Appointment of Drilling Contractor/Payment Scheme

RNS Number : 8894Q

Sula Iron & Gold PLC

05 December 2016

 

5 December 2016

Sula Iron & Gold plc

("Sula" or the "Company")

Appointment of Drilling Contractor & Innovative Payment Scheme

Sula (AIM: SULA), the multi-commodity exploration company focused on Sierra Leone, is pleased to announce that, following a comprehensive adjudication and tender process, Equity Drilling Ltd ("EQD") has been selected for its upcoming drill programme. Drilling is scheduled to commence in January 2017 and two of EQD's state of the art diamond drill rigs are being mobilised from South Africa, with drill pads and camp organisation being carried out in Sierra Leone, ahead of the drill programme.

As part of the agreement, over 50 per cent. of the Sula's standard costs to drill will be settled via the issue of new ordinary shares in the capital of Sula (the "Fee Shares") to EQD. The Fee Shares will be issued by Sula within one month of the completion of, and release of drill results from, an initial planned programme of 2,400m of drilling.  The issue price of the Fee Shares will be the higher of the prevailing share price following the release of results from the drill programme and a pre-agreed floor price, being 0.35p. This innovative financing arrangement should enable Sula to drill additional metres in excess of the planned programme of 2,400m depending on the initial results of the drilling campaign.

Furthermore, the Company is pleased to announce that EQD has agreed to waive all mobilisation costs associated with the transportation of the two drill rigs and ancillary equipment from South Africa to the Company's wholly owned flagship Ferensola Gold Project, located in central Sierra Leone.

Roger Murphy, Sula's CEO, commented:

"We are pleased to announce that this drill programme will commence in January, aimed at drilling some of the high conviction gold targets outlined in our recent releases, including Sanama Hill, which hosts our 0.8mn - 1.5mn oz Au Exploration Target, but also the TZ2 and TZ4 Induced Polarisation anomalies in the Eastern Target where, at the TZ2 anomaly, we recently recovered gold. The payment of a large percentage of the fees via the issue of Sula's equity, demonstrates Equity Drilling's confidence in our gold project and I would like to thank them for agreeing to work with us to deliver, what we believe, will be strong results."

For more detailed information, see "Sula Exploration Programme" below.

The information contained within this announcement is deemed by the Company to constitute inside information under the Market Abuse Regulation (EU) No. 596/2014.

For further information, please contact:

Sula Iron & Gold plc
Roger Murphy (CEO)	[phone]
Strand Hanson Limited (Financial and Nominated Adviser)
James Harris / Mathew Chandler / James Dance	[phone]
VSA Capital Limited (Broker)
Andrew Raca	[phone]

Sula Exploration Programme

It is anticipated that the initial 2,400m of drilling will take up to four weeks to complete and will comprise 10 diamond drillholes of between 150m and 300m in length. Drilling will target further mineralisation at Sanama Hill (TZ0), which was the focus of the November 2015 drill programme, and will also test the extensive Induced Polarisation (IP) anomalies at the recently identified Eastern Target with drilling planned to take place at both TZ2 and TZ4, highlighted in Figure 1 below. Overall, 80% of the drilling is planned within the Eastern Target.

Drilling at the Eastern Target will focus on the peak chargeability IP anomalies and associated dip and strike extents, with drilling also testing for potential mineralisation near the recently identified oxide samples that liberated free gold, which are located above the TZ2 IP anomaly. Based on the EQD deal structure, additional drill meters will be allocated as initial results become available and the geology and mineralisation controls become evident.

Sula plan to initiate similar protocols to those carried out in the November 2015 drilling programme, whereby a dedicated structural geologist will supervise the collection of structural data, in order to maximise the geological information recovered from the drill core and to enhance future exploration planning.

http://www.rns-pdf.londonstockexchange.com/rns/8894Q_-2016-12-4.pdf 

Figure 1: Priority drill targets, visible gold sample location and regional sample locations

Equity Drilling Limited

Equity Drilling is private company established by a team of highly experienced drilling professionals with many decades of experience of drilling across many African countries.

Notes:

Sula Iron & Gold plc is a multi-commodity exploration company focused on West Africa. The Company's main objective is to explore and advance its 153km² Ferensola Project in Northern Sierra Leone, which is highly prospective for gold, iron ore and coltan. In December 2014, the Company achieved a corporate milestone in delivering its JORC MRE for the BIF 1 iron ore project. A total resource of 514.5Mt @ 31.8% Fe was identified and total oxide resource of 55.5Mt @ 45.39% Fe. In June 2015, the Company defined a JORC Exploration Target on its Ferensola Gold Project. The Exploration Target centres on Sanama Hill, with a tonnage range of between 5 and 7 million tonnes ("Mt"), grading at between 4 and 8 g/t Au, which equates to between 0.8 and 1.5 million ounces ("Moz") Au. The Exploration Target was restricted to a 2km strike length segment of the regional fold belt that is believed to extend for over 10km.

The information in this release that relates to Exploration Results has been reviewed by Mr Howard Baker, Non-Executive Technical Director of Sula Iron and Gold plc. Mr Baker is a Chartered Professional Fellow of the Australasian Institute of Mining and Metallurgy (Membership Number 224239) and a Competent Person as defined by the rules of International Reporting Codes that are aligned with CRIRSCO.

Howard Baker has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the 'Australasian Code for Reporting of Exploration targets, Exploration Results, Mineral Resources and Ore Reserves', also known as the JORC Code. The JORC code is a national reporting organisation that is aligned with CRIRSCO. Howard Baker consents to the inclusion in the announcement of the matters based on his information in the form and context in which they appear.

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