Roger Murphy CEO, Sula Iron and Gold plc – Exclusive Q&A

 

Share Talk spoke to Roger Murphy of Sula Iron and Gold about the company since he become CEO. We talk about their Ferensola Gold project in Sierra Leone and the drill program to target advancing the exploration work on their Jorc compliant project.

That was December 2016, this week we contacted the CEO Roger Murphy and he talked to Share Talk exclusively about the companies future.

Share Talk is here to bridge the gap between share holders and companies,  EXCLUSIVE  Sula Iron and Gold Q&A.

Before we start the Q&A we re-visit Roger Murphy interview 9 December 2016

Q&A

Q Given the recent price increase in Iron Ore, what is the plan to sell the Iron Ore asset now at Ferensola? And when?

A  Sula’s focus is on the gold, but we plan to retain the value we see within our iron ore resource.  Shandong the Chinese group are mining Tonkolili which is contiguous with our iron ore resource, they also control the railway which is essential to get iron ore to port.  We are interested in exploring a deal with them, which could see them mining our ground, although there is nothing concrete at present.

Is there a plan to conduct the additional 4 or 6 drills to increase the Iron Ore asset by c.250MT as outlined by Nick Warrell previously and add further value to this asset?

A Whilst we see considerable potential in the Iron Ore asset, our current focus is on advancing Sula’s significant gold endowment, which we think will deliver a better return for shareholders

As an overriding comment and before I answer the questions, let me say we believe we have a very large gold asset on our licence.  A significant exploration target has already been independently defined by SRK from a small portion of our licence area, and we are moving beyond that.  Our focus will be on trying to understand how big this really is in a systematic, but commercial, process.

Why are we spending previous drill effort/cost on further drilling in TZ0? We know what’s there. I’d rather see that go to other zones, or more in TZ2. What will further drilling achieve? upgrading from target exploration JORC to JORC? Or explore other targets on periphery of TZ0 not covered off in previous drilling?

A The drill campaign, which will start soon, will mainly focus on the larger TZ2 anomaly, but we believe we have not fully delimited TZ0’s potential and it remains early stage and so merits further work.  Our recent IP survey indicates that we have only touched the peripheries of the anomaly. Indeed some of our trench assays provide further evidence of TZ0’s undrilled Eastern extension

Q Why is TZ5 identified as a target – it looks irrelevant compared to other targets?

A TZ5 is an IP anomaly and so has to be of interest, but for now our focus will be principally on TZ2 as detailed above.  But it’s worth re-emphasising that we have 8.5km of IP anomaly (of which we have only drilled 450m so far).  We will approach this systematically and cost effectively. 

Q Why are we not including zones to the North East of TZ2 and South of TZ2 which look much larger and more prospective and which were identified with a “?” in a recent corporate presentation?

A All our regional soil and magnetic work shows the need to further IP work in areas not yet surveyed, as does the number of artisanal workings across the licence area.  We are confident that 8.5km is not the full extent of the potential IP anomalies.  We have only completed IP on the eastern part of our licence area and there is evidence of gold beyond this.  As mentioned above we have to approach this systematically and commercially given normal budget constraints

Q What is the plan to get to a Maiden JORC estimate for gold? And by when?

A For now our focus is to expand the potential gold target by drilling TZ2 to try to understand just how big it could be.  We first plan to try to estimate potential size before moving to de-risk the most prospective areas.   Our strategy is to deliver a JORC as soon as we can

Q Will a gold JORC be based on all zones identified in recent IP survey, or just individual target zones e.g. TZ2?

A As per Q 4, our first focus is to get some idea of how much gold we have, which will in itself drive valuation, and then to advance the best parts to a JORC resource.

Q Is the plan to sell the gold resource to a larger miner, or go into production? I’ve always understood it would be the former but would like this confirmation.

A It would be a mistake to enter into commercial discussions with a larger miner without better knowledge of Sula’s substantial gold endowment – we wouldn’t want to sell at an undervalued price!  Obviously thought, the door remains open for discussions.

 Q Is the plan to sell the gold resource combined with the iron ore resource or separately?

A The plan is to explore all ways to maximise value for our shareholders.  Logically, the gold and iron assets would most likely be of interest to different buyers.  

 Q If the plan is to base a resource estimate on all target zones identified, will a JV be sought after the forthcoming drilling and assays are completed, or to continue on independently?

A We are open to all options at this stage.  The key consideration will be value optimisation.

Q What are the plans for other areas also identified in a recent corporate presentation e.g. West of Sanama Hill? Are these ruled out now, or will they be included at a later stage or in a separate exploration activity?

A All our regional soil and magnetic work shows the need to further IP work in areas not yet surveyed, as does the number of artisanal workings across the licence area.  We are confident that 8.5km is not the full extent of the potential IP anomalies.  We have only completed IP on the eastern part of our licence area and there is evidence of gold beyond this.  As mentioned above we have to approach this systematically and commercially given normal budget constraints

Q The Final IP survey results RNS mentioned further IP survey activity would be conducted in future. What is the plan here? Northern extension of TZ2? Somewhere else e.g. West of Sanama Hill?

A There are significant soil and magnetic anomalies which need IP work done.  This work will be considered in terms of the systematic geological but commercial approach we have adopted.

Q If the driller is to be paid in shares, what is the money raised through subscription/open offer to be spent on? As the reason stated was that it would be used to undertake the drill campaign – so I would expect to ALSO see that money spent on drilling so that more of the license area is drilled and we get to a faster conclusion. Please confirm.

A We were particularly pleased with the deal we negotiated here.  It demonstrates confidence by the drilling contractor. We also have the added advantage that being able to pay partially in stock (with a 0.35p floor price) will allow to drill more than our original budget.

Q  Please confirm that this is no longer being targeted and will disappear as slabs focus

A Confirmed

Q Will there be an updated company valuation based on the Final IP survey gold results and larger than expected resource as well as the increase from recent iron ore price increases?

A  We will focus our spend on expanding the size of Ferensola’s gold endowment.  This will drive valuations performed by other parties, such as SRK

Q SULA raised £400k initially through investment, £1.47m through subscription/open offer and £250k from warrant exercise. Exactly what will be done with this money and how far will it get SULA in its gold exploration?

A We were very pleased with the support that we received from new and existing shareholders, and the market has clearly responded positively to this support and our potential with the upwards share price move.  Sula will spend this money on advancing its Ferensola gold project; as much as possible will go into the ground. 

Q  We are waiting for the drill update as stated in previous rns, are SULA delayed in announcing this news update?

A  No, we are committed to keeping the market informed of developments.  We will release all price sensitive information as soon as we possess it. 

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