Nick Warrell, chief executive officer of Sula Iron & Gold (SULA), determinedly exudes cheerful confidence as the company works to establish a formal resource estimate for its Ferensola iron project in the mineral-rich West African state of Sierra Leone.
Bears fret about a potential global oversupply of iron ore and a weakening of China’s demand for the stuff as the People’s Republic’s economy slows.
Geochemical and geophysical surveys have identified several promising gold targets at Ferensola, Sula intends both to investigate these and to start quantifying the direct shipping iron ore (DSO) content at Ferensola, where consultant SRK has already forecast a 500 million-tonne potential iron ore deposit, by the end of May.
With iron ore recently hovering around $112 a tonne and pessimists talking of $100 or below, the entrepreneurial Warrell, a founder of London Mining, former owner of the Gwynedd gold mine in Wales and honorary Paramount Chief of the Diang Chiefdom near the company’s present concession, cites the 22 Chinese companies he says are actively looking for iron in Sierra Leone. Autumn drilling showed intercepts of up to 14.59 metres with 15.54 per cent iron and 29.7 metres with 52.25 per cent iron, though the 500 million-tonne target comes with a lower estimated grade of 30.4 per cent iron.
Ferensola, which lies in the Sula-Kangari greenstone belt, is close to African Minerals’ 12.8 billion-tonne Tonkolili iron ore mine and, according to SRK, shares many of its characteristics. Having started drilling on 9 April, Sula is looking for the first assay results late next month.
According to Warrell, the company, which lost £2 million in the year to last September, is fully funded for the next 12 months, having raised £3.65 million since then, including £2.25 million in March at 2.25p.That compares with today’s price of 3.15p, both a long way off Sula’s float price of 6p in 2012, though at least well above the shares’ 12-month low of 1.35p.
Management owns about 20 per cent of Sula, whose goal, says Warrell, is not to develop a mine, still less to mine one, but to establish the existence of a desirable iron ore property at Ferensola ‘and then be taken out’. The company has a similar objective for its gold projects in the same area, principally Dalakuru, where past work has yielded intercepts of 10.46 grams of gold per tonne of ore, but also Yanfarina and Lagunda, and, argues Warrell, latest geochemistry and geophysics should make the gold side ‘very attractive for joint venture partners.’
If sentiment for iron ore improves and Sula’s gold prospects prove worth pursuing, the shares could bounce, though, of course, risk remains. |
