious and/or base metal prices; and future 
unforeseen liabilities and other factors including, but not limited to, those 
listed under "Risk Factors" in the Company's Annual Information Form dated April 
30, 2010 available under the Company's profile on SEDAR at www.sedar.com. 
 
Forward-looking information speak only as of the date on which it is made and, 
except as may be required by applicable law, African Aura disclaims any 
obligation to update or modify such forward-looking information, either as a 
result of new information, future events or for any other reason. 
 
 Neither the TSX Venture Exchange nor its Regulation Services Provider (as that 
      term is defined in the policies of the TSX Venture Exchange) accept 
          responsibility for the adequacy or accuracy of this release. 
Ends 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
 MSCEADFXELAEFAF 
 

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