LONDON (Alliance News) -Sula Iron & Gold PLC Tuesday said an independent valuation of the company's Ferensola Project has been prepared by mining consultants SRK Exploration Services.
The multi-commodity exploration company focused on Sierra Leone said SRK has suggested a minimum value for the licence of USD8 million, a maximum value of USD200 million and a technical value of USD36.7 million.
With a current market cap of GBP10 million, or USD16.4 million this valuation could represent significant value potential for Sula Iron & Gold.
The technical valuation, which SRK considers to be a fair and reasonable value for the property, is based on geological information available to the consultancy and its view on the status of Ferensola and their probability of success.
The minimum valuation is based on the purchase price of the property, historical exploration expenditure and the amount that Sula intends to expend on exploration during the next phase of work, with a discount factor of 65 to 80%.
The maximum valuation considers that the highest level of prospectivity for gold is a mesothermal gold model which could be expected to contain 250,000 to 400,000 ounces of gold and may be as large as 40 million tonnes.
The company noted that the Komahun site nearby, which is partly owned by Polo Resources PLC, has a 3.6 million tonne deposit at 4.69 grams per tonne of gold in the indicated category and 2.6 million tonnes at 4.08 grams per tonne in the inferred category.
Additionally, SRK said that the licence area has excellent potential has an iron ore resource to be delineated after the company made significant iron ore tests at the site throughout 2013, and that Sula can achieve its target of 500 million tonnes of iron at the site.
SRK also noted that the maximum potential value for the gold and iron targets has been heavily discounted due to Sula's stage of development.
"We hope to use the results of the SRK independent valuation to try and raise sufficient money to help establish a JORC compliant resource on the iron, a JORC compliant resource on the DSO and a JORC compliant resource on the gold," the company's Chief Executive Officer Nick Warrell told Alliance News last week.
Sula Iron & Gold shares were up 2.3% to 6.39 pence Tuesday following a 226% increase in the company's share price over the last three months.
By Tom McIvor; tommcivor@alliancenews.com; @TomMcIvor1
Copyright © 2014 Alliance News Limited. All Rights Reserved.