13th Aug 2014 08:54
LONDON (Alliance News) - Sula Iron & Gold PLC Wednesday said it has secured a GBP2.0 million equity financing facility with Darwin Strategic Ltd that can be drawn down at any time over the next five years, although the exploration and development company has no current intention of using it.
In a statement, Sula, which is focused on iron ore and gold exploration in Sierra Leone, said it has issued 1.7 million warrants to Darwin in conjunction with the equity financing facility.
If Sula wants to make a draw down under the facility, it must notify Darwin, which will then subscribe for new shares. The subscription price will be set based on the average of the three lowest closing bid prices of Sula's shares in the period following the issue of the subscription notice provided the relevant pricing period, as set by the company, is between three and 15 days. Sula said it can specify a minimum price in relation to the shares issued.
Chief Executive Nick Warrell said that the facility strengthens Sula's financing position and provides it with a "highly flexible and cost effective source of capital" if required.
"One of the key benefits of this facility is that we remain at all times in complete control over the pricing and timing of any issue of equity as it can only be used at our discretion," Warrell said.
"We have no present intention of using the EFF as we have a strong cash balance sufficient for the foreseeable future. However, it does provide us with additional fundraising options," Warrell added.
There are no penalty fees payable for not using the facility. Darwin and Sula may terminate the EFF agreement if certain conditions are not met. The maximum amount of an individual subscription notice may not exceed GBP500,000 without Darwin's permission.
The CEO said that Sula is anticipating "strong news flow" over the coming months, especially with the publication of a JORC compliant mineral resource estimate on both the DSO and fresh magnetite within its licence.
Separately, Sula said that results from its deep drilling campaign at its Ferensola project in Sierra Leone identified up to five fresh magnetite banded iron formations in its main unit.
The company said it has now received all results from its fresh magnetite targeting drilling. SRK Consulting (UK) Ltd has begun work on a mineral resource estimation for the site, Sula said.
The company's exploration camp is on "care and maintenance" currently, and will return to exploration when the rainy season ends.
"As expected, drilling has confirmed the presence of magnetite mineralisation to a depth of in excess of 400 metres from surface along the full 2.8 kilometres strike of the main banded iron formation unit, BIF 1," Warrell said.
Sula shares were trading down 4.4% at 2.20 pence Wednesday morning.
By Samuel Agini; [email protected]; @samuelagini
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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