3 Mar 2008 07:19
FOR RELEASE 7.00AM 3 MARCH 2008 SIRIUS EXPLORATION PLC ("Sirius Exploration", "Sirius" or "Company") INTENDED ACQUISITION OF NJAHILI RESOURCES LTD ("Njahili Resources" or "Njahili") AND PLACING TO RAISE ‚£2 MILLION TO ‚£6 MILLION
Further to the Company's announcement on 7 September 2007, the Company confirms that it is progressing the proposed acquisition of Njahili and is seeking to raise between ‚£2 million and ‚£6 million by means of a placing of Ordinary Shares. The Company is working towards publishing its circular incorporating its AIM Admission Document by 31 March 2008. If Sirius fails to publish its circular by 31 March 2008 the admission of its AIM listed securities will be cancelled.
Set out in the attached schedule is the background to the transaction and a review of the exploration properties which the enlarged Group would have on completion of this acquisition. The Company intends to continue growth by acquisition as one of its main strategies.
A further announcement will be made when all the arrangements have been finalised and the Company is able to publish its circular incorporating its AIM Admission Document.
KEY POINTS * Proposed acquisition brings together a strong management team * expertise in exploration geology, mine engineering, international mine management, corporate finance, law and financial control * Spread of properties across Sierra Leone, Macedonia * Extensive work programme planned * The immediate prospects of the Enlarged Group will depend upon the success of the work programme in geological terms and on the extent to which the Enlarged Group can establish production and/or establish agreements with third parties for the development and/or financing of its various licence areas. For further information:Sirius Exploration Plc Tel: 01453 511900 Richard Poulden (Chairman) richard.poulden@siriusexploration.com Mobile: 07879 447 601 Jonathan Harrison (Financial Director) Mobile: 07879 887 755 Beaumont Cornish Tel: 020 7628 3396 Roland Cornish, (Chairman) S.P. Angel Corporate Finance LLP 020 7647 9644 Robert Woolridge, Partner Cubitt Consulting Tel: 020 7367 5100 07802 724400 Brian Coleman-SmithJames Verstringhe Nicola Krafft
Website: www.siriusexploration.com
SIRIUS EXPLORATION PLC ("Sirius Exploration", "Sirius" or "Company") INTENDED ACQUISITION OF NJAHILI RESOURCES PLC ("Njahili Resources" or "Njahili") AND PLACING TO RAISE ‚£2 MILLION TO ‚£6 MILLION BACKGROUND & REVIEW OF PROPERTIES
The following information should be read in conjunction with the full text of the Pathfinder Document from which it is derived.
Summary
Sirius Exploration Plc will be enlarged by the acquisition of Njahili Resources Limited by the Company and Sirius Exploration Plc will be renamed Xanadu Resources Plc. This constitutes a reverse takeover under the AIM Rules.
Xanadu Resources will have a strong management team with expertise in exploration geology, mine engineering, international mine management, corporate finance, law and financial control.
Xanadu Resources plans to expand further by acquisition of both companies and properties. It is the Director's view that there are a number of companies at the small-cap end of AIM and other markets which do not have critical mass and will find expansion and fund raising difficult. It is these, together with companies which have failed to get to AIM, which form our primary target group.
Xanadu Resources will have a spread of resource properties across Sierra Leone and Macedonia which have been grouped into Category 1 and Category 2. Category 1 ranges from small gold and diamond properties (possible production 2008) to medium size copper-gold (possible production 2010) to the major Bagla Hill iron ore prospect close to the Sierra Leone / Liberia border. This latter is part of the same geological group as the established Liberian "Western Cluster" mines currently up for tender.
Category 1 provides the prospect for early revenue. In addition, the Bagla Hill property provides a major potential resource. Drilled by Bethlehem Steel in the 1970's there is extensive data which, in the era in which it was produced, would then have been considered sufficient to establish a resource.
The Category 2 properties are only so described as they are all less advanced than Category 1, but they nonetheless, in the opinion of the Directors, all provide good exploration prospects.
History
Sirius Exploration was admitted to trading on AIM in August 2005 and at that time it had rights in respect of two properties in Macedonia as set out in a joint venture with Phelps Dodge Inc (now a subsidiary of Freeport McMoRan Copper & Gold Inc).
In the annual report for the year ended 31st March 2006, the Chairman's statement contained the following:
"We intend to continue our successful policy of joint ventures and agreements with the major mining companies. However, we also intend to utilise your board's corporate finance skills in looking for acquisitions. These may be small, one-project companies which cannot find funding in today's markets. Alternatively, they could be small or medium sized companies on less attractive exchanges than AIM."
Njahili Resources is the first of what is hoped will be that series of acquisitions.
Njahili Resources considered floating on AIM in the third quarter of 2006 but the flotation did not take place. The company was then restructured with new management and the injection of ‚£2.3m in additional equity for a mixture of cash and in lieu of fees outstanding. The combination of Sirius Exploration's existing management and properties, and the new team and the restructured assets of Njahili Resources, will, in the opinion of the Directors and the Proposed Directors, provide an excellent base for growth.
Exploration Strategy
The enlarged Group's overall strategy will be to focus on its Properties as follows, and in order of priority: Category 1
1. No. 12 Tailings
2. Wara Wara
3. Macedonian Property: Kadiica
4. Evaluation: Bagla Hill Category 2
1. Exploration Sierra Leone: Bently, Chetham, Little Scarcies and Bumbuna
2. Exploration Macedonia: Osogovo
The enlarged Group aims to have three streams of cash-flow within the next 2 years, the most likely at present being No. 12 Tailings, Wara Wara and Kadiica.
A summary of the enlarged Group's licence areas is as follows:
Category 1
1. No. 12 Tailings
A mining lease over a tailings deposit from previous alluvial diamond operations with potential for gold and small diamonds. Further drilling to build on previous studies is in progress to optimise plant design. If such confirmation drilling is successful, production could be commenced within 12 months.
2. Wara Wara
A mining lease over an alluvial gold prospect. Early stage exploration with the potential for production within 18-24 months. Work programme planned to verify the prospect's potential grade and tonnage to indicate the commercial viability of the project.
3. Kadiica
An exploration permit currently held by Phelps Dodge in Macedonia on trust for the Company. Recent drilling has intersected a substantial zone of supergene copper enrichment. The Company's data sharing agreement with Rio Tinto also showed traces of gold within the lease area which will be investigated fully in the current exploration season.
4. Bagla Hill
An exclusive prospecting licence over an iron ore prospect. Substantial historic estimates of magnetite iron mineralisation. The Directors intend to conduct more detailed engineering work that will advance the project to the prefeasibility stage.
It is important to note that whilst the minimum proceeds (being ‚£2 million) will be sufficient to progress evaluation work in each of the above areas, the ability of the Enlarged Group to bring any properties into production will depend upon (i) how much further money is raised from the placing (ii) the Co mpany's ability to utilise its committed equity facility and (iii) the availability of other forms of financing (as yet not committed) such as local asset-based finance.
On the basis of the maximum proceeds (being ‚£6 million), the Directors and the proposed Directors believe that they will have sufficient funds to commence production (subject inter alia to other geological and operational issues) for No. 12 Tailings and Wara Wara.
Category 2
5. Bently
An exclusive prospecting licence over a diamond and primary, eluvial and alluvial gold prospect. Preliminary exploration has indicated potential for primary diamonds, eluvial, alluvial and primary gold and tungsten. Early stage exploration with priority given to the greenstone belt area identified as having good primary gold potential.
6. Chetham
An exclusive prospecting licence over hard rock and alluvial gold and molybdenite. Preliminary exploration has indicated potential for both alluvial and primary gold and columbite-tantalite.
7. Little Scarcies
An exclusive prospecting licence with potential for hard-rock, alluvial and eluvial rutile. Exploration has yet to commence.
8. Bumbuna
An exploration licence over an alluvial gold prospect currently in the early stage of exploration.
9. Osogovo
An exploration permit currently held by Phelps Dodge in Macedonia on trust for the Company. Further exploration will establish the potential of some peripheral high grade copper skarns.
Prospective investors should note that, the timetable for production is based upon the current beliefs of the Directors and the proposed Directors and the implementation of production within this timetable is dependent upon a number of factors known and unknown and may not be achieved within this timescale or at all.
The Placing
The proceeds of the placing will be utilised to continue the Company's exploration and development programme and for general working capital.
The Company proposes to raise, via the placing, a minimum of ‚£2 million and up to a maximum of ‚£6 million. On the basis that the Company raises the minimum it will use the money raised and its existing resources to develop the Category 1 Projects No 12 Tailings, Kadiica and Bagla Hill. Further money raised up to ‚£6 million will be used to develop these Category 1 Projects further and bring them into production. As well as this, money will be used to review and develop the Category 2 projects, through additional exploration work as approved in the Competent Persons Report.
In addition, the Company has signed a non-legally binding indication term sheet regarding a proposed committed equity facility from Trafalgar Capital Specialised Investment Fund, FIS (Trafalgar) to purchase up to ‚£3 million sterling of new Ordinary Shares. This can be drawn at the Company's option subject to certain conditions regarding the amount and pricing of draw downs related to average historic trading of the newly admitted shares. Up to ‚£ 500,000 may be advanced at any time by way of a loan to repaid either by draw downs under the committed equity facility or at the Company's discretion under various refinancing options. Full details of the terms of the Committed Equity Facility are set out in the Pathfinder Document.
The minimum proceeds together with the Committed Equity Facility (if formal legal agreements relating to that proposed facility are agreed and signed), in the opinion of the Directors and the proposed Directors, provides the enlarged Group with sufficient resources to carry forward its plans as set out for the various exploration properties.
Work Programme
The work programmes for Category 1 Projects are as follows:
Prospective investors should note that, in respect of the various historic data and estimates given in this section below, the Company has not prepared a resource classification under any of the modern standards such as the JORC Code, SAMREC, IMMM or CIM Standards.
No 12 Tailings Retreatment Project
Njahili Resources has carried out a preliminary drilling programme aimed at confirming the historical resource at No 12; however results have returned much lower gold values than reported historically, which has been ascribed to insufficient sample size to cater for coarse gold (nugget effect). Njahili Resources has therefore elected to evaluate the tailings resource by bulk sampling and trial mining.
Additional metallurgical test work is being conducted to finalise the flowsheet for the gravity and final product recovery circuits, prior to the construction and commissioning of the mining and plant operation.
Wara Wara gold project
Satellite imagery interpretation, photogeological interpretation and detailed geological mapping of the current property and its surroundings will be conducted to identify alluvial flats, terraces and preserved meanders. Results from 26 pits sunk by 2007 indicated an inferred alluvial resource of 407,000 tonnes at 0.78 grams per tonne of gold. Further more detailed pitting carried out in 2007 aimed at confirming the resource has returned much lower gold values than the initial pit samples. These results are believed to be caused by incorrect sample preparation and analysis and possibly by inadequate sample size and sample collection. Njahili Resources has therefore elected to evaluate the Wara Wara deposit by bulk sampling and trial mining.
Resource estimates and economic analyses will be conducted and, if positive, the project will proceed to the next stage, namely the procurement, construction and commissioning of a 30 cubic metre per hour plant.
Kadiica
The immediate target is the supergene-enriched copper blanket. This has been identified beneath the greater part of Bukovic Ridge. The primary focus is its richer central spine. Infill drilling will be undertaken at the southern end in order to establish the continuity of this better grade material and to give confidence to the siting of an exploration adit. The adit will be driven to establish beyond reasonable doubt the continuity of the better grade enriched material at least over the southern end of the system. The second purpose of the adit will be to provide a bulk sample for mineralogical and leach testing. In addition, the adit will permit assessment of the underground mining conditions and suitability for cheap underground extraction of the enrichment blanket.
Although the supergene blanket is attractive, the underlying porphyry mineralisation is too low-grade, at the current price of copper, to be considered a target. Therefore we have no immediate plans for any follow up drilling to the deep holes which have nonetheless established the presence of this large tonnage resource.
The secondary target for immediate exploration is the two areas of anomalous gold. Geological mapping followed by petrographic studies will be undertaken as soon as is practicable. This will confirm the nature of the hydrothermal systems which introduced the gold. The ridge-top anomaly, where outcrop is good, will then be investigated by trenching and possibly shallow drilling. The eastern anomaly, where exposure is poor, will first be better defined by a programme of soil geochemistry. Anomalies will then be trenched. No drilling for gold will take place until the nature and orientation of the mineralisation have been established.
Copper - gold porphyry systems commonly have more than one focus of gold enrichment. There is local anecdotal evidence of ancient workings for gold and occasional recovery of gold flakes from the local streams. Therefore the entire Kadiica area will be covered by a stream sediment programme to identify any other gold targets around the porphyry core.
Bagla Hill
Njahili Resources has conducted an order of magnitude scoping study based on the conceptual pit resource determined by Bethlehem Steel. The Company plans to conduct more detailed engineering work that will advance the project to the prefeasibilty stage.
The first phase of the work programme will involve the production of a resource estimate using modern software, a preliminary study on the marketability of the concentrate for making pellets, an initial examination of the landsat imagery of the area between the licence area and the Liberia border and the production of a report on the preliminary investigation regarding the transportation of concentrate.
Contingent on the successful conclusion of this phase the Company will embark on a prefeasibility study which will include a topographic survey, environmental impact assessement, confirmatory drilling, bulk sampling and metallurgical testwork to refine the existing conceptual flowsheet which will include pelletisation of the concentrate, a transportation study and a full market study.
Current Trading and Prospects
The current work programme is set out above. The immediate prospects of the enlarged Group will depend upon the success of this work programme in geological terms and on the extent to which the enlarged Group can establish production (as referred to above) and/or establish agreements with third parties for the development and/or financing of its various licence areas.
The enlarged Group also intends to expand through acquisition of other companies or individual mining projects.
FORWARD-LOOKING STATEMENTS
This Document contains forward-looking statements. These statements relate to the Company's future prospects, developments and business strategies. Forward-looking statements are identified by the use of terms and phrases such as "believe", "could", "envisage", "estimate", "intend", "may", "plan", "will" or the negative of those, variations or comparable expressions, including references to assumptions.
The forward-looking statements in this Document are based on current expectations and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by those statements. Certain risks to and uncertainties for the Company are specifically described in the Pathfinder Document headed "Risk Factors". If one or more of these risks or uncertainties materialises, or if underlying assumptions prove incorrect, the Company's actual results may vary materially from those expected, estimated or projected. Given these risks and uncertainties, potential investors should not place any reliance on forward-looking statements. These forward-looking statements speak only as at the date of this Document. Neither the Directors, the Proposed Directors nor the Company undertake any obligation to update forward-looking statements or the Risk Factors described in the Admission Document other than as required by the Prospectus Rules, the AIM Rules or by the rules of any other relevant securities regulatory authority, whether as a result of new information, future events or otherwise.
OVERSEAS SHAREHOLDERS
This Document does not constitute an offer to sell, or a solicitation to buy Ordinary Shares in any jurisdiction in which such offer or solicitation is unlawful. In particular, this Document is not for distribution in or into the United States of America, Canada, Australia, the Republic of South Africa or Japan. The Ordinary Shares have not been nor will be registered under the United States Securities Act of 1933 (as amended) nor under the securities legislation of any state of the United States or any province or territory of Canada, Australia, the Republic of South Africa, or Japan or in any country, territory or possession where to do so may contravene local securities laws or regulations. Accordingly, the Ordinary Shares may not, subject to certain exceptions, be offered or sold directly or indirectly in or into the United States of America, Canada, Australia, the Republic of South Africa or Japan or to any national, citizen or resident of the United States of America, Canada, Australia, the Republic of South Africa or Japan. The distribution of this Document in certain jurisdictions may be restricted by law. No action has been taken by the Company or by Beaumont Cornish Limited that would permit a public offer of Ordinary Shares or possession or distribution of this Document where action for that purpose is required. Persons into whose possession this Document comes should inform themselves about, and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of the securities laws of any such jurisdiction.
SIRIUS EXPLORATION PLC