West African Iron Ore Drills New Target


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TSX.V:WAI
03/29/2012 [ACCESSWIRE]

SOURCE: [Metal Investment News] - A recent Fundamental Research report on West African Iron Ore (WAI-TSX.V) stated: “a visit was made to the newly identified Wondima target”.  Directly beneath this was a photograph of an NITON XRF – a compact instrument that looks like pregnant tripod.

The NITON XRF has become an important exploration field analysis tool.  Used extensively by Barrick Gold (ABX-NYSE), Vale (VALE-NYSE) and RIO TINTO (RIO-NYSE), the device reads a sample about 1 cm across, 2 mm thick.  It sends X-rays into the sample. Each element has a “signature of energy” which it throws back and the machine can detect.  XRF results have about 90% correlation to a lab.

“X-Ray metal detection technology has been around since the 70s,” states Keith Grattan, CEO of Elemental Controls, the distributor of the global distributor of the NITON XRF,  “In 2005, there was a big leap forward in instrumentation and software, creating lower detection limits, better analysis and simpler calibration.”

On March 21, 2012 – five weeks after the analyst report – WAI announced the start of an 8,000 meter reverse circulation drilling campaign on the Wondima target, following geological mapping and surface sampling utilizing the NITON XRF.

The Wondima target is an extensive iron bearing layered prospect. The central part of the target consists of about 26km² of raised plateau with a flat and hard iron rich cap. 224 surface samples were collected from the target area during mapping and the average Fe content was estimated to be 34.73% using the NITON XRF.

A test pit initiated on the Wondima target reached 2m in depth and encountered continuous hematite-rich hard laterite. The pit results were sufficiently encouraging for the Company to mount an 8,000 metre RC drilling program across the whole plateau area so as to make a quick evaluation of the target.   “These initial results on the Wondima target are very encouraging, pending further confirmation by SGS Canada”, stated Guy Duport the CEO of West African Iron Ore Corp.

The Company has also received the initial interpretation of the detailed ground gravimetric survey on the Sambalama South and Kalyadi North targets.

Sambalama South Target:

Sambalama South target has exhibited a series of high gravity anomalies striking N-S and coincident to the highest part of the magnetic anomaly.  The width of the main Sambalama South gravity anomaly is 350 meters, and the modeled anomaly is almost a kilometer long.

The Sambalama South gravity anomaly is consistent with the intersections of magnetite mineralization in drilling and therefore can be used to quickly delineate the Sambalama magnetite iron resources. WAI has completed 72 drill holes on the Sambalama South target. Of these, 32 holes have already been assayed and the assay results for the rest are pending.

Kalyadi North Target:

The gravity anomaly revealed over Kalyadi North target appears to be more extensive than at Sambalama: It is about 500m wide and almost 2km long. The previous drill holes completed over Kalyadi target were not optimally positioned.   WAI now plans to follow up the gravity data by drilling. The Company believes that the Kalyadi and Sambalama targets will provide significant magnetite iron resources in addition to the more extensive hematite-goethite shallow iron resources.

WAI has drilled 12 holes in Kalyadi North. The samples for these are pending assaying and compilation.

Investment Highlights

  • Two iron ore permits in the Republic of Guinea, West Africa: Forécariah and Kérouané.
  • An exploration target was calculated for the Sambalama, and Kalyadi targets (both on Forécariah), of between 2.9, and 5.1 billion tones, with average grades of 25% – 35% Fe.
  • Drilling commenced in April 2011, with aims to define an initial 43-101 resource estimate by the end of Q4 2012 on Forécariah.
  • WAI recently discovered two highly prospective new targets in the northern area of the Forécariah permit, including the Wondima target.
  • The company is actively seeking investors and strategic partners in China.
  • Attractive takeover target. The company has a strong board of directors with extensive experience in mergers and acquisitions.

Competitive Advantage:

Iron ore is currently selling for about $140 a tonne.  The economics of an iron ore project typically hinge on the cost of transportation.

Fortesque Metals spent $2.5 billion to construct a 280 kilometer rail line from its Cloud Break Mine to the nearest port.

WAI’s lead asset is so close to a proposed deep sea port in Guinea, that they could potentially build a conveyor belt to deliver the iron ore directly to the ocean freighters.

“The strategic location of the property means that WAI has a significant advantage over other iron ore projects in the country,” states Fundamental Research, “There is high potential to capitalize on near term infrastructure improvements in Guinea.  Proximity to the proposed deep water port has the potential to create further upside for WAI by further reducing costs”.

Riding the Wave:

The urbanization of China is a macro-trend that creates investment opportunities.

By 2025 one billion people will live in China’s cities – an increase of 350 million.  Cities are built with steel, which requires iron ore.

BHP Billiton (BHP-NYSE), Rio Tinto (RIO-NYSE) and Xstrata (XTA-L) currently produce most of the world’s iron ore.  With mining costs soaring, China is looking to spend $25 billion buying up iron ore assets in the next five years.

West African Iron Ore CEO Guy Duport has lived in China for 12 years. He has an established business network in China, and he speaks Chinese.

Drilling the Wondima target is the next step in the building of this company.  WAI is trading at .10 with a market cap of $17 million.  On February 16, 2012, Fundamental Research issued a buy recommendation a target price of .46.

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