Panmure's recent site visit to Afferro Mining's (LON:AFF, CVE:AFF) Nkout iron ore project underlined its investment case, it said today.
The City broker has an unchanged 'buy' stance on the shares and a target price at 279 pence - an impressive premium to the current price of 60.75p.
Analyst Alison Turner said her visit highlighted the robustness of the Nkout resource but, however, also showed the complexities of the politics in Cameroon and that corruption remains a problem.
Earlier this month, the mining firm said ongoing drilling at the project identified further potential direct shipping ore (DSO) resources.
In particular, it indicated a separate DSO zone in Nkout East with wide intercepts with grades up to 55% iron.
High grade results were also found at the Nkout Centre, the firm revealed.
Turner highlighted that these further positive drill results may enhance Nkout's economics by extending the "high grade oxide" phase of the project - the material which is easier to process.
This would mean a delay both to the capital expenditure and the increased operational expenditure associatedwith the transition to haematite and then magnetite production, she notes.
"We were impressed by the strength of the commitment throughout Afferro to operating honestly and transparently," she added.
"We believe that approach significantly reduces risks to the security of the licences as does the strong support shown by government (at all levels)."
The analyst added: "Whilst we believe the most likely outcome is that Afferro will find itself negotiating third party access to a Chinese-built railway, a strong commitment by government to ensure fair and equitable access is reassuring."
The Nkout resource already has significant scale and stands at 2.5 billion tonnes while the extent of the defined high grade oxide zones (over 50% iron) continues to grow, from 36.4 million tonnes currently.
Results from the latest drilling will be incorporated into an updated mineral resource estimate in the first half of next year.
This will then be used as the basis for a pre-feasibility study.
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