Afferro Mining Inc. - Increase of Indicated and Inferred Resources at Nkout

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TSX-V: AFF
AIM: AFF

LONDON, UK, July 4, 2012 /CNW/ - Afferro Mining Inc. ("Afferro" or the "Company"), the exploration and development company focused on iron ore in Cameroon, is pleased to announce a fourth National Instrument 43-101 ("NI 43-101") compliant Mineral Resource Estimate ("MRE4") for the Nkout iron ore project ("Nkout").

Highlights:

• A 25% increase in the total Indicated resources to 1.19 Billion tonnes ("Bt") at a grade of 32.9% iron
• A 27% increase in the total Inferred resources to 1.33 Bt at a grade of 30.3% iron
• High grade cap, comprising all material above a mineralised cut-off of 50% Fe, totalling 25.1 Mt, with a grade of 57.7% iron in the Indicated category
• Promotion of 16.7 million tonnes ("Mt"), representing 87% of the potential direct shipping ore ("DSO") to the Indicated category with a grade of 60.5% iron
• Promotion of 8.4 Mt, representing 49% of the high grade saprolite to the Indicated category, with a grade of 52.0% iron
• Metallurgical testwork shows that material above a 50% iron mineralised cut-off is amenable to processing through the potential DSO plant with a mass yield of approximately 75%

Luis da Silva, Chief Executive Officer of Afferro, commented:

"We have been successful in expanding and significantly increasing confidence in the resource base at Nkout, working to unlock value and rapidly advance the project. This fourth resource estimate for Nkout represents a significant boost in Indicated and Inferred material over and above the resource used for the preliminary economic assessment and will extend the projected mine life and enhance the project economics. The work in the first quarter of 2012 focused on de-risking the project and increasing visibility over the full extent of the mineralisation at Nkout. The promotion of 16.7 Mt of potential DSO to the Indicated status at an increased grade of 60.5% iron strengthens our aim of progressing the opportunity to access early cash flows with a small-scale 1-2 Mtpa operation whilst development of larger scale mine takes place.

In addition, assay results for reconnaissance drilling of the Nkout zone D8 and the adjoining Ngoa will be provided in a separate update once available. The Company also expects to commission an environmental and social impact assessment later in the year.

The focus in the coming months remains the effective use of shareholders' funds to advance technical and economic studies to increase confidence in a project that is already considered to be viable and an attractive option for strategic investment."

Mineral Resource Estimate

MRE4 has been prepared by Howard Baker of SRK Consulting (UK) Ltd. ("SRK") in accordance with the provisions of NI 43-101. Mr Baker is an independent Qualified Person as defined by NI 43-101 and its companion policy 43-101CP.

The definitions of Measured, Indicated and Inferred Mineral Resources, and Mineral Reserves as used in the report, are as defined in the CIM Definition Standards on Mineral Resources and Mineral Reserves adopted by the CIM Council, as amended.

Afferro contracts an independent and permanent SRK resource geologist providing continual assistance in drill planning and ensuring that compliance to all appropriate Quality Assurance/Quality Control ("QA/QC") procedures is maintained. Continual review and updates to the geological model has allowed targeted drill programmes to be developed with a focus on increasing the reportable Mineral Resources and focusing on the delineation of high-grade near surface material.

Notes:
(1) Mineral Resources which are not Mineral Reserves have no demonstrated economic viability
(2) The effective date of the Mineral Resource is 29 June 2012
(3) The Mineral Resource Estimate for the Nkout deposit was constrained within lithological and grade based solids and within a Lerchs-Grossman optimised pit shell defined by the following assumptions; metal price of USD1.50/dmtu; slope angles of 16º and 41º in the oxide and fresh material; a mining recovery of 95.0%; a mining dilution of 5.0%; a base case mining cost of USD1.60/t and an incremental mine operating costs of USD0.05/t/10 m below the 80 m reference RL and USD0.05/t/10 m above the 80 m reference RL; process operating costs of USD3.00/t crushed DSO, USD4.20/t crushed oxide and USD5.50/t crushed BIF ore; DSO processing recovery of 75%; Oxide processing recovery of 60%; BIF processing recovery of 88% and G&A costs of USD 1.68/t, USD0.78/t and USD0.96/t crushed DSO, oxide and BIF ore.
(4) Mineral Resources for the Nkout deposit have been classified according to the "CIM Standards on Mineral Resources and Reserves: Definitions and Guidelines (December 2005)" by Howard Baker (MAusIMM(CP)), an independent Qualified Person as defined in NI 43-101.

Nkout Resource Potential

The Nkout model is open at depth and SRK recognises that there is potential to increase the Mineral Resource Estimate by targeting material that falls below the optimised pit shell but remains potentially economic. This material, based on a metal price of USD1.50/dmtu is considered by SRK to be potentially economic, should sufficient exploration data be collected that confirms the geometry and continuation of the mineralisation and that enables a classified resource to be estimated. SRK has estimated that an additional 500 Mt to 1,500 Mt lies below the optimised pit shell used for constraining the Inferred and Indicated Mineral Resources. The potential quantity of tonnes is conceptual in nature as there has been insufficient exploration or demonstration of economic viability to report these in the Inferred Mineral Resource category at the current time. It is uncertain if further exploration will result in these targets being defined and reported in a future Mineral Resource Estimate. These potential tonnages reflect a range of material within SRK's wireframe solid models outlining the interpreted down dip extent of mineralisation.

Database Validation

The QA/QC programme for Nkout consists of alternating the insertion of a blank, standard and duplicate sample on a regular basis within the sample train. The Company uses standards with varying grades which are also alternated. All samples have been assayed at the accredited ALS Minerals in Ireland. SRK found that the results of the above described QA/QC programme indicate that Nkout's assay databases were appropriate for mineral resource estimation.

Data Verification

Howard Baker, as Qualified Person, completed the verification of data on which MRE4 was based. This verification included an assessment of QA/QC data, sample preparation and assay methodologies, density data, data inputs and survey data used in the estimate. Data was validated by using field checks, statistical methods and evaluating the Company's protocols.

Geological Modelling, Resource Estimation Assumptions, Parameters and Methods

Nkout Centre, Nkout East and Nkout West, being an 8.9 km portion of a larger 20 km strike length magnetic anomaly, forms an east-west trending magnetite banded iron formation ("BIF") with an oxidised cap of dominantly haematite mineralisation. SRK created a geological model based on the lithological logging and magnetic susceptibility data enabling the hanging wall and footwall contacts of the BIF unit to modelled and a three dimensional solid to be created. A statistical review of the validated drill hole data enabled grade based domains to be created within the oxidised cap. Internal metasedimentary waste domains created within the BIF and oxidised cap were based on lithology logging, magnetic susceptibility data and predominantly Al₂O₃ assay grades.

A 5 m composite file was used in a geostatistical study (variography and Quantitative Kriging Neighbourhood Analysis, "QKNA") that enabled Ordinary Kriging ("OK") to be used as the main grade interpolation method. The interpolation used an elliptical search following the predominant dip and dip direction of the geological domains. The results of the variography and the QKNA were utilised to determine the most appropriate search and estimation parameters.

The interpolated block model was validated through visual checks and a comparison of the mean input composite and output model grades. SRK is confident that the interpolated block grades are a reasonable reflection of the available sample data.

The NI 43-101 compliant technical report on MRE4 will be filed on www.sedar.com within 45 days of the date of this announcement.

About Afferro Mining Inc.

Afferro is an established exploration and development company listed on the TSX-V (AFF) and AIM (AFF). Afferro's portfolio includes the 100% owned Nkout, Ntem and Akonolinga iron ore projects. It also holds a 70% interest in the Ngoa project, an exploration target bordering Nkout. Nkout comprises an NI 43-101 compliant Indicated Mineral Resource Estimate of 1.19Bt at 32.9% Fe and an Inferred mineral resource estimate of 1.33Bt at 30.3% Fe.

Qualified Person

Howard Baker (MAusIMM(CP)) has 18 years' experience in the mining industry and 10 years' experience in the exploration, definition and mining of iron ore mineral resources. Mr Baker is a full-time employee of SRK Consulting (UK) Ltd., an independent consultancy, and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration, and to the type of activity which he is undertaking to qualify as a Qualified Person in accordance with NI 43-101 and a Competent Person as defined in the June 2009 Edition of the AIM Note for Mining and Oil & Gas Companies. Howard Baker consents to the inclusion in the announcement of the matters based on their information in the form and context in which it appears and confirms that this information is accurate and not false or misleading.

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.

SOURCE Afferro Mining Inc.