Power Metal Regulatory News (POW)

Sula Iron & Gold plc / Index: AIM / Epic: SULA / Sector: Natural Resources 28 June 2013 Sula Iron & Gold plc (`Sula' or `the Company') Interim Results Sula Iron & Gold plc, an iron ore and gold exploration companyfocussed on Sierra Leone, announces its interim results for the six monthsended 31 March 2013. Overview - Defined exploration programme in place to delineate a maiden JORCcompliant iron resource in 2013 at its 153 sq km licence area - Licence area is located in the Sula-Kangari Greenstone Belt andcontiguous to African Minerals' operational Tonkolili Iron Ore Mine which hasa JORC compliant resource of 12.8 billion tonnes - Commenced 2,000m drilling programme to target iron mineralisationpost period end - to test the strike, thickness and iron grade of a 3.1kmbanded iron formation (`BIF') - Five target areas identified as hosting potential for hard rockgold mineralisation - detailed ground magnetic surveys and soil samplingplanned, subject to availability of appropriate financing Chairman's Statement Sula Iron & Gold is establishing itself as an iron and goldexploration company in Africa and I believe the outlook for the Company isvery positive. Sula continues to make solid progress in exploring its highlyprospective licence area in Sierra Leone that offers dual commodity upsidepotential, and a defined exploration programme is in place that aims todelineate a maiden JORC compliant iron resource in 2013. With this in mind, weexpect to be active with news flow from our exploration programme through therest of the year. In addition, with a strong Board and management team inplace with in-depth knowledge of Sierra Leone, a proven track record indeveloping African resource projects and a prospective flagship project, Ibelieve we have all the foundations in place to deliver growth and createshareholder value. Sula's 100% owned 153 sq km exploration licence in Sierra Leone(`the Licence') is prospective for iron and gold. The area's prospectivity isunderpinned by local operators in the region, including African MineralsLimited's (`AML') wholly-owned 12.8Bt iron ore Tonkolili mine, which adjoinsthe Licence to the south, and hosts BIF mineralisation proven to extend fromTonkolili into the Licence. The Licence area is also located within the highlyprospective Sula-Kangari Greenstone Belt rocks, which hosts Amara Mining Plc's2.91Moz Baomahun deposit in Sierra Leone. As a result, we are focussed onsimultaneously developing the resource potential of both iron and gold throughdefined exploration programmes, with the ultimate aim of delineating asignificant multi commodity resource. Within the Licence area, the iron mineralisation in the form of BIFsupergene enriched oxidised zones is prospective. Exploration consultants SRKExploration Services Ltd issued an exploration target for the Licence of 500Mtat 30.4% iron for magnetite and 55% iron for haematite. Furthermore, inFebruary 2013 positive channel sampling results confirmed the presence of highgrade iron mineralisation, with best intersections of 18m at 51.83% Fe and 22mat 56.22% Fe. As a result, Sula commenced a 2,000m drilling programme in April2013, which aims to test the strike continuity, thickness and iron grade of a3.1km BIF located in target Area 1 in the south-western part of the Licence,directly along strike from an undrilled magnetic high within AML's 12.8BtTonkolili iron mine. The diamond drilling programme will comprise eight drill collarsover a strike length of 2.2km. Each hole will be drilled at an azimuth of140Ëš and a dip of 50Ëš, to a downhole depth of 250m. Depending on the resultsof the diamond drilling, a second phase programme of shallow vertical holesmay be required to test Area 1's potential for direct shipping ore (`DSO').Initial field mapping completed in December 2012 indicated that the BIFoutcrops are variably oxidised to higher grade haematite mineralisation; suchsupergene processes are responsible for the formation of the higher grade DSOores. In addition to our iron exploration work, we will seek in thefuture to prove up the gold resource potential through ground magnetic surveysand soil sampling aimed at improving our knowledge of the gold structures withour Licence, and identifying the location of the most prospective targets forhard rock gold mineralisation. Sula considers the association of placer goldworkings and major lineaments within Greenstone Belt rocks at the Licence tobe significant. In January 2013, Sula identified five target areas that appear tobe prospective for hosting hard rock gold mineralisation. GeoEye-1 satelliteimagery generated provided detailed information on the extent of placer goldworkings and indicated the source of some of the placer gold within theLicence. This imagery, combined with Sula's understanding of the location ofhistoric gold drill intercepts, the source areas for alluvial gold deposits,and the position of major structures as defined by airborne magnetic data anddrainage orientation, helped the Company to identify the five target areas.Sula now remains focussed on better understanding and proving up the goldmineralisation at these targets, with the Dalakuru and Lagunda prospectsmarked as high priority. Dalakuru is the most advanced prospect within the Licence. Historicdrilling at the target has already discovered hard rock mineralisation, whichis open in all directions, with previous operators returning gold highs of1.55m @ 11.68g/t gold (171.00 to 173.00m, SDD016 and 8.72m @ 10.46g/t gold(89.40 to 98.10m, SDD004)) from a 19 diamond drill hole programme totalling3,402m. The Dalakuru structure is at least 5km long but extensive developmentof laterite masks bedrock geology along its length. Sula is consequentlyplanning a detailed ground magnetic survey to better constrain the location ofthe fault zone, which will then be followed by a soil and channel samplingprogramme to assist with drill targeting along strike to explore the sizepotential and morphology of Dalakuru. Step-out and step-back drilling ofmineralisation intercepted in historic drill holes is a priority. The Lagunda prospect is defined by extensive artisanal alluvialgold workings which outline a northeast-southwest trending target that isapproximately 6km long and 2km wide. Regional magnetic data suggests thatLagunda is a dilational zone, where multiple faults and contact zones provideexcellent structural preparation, and competency contrasts betweenlithological units, which act as conduits for hydrothermal fluids and areexcellent traps for gold mineralisation in greenstone-style environments. As aresult, the Board believe the potential presence of multiple structures andcontact zones, juxtaposing different lithologies, coincident with the sourcearea of the Lagunda alluvials, is very strong. A detailed ground magneticsurvey is planned in conjunction with reconnaissance soil sampling in order tobetter define the structural architecture and location of prospective targets. The other prospect areas, known as Simbako, Simbako East andNortheast are located on regional, northeast trending lineaments which definethe contact between magnetic highs and magnetic lows. Localised alluvialworkings are associated with each prospect indicating the potential for hardrock gold mineralisation. These prospects are not covered by regional magneticdata and the structural architecture of the projects is unknown. Following theplanned exploration of the Dalakuru and Lagunda targets, Sula plans to acquireground magnetic data and conduct reconnaissance geochemical sampling to betterunderstand the prospects' mineralisation. Financials As would be expected for an exploration company, I am reporting aloss for the six months ended 31 March 2013, of £988,000 (Year ended 30September 2012: £563,000). The loss reflects increased operating levels andtherefore costs in Sierra Leone following Sula's admission to AIM, as we lookto prove up the resource potential of iron and gold within our highlyprospective Licence. A major part of this loss, £331,000, is a charge arisingunder IFRS 2 as being the value of options issued at the time of the AIMadmission. It should be stressed that this is a non recurring charge and isnot a cash payment. Outlook Sula remains focussed on proving up the JORC resource potential ofits Licence in Sierra Leone, which appears to be prospective for iron andgold. With defined work programmes in place to ensure the resource potentialof both commodities is concurrently realised, I firmly believe Sula is wellplaced to deliver growth and generate shareholder value and Sula looks forwardto keeping shareholders updated with our exploration activity. Finally, I am announcing that I plan to step down as Chairman andas a Director of the Company at the end of July 2013. Having been with Sula,prior to its successful Admission in October 2012, at the age of 77, I am nowseeking to reduce my business commitments. I would like to thank the SulaBoard and management team for their hard work and commitment, and shareholdersfor their continued support in what has been a significant year of progressfor the Company. A further announcement will be made in due course regarding theappointment of a new Chairman and Director. B MoritzChairman For further information please visit www.sulairongold.com or contact thefollowing: Brian Moritz Sula Iron & Gold plc +44 (0) 7976 994 300James Caithie / Avi Cairn Financial Advisers LLP +44 (0) 20 7148 7900RobinsonJohn-Henry Wicks / Alice Northland Capital Partners +44 (0) 20 7796 8800LaneChris Rourke / Guy Beaufort Securities Limited +44 (0) 20 7382 8387WheatleyFelicity Edwards / St Brides Media and Finance +44 (0) 20 7236 1177Charlotte Heap CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED 31 MARCH 2013 6 months 6-Oct-11 6-Oct-11 ended to to 31-Mar-13 31-Mar-12 30-Sep-12 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Continuing operations Revenue - - -Cost of sales - - -Gross profit - - - Administrative expenses (988) (107) (563)Results from operating (988) (107) (563)activities Finance income - - -Finance costs - - -Net finance costs - - - Loss before taxation (988) (107) (563) Taxation - - -Loss for the period (988) (107) (563) Other comprehensive incomeOther comprehensive income for the period, - - -net of tax Total comprehensive loss for (988) (107) (563)the period Loss per share - continuing operationsBasic and diluted loss per (0.83) (0.647) (1.03)share (pence) CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 2013 6 months 6-Oct-11 6-Oct-11 ended to to 31-Mar-13 31-Mar-12 30-Sep-12 (unaudited) (unaudited) (audited) Notes £'000 £'000 £'000 AssetsProperty, plant and 7 248 254 270equipmentIntangible assets 8 4,034 3,824 3,824Non-current assets 4,282 4,078 4,094 Trade and other receivables 19 2 28Cash and cash equivalents 605 44 76Current assets 624 46 104 Total assets 4,906 4,124 4,198 EquityShare capital 9 1,220 795 820Share premium 9 4,681 3,232 3,226 Convertible notes - - 520Reserves 331 - -Retained deficit (1,551) (107) (563) 4,681 3,920 4,003LiabilitiesLoans and borrowings 94 - 93Trade and other payables 131 204 102Current liabilities 225 204 195 Total liabilities 225 204 195 Total equity and 4,906 4,124 4,198liabilities CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED 31 MARCH 2012 Attributable to owners of the Company Share Share Convertible Retained Total capital premium notes deficit equity £'000 £'000 £'000 £'000 £'000 Balance at 6 October 2011 (unaudited) - - - - - Loss for the period - - - (107) (107)Total comprehensive loss for the period - - - (107) (107) Issue of ordinary shares onacquisition of subsidiary 500 3,187 - - 3,687Issue of ordinary shares 295 45 - - 340 795 3,232 - - 4,027 Balance at 31 March 2012 (unaudited) 795 3,232 - (107) 3,920 CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2012 Attributable to owners of the Company Share Share Convertible Retained Total capital premium notes deficit equity £'000 £'000 £'000 £'000 £'000 Balance at 1 April 2012 (unaudited) 795 3,232 - (107) 3,920 Loss for the period - - - (456) (456)Total comprehensive loss for the - - - (456) (456)period Issue of ordinary shares 25 25 - - 50Issue of convertible notes - - 520 - 520 Issue costs - (31) - - (31) 25 (6) 520 - 539 Balance at 30 September 2012 820 3,226 520 (563) 4,003(audited) CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED 31 MARCH 2013 Attributable to owners of the Company Share Share Convertible Share based Retained Total capital premium notes payment deficit equity reserve £'000 £'000 £'000 £'000 £'000 £'000 Balance at 1 October 2012 820 3,226 520 - (563) 4,003(audited) Loss for the period - - - - (988) (988)Total comprehensive loss - - - - (988) (988)for the period Issue of ordinary 400 1,738 (520) - - 1,618sharesIssue costs - (283) - - - (283)Share based payment - - - 331 - 331transactions 400 1,455 (520) 331 - 1,666 Balance at 31 March 2013 1,220 4,681 - 331 (1,551) 4,681(unaudited) CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED 31 MARCH 2013 6 months 6-Oct-11 6-Oct-11 ended to to 31-Mar-13 31-Mar-12 30-Sep-12 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Cash flows from operatingactivitiesResults from operating activities: (988) (107) (563) - Depreciation 72 - 63- Share based payment transaction 331 - - (585) (107) (500)Changes in:- trade and other receivables 9 (2) (28)- trade and other payables 29 (181) (295)Net cash from operating activities (547) (290) (823) Cash flows from investingactivitiesAcquisition of property, plant and equipment (50) (6) (84)Exploration expenditure (210) - -Net cash used in investing (260) (6) (84)activities Cash flows from financingactivitiesProceeds from issue of share 1,335 340 359capitalProceeds from issue of convertible - - 520notesProceeds from loans and borrowings - - 78Net cash flows from financing 1,335 340 957activities Net increase in cash and cash equivalents 528 44 50Cash and cash equivalents at beginning of 61 - -periodCash acquired with subsidiary - - 11Cash and cash equivalents at end of period 589 44 61 NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL REPORT 1. Reporting entity Sula Iron & Gold plc (the "Company") is a company domiciled in theUnited Kingdom. The condensed consolidated interim financial report of theCompany as at and for the period ended 31 March 2013 comprise the Company andits subsidiary (together referred to as the "Group"). The Group primarily isinvolved in the exploration and exploitation of mineral resources in SierraLeone. 2. Basis of preparation (a) Statement of compliance This condensed consolidated interim financial report has beenprepared in accordance with IAS 34 Interim Financial Reporting. Selectedexplanatory notes are included to explain events and transactions that aresignificant to an understanding of the changes in financial performance andposition of the Group since the last annual consolidated financial statementsas at and for the period ended 30 September 2012. This condensed consolidatedinterim financial report does not include all the information required forfull annual financial statements prepared in accordance with InternationalFinancial Reporting Standards. This condensed consolidated interim financial report was approvedby the Board of Directors on 27 June 2013. (b) Judgements and estimates Preparing the interim financial report requires Management to makejudgements, estimates and assumptions that affect the application ofaccounting policies and the reported amounts of assets and liabilities, incomeand expense. Actual results may differ from these estimates. In preparing this condensed consolidated interim financial report,significant judgements made by Management in applying the Group's accountingpolicies and key sources of estimation uncertainty were the same as those thatapplied to the consolidated financial statements as at and for the periodended 30 September 2012. 3. Significant accounting policies The accounting policies applied by the Group in this condensedconsolidated interim financial report are the same as those applied by theGroup in its consolidated financial statements as at and for the period ended30 September 2012. 4. Financial instruments Financial risk management The Group's financial risk management objectives and policies areconsistent with those disclosed in the consolidated financial statements as atand for the period ended 30 September 2012. 5. Operating segments The Company acts as a holding company of a group involved inmineral resources exploration and exploitation in Sierra-Leone and aretherefore considered to operate in a single geographical and business segment. 6. Seasonality of operations The Group is not considered to be subject to seasonal fluctuations. 7. Property, plant and equipment Acquisitions During the six months ended 31 March 2013 the Group acquired assetswith a cost, excluding capitalised borrowing costs, of £50,000 (period ended31 March 2012: £254,000, period ended 30 September 2012: £333,000). 8. Intangible Assets During the six months ended 31 March 2013 the Group has capitalisedexploration expenditure of £210,000 (period ended 31 March 2012 (acquired withsubsidiary): £3,824,000, period ended 30 September 2012: £nil). 9. Share capital and reserves Issue of ordinary shares On 9 October 2012, Sula was admitted to trading on AIM. Onadmission, the convertible notes in issue converted to 13,000,000 ordinaryshares at a price of £0.04 per ordinary share. In addition, 19,166,674ordinary shares were issued at a price of £0.06 per ordinary share. On 2 November 2012 the Company issued a further 7,500,000 ordinaryshares for cash at £0.06 per share, together with warrants to subscribe forone ordinary share at £0.08. On 17 January 2013 the Company issued 300,000 ordinary shares at£0.06 per share in consideration of an amount owed to supplier. Issue costs of £283,000 have been offset against the share premiumaccount. Dividends No dividends were declared or paid in the six months ended 31 March2013 (period ended 31 March 2012: £nil, period ended 30 September 2012: £nil). 10. Share-based payment arrangements At 31 March 2013 the Company had the following share-based paymentarrangements. Share option programme On 9 October 2012, the Company issued options to certain directors to purchaseshares in the Company at a price of £0.06 per ordinary share. The terms and conditions related to the grants of the share option programmeare as follows: Number of instrumentsGrant date/employees entitledOption grant to G Burnell 7,466,667Option grant to B Moritz 2,283,333Warrant grant to Dr C Wilson 833,334 Total directors' share options/warrants as at 31 March 2013 10,583,334 Measurement of fair values The fair value of the share-based payments was measured based onthe Black-Scholes formula. Expected volatility is estimated by consideringhistoric average share price volatility for similar entities on AIM. Equity-settled share-based payment plans The inputs used in the measurement of the fair values at grant date of theequity-settled share-based payment plans were as follows: Options WarrantsGrant date 9 Oct 12 9 Oct 12Vesting period ends 9 Oct 12 9 Oct 12Share price at date of grant 6.0 6.0Volatility 40% 40%Option life 10 years 10 yearsDividend yield 0% 0%Risk free investment rate 1.87% 1.87%Fair value at date of grant 3.13 3.13Exercise price at grant date 0.06 0.06Exercise from/to 9 Oct 12/ 9 Oct 12/ 9 Oct 22 9 Oct 22 Employee expenses 31 March 2013 £`000Total expense recognised as employee benefit expense 331 Reconciliation of outstanding directors' share options and warrants 2013 Number of Weighted options/ average warrants exercise price £Outstanding at beginning of period - - Granted during the period 10,583,334 0.06Outstanding at 31 March 2013 10,583,334 0.06Exercisable at 31 March 2013 10,583,334 0.06 The options/warrants outstanding at 31 March 2013 have an exerciseprice of £0.06 and a remaining weighted average contractual life of 9 years194 days. 11. Share warrants Reconciliation of outstanding share warrants 2013 Number of Weighted warrants average exercise price £Outstanding at beginning of period - - Granted during the period 22,028,705 0.072Outstanding at 31 March 2013 22,028,705 0.072Exercisable at 31 March 2013 19,833,336 0.072 The weighted average remaining contractual life of the warrantsoutstanding at the balance sheet date was 342 days. Warrants were subscribed on admission to AIM at £0.08 on the basisof 1 warrant for each 2 ordinary shares subscribed for. The warrants areexercisable at any time up to 9 October 2013. Further warrants were issued on admission, 6,500,000 warrants toPre-IPO investors at £0.06, exercisable at any time up to 9 October 2013, and2,195,369 warrants to the Advisers at £0.06 exercisable at any time up to 9October 2017. Warrants were subscribed after the issue of 7,500,000 ordinaryshares at £0.08 on 2 November 2012 on the basis of 1 warrant for each 2ordinary shares subscribed for. The warrants are exercisable at any time up to2 November 2013. 12. Related parties The Company advanced funds, interest free, to Blue Horizon (SL) Ltdtotalling £688,000 during the period. As at 31 March 2013, the balanceoutstanding totalled £1,573,000. 13. Capital commitments The Company has agreed to a drilling programme on its exploration licence inSierra Leone. A deposit was paid during the period under review and thebalance to be paid is approximately £200,000