DJ Sirius Exploration: Progressing Njahili Acquisition >SXX.LN
LONDON, Mar 03, 2008 (Dow Jones Commodities News via Comtex) --
Edited Press Release
Sirius Exploration said Monday that further to the company's announcement on Sep. 7, 2007, the Company confirms that it is progressing the proposed acquisition of Njahili and is seeking to raise between GBP2 million and GBP6 million by means of a placing of Ordinary Shares.
The Company is working towards publishing its circular incorporating its AIM Admission Document by Mar. 31, 2008.
If Sirius fails to publish its circular by Mar. 31, 2008 the admission of its AIM listed securities will be cancelled.
The company said that the proposed acquisition brings together a strong management team with expertise in exploration geology, mine engineering, international mine management, corporate finance, law and financial control.
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, the company said.
Sirius Exploration 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 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 its 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.
The enlarged Group's overall strategy will be to focus on its Properties as follows, and in order of priority.
In Category 1 the company will focus on No. 12 Tailings, Wara Wara, Macedonian Property Kadiica and the evaluation of Bagla Hill.
In Category 2 it will focus on exploration in Sierra Leone: Bently, Chetham, Little Scarcies and Bumbuna; and exploration in 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- No. 12 TailingsP: 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.
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.
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.
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 GBP2 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 GBP6 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 - 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.
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.
Little Scarcies: An exclusive prospecting licence with potential for hard-rock, alluvial and eluvial rutile. Exploration has yet to commence.
Bumbuna: An exploration licence over an alluvial gold prospect currently in the early stage of exploration.
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 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 GBP2 million and up to a maximum of GBP6 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 GBP6 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 to purchase up to GBP3 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 GBP500,000 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.
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.
At the 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.
At the 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.
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