16 December 2014 Sula Iron & Gold plc (Sula or the … · 16 December 2014 Sula Iron & Gold plc...

16 December 2014

Sula Iron & Gold plc ("Sula" or the "Company")

MAIDEN MINERAL RESOURCE ESTIMATE DECLARED AT FERENSOLA

Total oxide resource of 55.5Mt @45.39% Fe represents easily accessible mineralisation with a total resource of 514.5Mt @ 31.8% Fe

Deep exploration target outlined by SRK suggests further resource base

Sula Iron & Gold plc, the exploration and development company focused on iron ore, gold and coltan in Sierra Leone, is pleased to announce a Maiden JORC Compliant Mineral Resource Estimate at its 100% owned Ferensola iron ore project in Sierra Leone ("Ferensola"). Highlights:

• Five distinct iron mineralised units, consisting of unique material zones based upon characteristics and iron grades, have been identified at Ferensola. Total JORC compliant Mineral Resources for each of the given separate zones are:

o Oxidised, laterite Cap : 8.3Mt @ 42.95% Fe;

o Oxidised, high grade: 7.4Mt @ 56.71% Fe;

o Oxidised, Saprolite: 8.1Mt @ 39.01% Fe;

o Oxidised, Upper Saprolite: 31.7Mt @ 45.02% Fe; and

o Fresh Magnetite ore: 459Mt @ 30.2% Fe.

• Total oxidised resource of 55.5Mt @ 45.39% Fe over the full 2.8km strike of BIF1;

• Total Indicated mineral resource of 17.6Mt @ 45.6% Fe;

• Total Inferred mineral resource of 496.9Mt @ 31.3% Fe; and

• Mineral Resource Estimate prepared by SRK who have in addition identified an exploration target comprising an additional 100Mt to 250Mt, with a grade range of between 20% Fe and 35% Fe that lies below the optimised pit shell.

NB. The Mineral Resource quoted above occurs entirely within the license boundary and within an optimised pit shell though the pit shell itself was not constrained by license boundary limitations. Commenting on today’s landmark news, Nick Warrell CEO of Sula, said: “We are very pleased to update our shareholders and the market with our Mineral Resource Statement. Back in 2013 we set ourselves the target of identifying a 500Mt iron ore resource and today’s results reflect the past two year work programme. The total oxidised resource of 55.5Mt @45.39% Fe represents easily accessible mineralisation at surface. This, coupled with exceeding the SRK ES Exploration Target of 500Mt, is pleasing. “Furthermore, the deep exploration target of 100-250Mt at BIF1 outlined by SRK suggests that we can add further to the resource base.”

Sula Iron & Gold plc Nick Warrell / Matt Wood

+44 (0) 20 7583 8304

Cairn Financial Advisers LLP (Nominated Adviser) James Caithie / Avi Robinson

+44 (0) 20 7148 7900

VSA Capital Limited (Broker) Bhavesh Patel / Richard Buckle

+44 (0) 20 3617 5177

Strand Hanson (Financial Adviser) Simon Raggett / James Harris

+44 (0) 20 7409 3494

Yellow Jersey PR (Financial PR) Dominic Barretto / Kelsey Traynor

+44 (0) 7768 537 739

Project Background

The Ferensola License area lies largely within the rugged greenstone belt of the southern Sula

Mountain Range, approximately 20 km northeast of the town of Bumbuna. Ferensola is an

exploration project comprising a BIF with a supergene-enriched oxide cap. Ferensola is thought to be a northerly extension of the Kasafoni deposit, which is part of the Tonkolili Iron Ore Project, owned by African Minerals Ltd, which lies directly to the south and adjacent to the Ferensola licence.

Mineral Resource Estimation

This Mineral Resource Estimate (“MRE”) has been prepared by SRK Consulting (UK) Ltd (“SRK”) following the guidelines of the Australasian Code for Reporting of Exploration Results, Mineral

Resources and Ore Reserves 2012 Edition (“the JORC Code”).

The definitions of Measured, Indicated and Inferred Mineral Resources as used in the report, are as defined in the JORC code prepared by the Joint Ore Reserves Committee of the Australasian Institute

of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia (“

JORC”).

SRK has conducted a site visit to the Ferensola Project during the course of the drilling campaigns undertaken by Sula. The site visit was undertaken by Mr Colin Rawbone, Senior Geologist with SRK, who is a Competent Person and Chartered Professional Member of the AusIMM (Membership ID:313771). During the site visit, Mr Rawbone undertook an associated review of all on site procedures and protocols.

The Mineral Resource Statement (“MRS”) generated by SRK has been restricted to all classified material falling within the license area and within an optimised pit shell representing a metal price of USD150c/dmtu for magnetite and sinter fines concentrate (The metal price selected is based upon SRK’s internal consensus market forecast data). The different ore-types have been reported based on various material specific marginal cut-off grades which have been derived by SRK as a result of metallurgical test work undertaken. This represents the material which SRK considers has reasonable prospect for eventual economic extraction based on the above pit optimisation and processing recovery analysis. The MRS for Ferensola is shown in Table 1.

The pit outline used to report the final MRS has not been restricted to the license boundary i.e. the projected pit edge extends into the adjacent license and mining would need to occur in this in order to exploit the Mineral Resource reported. For clarity therefore, SRK has also derived a pit outline that occurs entirely within the Ferensola license and does not encroach onto the adjacent license. If the company is only able to mine material falling within this pit then this would exclude 72.3 Mt of the reported Mineral Resource, of which 71.7 Mt% (99%) is from the magnetite BIF, 0.5 Mt is from

domain 100 and 0.1 Mt is from domain 130 even though this does occur within the license boundary.

Table 1: Mineral Resource Statement for Ferensola

Domain CoG Resource Category Tonnes

(Mt) Fe % SiO2 % Al2O3 % P %

Oxidised, Laterite Cap 17%

Measured

Indicated 1.8 39.9 3.89 22.59 0.07

Meas. + Ind. 1.8 39.9 3.89 22.59 0.07

Inferred 6.5 43.8 2.62 20.00 0.07

Oxidised High Grade 5%

Measured

Indicated 3.3 56.6 5.77 5.66 0.07

Meas. + Ind. 3.3 56.6 5.77 5.66 0.07

Inferred 4.1 56.8 5.30 5.17 0.07

Oxidised Saprolite 17%

Measured

Indicated 4.9 38.3 35.19 3.75 0.05

Meas. + Ind. 4.9 38.3 35.19 3.75 0.05

Inferred 3.2 40.1 33.44 3.21 0.06

Oxidised Upper Saprolite 13%

Measured

Indicated 7.6 47.0 9.86 12.34 0.08

Meas. + Ind. 7.6 47.0 9.86 12.34 0.08

Inferred 24.1 44.4 13.74 12.39 0.08

Fresh Magnetite BIF 7%

Measured

Indicated

Meas. + Ind.

Inferred 459.0 30.2 44.29 4.71 0.04

TOTAL

Measured

Indicated 17.6 45.6 15.60 9.72 0.07

Meas. + Ind. 17.6 45.6 15.60 9.72 0.07

Inferred 496.9 31.3 41.88 5.27 0.05

Notes:

(1) Mineral Resources which are not Mineral Reserves have no demonstrated economic viability

(2) The effective date of the Mineral Resource is 12 December 2014

(3) The Mineral Resource Estimate for Ferensola was constrained within lithological and grade based solids and

within a Lerchs-Grossman optimised pit shell defined by the following assumptions; metal price of US150c/dmtu

based on SRK’s internal consensus market forecast data; slope angles of 43º in the oxide zones and 50º in the

fresh material, depending on respective location; a mining recovery of 97.0%; a mining dilution of 3.0%; a base

case mining cost of USD1.50/t and an incremental mine operating costs of USD0.03/t/12 m below the 670 m

reference RL and USD0.03/t/12 m above the 670 m reference RL; process operating costs of USD2.50/t crushed

DSO and high grade saprolite, all other saprolite crushed USD4.00/t and USD5.50/t crushed BIF; Fe recovery of

30% for the Laterite cap, 100% for the High Grade oxide, 30% for Saprolite, 40% for the upper saprolite and 80%

for the fresh Magnetite BIF.

(4) Mineral Resources at Ferensola have been classified according to the JORC code by Howard Baker

(FAusIMM(CP)), an independent Competent Person as recognised by JORC.

The Competent Person responsible for this Mineral Resource Statement is Mr Howard Baker (FAusIMM(CP)). Mr Baker is a CP as defined by the JORC Code and a Principal Resource Geologist with SRK who is a Chartered Professional Fellow of the AusIMM (Membership ID: 224239). Sula and SRK are not aware of any additional factors (environmental, legal, title, taxation, socio-economic, marketing, political, or other relevant factors) that could have material impacts on the Mineral Resource Estimate. The quantity and grade of reported Inferred Mineral Resources in this estimation are uncertain in nature and there has been insufficient exploration to further define these as Indicated or Measured Mineral Resource respectively; and it is uncertain if further exploration will result in upgrading them to an Indicated or Measured Mineral Resource category. Ferensola Exploration Target SRK recognises that there is potential to increase the Mineral Resource at Ferensola through deep drilling that targets material that falls beneath the base of the optimised pit shell where the deposit remains open at depth. This material may be considered by SRK to be potentially economic, should sufficient exploration data be collected that confirms the geometry and continuation of the mineralisation. SRK has identified an Exploration Target comprising an additional 100 to 250 Mt, with a grade range of 29 and 35% Fe that lies below the optimised pit shell used for constraining the Mineral Resource reported above. SRK notes that the Exploration Target is conceptual in nature, that there has been insufficient exploration to estimate a Mineral Resource in this area and that it is uncertain if further exploration will result in the estimation of a Mineral Resource in this area. In addition, SRK recognises the potential for further conversion from the Inferred category to the Indicated and or Measured categories following further exploration. Database Validation The QA/QC programme for Ferensola consists of alternating the insertion of a blank, standard and duplicate sample on a regular basis within the sample sequence. The Company uses standards with varying grades representative of the deposit which are also alternated. All samples have been prepared at the ALS laboratory in Monrovia, Liberia and assayed at the accredited analytical facility in County Galway, Ireland. SRK found that the results of the above described QA/QC programme indicate that Ferensola’s assay databases were appropriate for mineral resource estimation. Data Verification Mr Colin Rawbone and Mr Howard Baker as the Competent Person’s completed the verification of data on which the MRE is based. This verification included an assessment of QA/QC data, sample preparation and assay methodologies, density data, data inputs and survey data used in the estimate. Data was validated by using field checks, statistical methods and evaluating the Company's protocols. MRE Drilling A 3D geological model based on a total of 85 diamond drill holes for 8,873 m has been used to develop the model used in the MRE. This includes 3,863 raw Fe assays from project inception up to the cut-off date of September 2014.

Ferensola Deposit Characteristics Ferensola covers a 2.8 km portion of a larger 20 km strike length magnetic anomaly extending SW from the license area. The target forms a BIF with an oxidised cap of dominantly haematite / magnetite mineralisation. Capped by a ~10 m thick laterite, the oxide mineralisation consists of friable to weakly indurated haematite rich saprolite which has been subdivided into multiple unique domains based principally on the relationships between Fe, Al2O3 and SiO2. The oxide material has been subjected to supergene enrichment resulting in the progressive dissolution of SiO2 that increases with depth. As such, the general observed trend shows an increase in Fe grade moving up the sequence away from the base of oxidation which is accompanied by a decrease in the SiO2 content within the oxide material. In addition to this sequence two units of elevated/enriched material, characterised by low Al2O3 have been interpreted and are considered a reflection of a fluctuating water table. The spatial relationships are reflected in Figure 1.

Figure 1: Ferensola deposit oxide domains

Fresh BIF mineralisation is modelled into five independent strike continuous packages separated by intercalated metasediments. The BIF units are comprised of laminated to bedded magnetite rich BIF horizons and, weakly foliated aggregates of magnetite. Basement footwall mineralisation consists of coarse grained mica bearing gneiss. The hanging wall is comprised of biotite and sericite rich intercalated meta-sediment.

Figure 2: Strike continuous BIF packages modelled at Ferensola

Geological Modelling, Resource Estimation Assumptions, Parameters and Methods SRK created a geological model based on the lithological logging, assay and magnetic susceptibility data, enabling the hanging wall and footwall contacts of the BIF unit to be modelled and a three dimensional solid model to be created. The oxide cap was modelled using statistical grade

boundaries, the magnetic susceptibility data and Loss on Ignition values to determine the base of oxidation. A 2 m composite file was used in a geostatistical study (variography and Quantitative Kriging Neighbourhood Analysis, "QKNA") that enabled Ordinary Kriging ("OK") to be used as the main grade interpolation method. The interpolation used an elliptical search based on the presence of primary fabric of the fresh to semi fresh units and following the predominant dip and dip direction and topographic parallel elliptical searches in the highly weathered oxide units. SRK also utilised Datamine’s dynamic anisotropy function to honour slight changes in the overall dip and dip direction of the data. The results of the variography and the QKNA were utilised to determine the most appropriate search and estimation parameters. The interpolated block model was validated through visual checks and a comparison of the mean input composite and output model grades. SRK is confident that the interpolated block grades are a reasonable reflection of the available sample data. Competent Persons The information in this press release that relates to the current drilling programme is based on information compiled by Mr Colin Rawbone, who is a Chartered Professional Member of the Australasian Institute of Mining and Metallurgy ("AusIMM"). Mr Rawbone is a full time employee of SRK and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Mr Colin Rawbone has reviewed this press release and consents to the inclusion in the press release of the matters based on his information in the form and context in which this appears. In addition to the above, this press release has been compiled under the direction of Mr Howard Baker, who is a Chartered Professional Fellow of the Australasian Institute of Mining and Metallurgy ("AusIMM"). Mr Baker is a full time employee of SRK Consulting (UK) Ltd and has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Mr Baker has reviewed this press release and consents to the inclusion in the press release of the matters based on his information in the form and context in which this appears. Forward-looking Statements This announcement includes certain forward-looking statements. All statements, other than statements of historical fact, included herein are forward-looking statements that involve various known and unknown risks and uncertainties as well as other factors. Such forward looking statements are subject to a number of risks and uncertainties that may cause actual results or events to differ materially from current expectations, including delays in obtaining or failure to obtain required regulatory approvals. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. 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 Ferensola project in Northern Sierra Leone, which is highly prospective for iron and gold. The 153 sq. km license area is contiguous to African Minerals’ Tonkolili Iron Mine, which has a JORC resource of 12.8 billion tonnes iron mineralisation. Significant Greenstone Belt-style gold mineralisation has also been identified at various prospects within the license area. Five target areas for hard rock gold mineralisation have been identified

based on the location of historic drill intercepts, the source areas for alluvial gold deposits, and the position of major structures as defined by airborne magnetic data and drainage orientation. The information in this release that relates to Exploration Results has been reviewed by Mr Andrew Dacey, Non-Executive Technical Director of Sula Iron & Gold plc. Mr Dacey is a Fellow of the Institute of Materials Minerals and Mining, a Registered Professional Geologist with the Australian Institute of Geoscientists and a Competent Person as defined in the Australasian Code for Reporting of exploration results and Mineral Resources and Ore Reserves.

APPENDIX A. JORC CODE, 2012 Edition, Table 1 (Section 1 and 2)

Section 1 Sampling Techniques and Data

Criteria JORC Code explanation Commentary

Sampling

techniques • Nature and quality of

sampling (eg cut channels,

random chips, or specific

specialised industry standard

measurement tools

appropriate to the minerals

under investigation, such as

down hole gamma sondes, or

handheld XRF instruments,

etc). These examples should

not be taken as limiting the

broad meaning of sampling.

Diamond core samples collected by Sula staff were of half HQ

or NQ core, with the sample cut so as to equally divide

structures. Sample lengths ranged from 0.5 m to 2 m. Sample

intervals were not matched to geological boundaries.

• Include reference to

measures taken to ensure

sample representivity and the

appropriate calibration of any

measurement tools or

systems used.

Sula used a minimum sample size of 0.25 kg per core sample

dispatched. They routinely submitted blanks, duplicate and

certified reference material.

• Aspects of the determination

of mineralisation that are

Material to the Public Report.

Diamond core samples were HQ diameter, and were cut in half

using a core saw, dividing geological structures equally where

possible. Some samples demonstrated a significant variance

when compared to duplicate samples, but this affect was

observed to be minor, with most samples showing good

repeatability.

Sample preparation techniques were deemed to be of

international best practice.


• In cases where ‘industry

standard’ work has been

done this would be relatively

simple (eg ‘reverse

circulation drilling was used

to obtain 1 m samples from

which 3 kg was pulverised to

produce a 30 g charge for fire

assay’). In other cases more

explanation may be required,

such as where there is

coarse gold that has inherent

sampling problems. Unusual

commodities or

mineralisation types (eg

submarine nodules) may

warrant disclosure of detailed

information.

All sampling preparation has been undertaken by an accredited

laboratory; preparation of samples has been undertaken

through ALS Monrovia and XRF analysis has been undertaken

by ALS based in Ireland.

Drilling

techniques • Drill type (eg core, reverse

circulation, open-hole

hammer, rotary air blast,

auger, Bangka, sonic, etc)

and details (eg core

diameter, triple or standard

tube, depth of diamond tails,

face-sampling bit or other

type, whether core is oriented

and if so, by what method,

etc).

Drill methods were diamond drilling of dominantly HQ core

using standard tubes for the drill programmes undertaken. A

CS1000 man portable drill rig operated by a reputable company

acting under industry best practices.

Core on vertical holes targeting oxide material has not been

orientated.

Drill sample

recovery • Method of recording and

assessing core and chip

sample recoveries and

results assessed.

Drill core recovery was recorded for every hole through routine

monitoring of drill rod depth and recovered core. Recoveries

for each hole were graphically plotted and show total recovery

better than 85%. Where recovery has been recorded these

intervals are identified and flagged for re-drilling as required.

• Measures taken to maximise

sample recovery and ensure

representative nature of the

samples.

Supervision of the diamond drilling by Sula geologists ensured

sample recovery was good, and that samples were

representative without contamination issues. Where poor

recovery has been encountered contractual agreements with

the drill company incur penalties and re-drill policies.


• Whether a relationship exists

between sample recovery

and grade and whether

sample bias may have

occurred due to preferential

loss/gain of fine/coarse

material.

No studies are known to have been completed on sample bias.

Logging • Whether core and chip

samples have been

geologically and

geotechnically logged to a

level of detail to support

appropriate Mineral Resource

estimation, mining studies

and metallurgical studies.

Geological logging for diamond core includes a descriptive log

with some quantitative logging of mineralogy and alteration, in

addition to plotting of assays and the geology as a graphic log.

No geotechnical logging has been undertaken on oxide material

due to core fragmentation and lack of orientation.

• Whether logging is qualitative

or quantitative in nature. Core

(or costean, channel, etc)

photography.

Logging is qualitative, with the exception of some quantitative

logging of mineralogical and alteration content.

Core photography is undertaken for both half and whole core

on a box by box basis.

• The total length and

percentage of the relevant

intersections logged.

100% of diamond core samples can be correlated to graphic

logs of the diamond drill hole.

Sub-sampling

techniques and

sample

preparation

• If core, whether cut or sawn

and whether quarter, half or

all core taken.

Drill core samples were half HQ core, where the core was cut to

equally divide significant structures in the rock. Half core is

dispatched for analytical process’s

• If non-core, whether riffled,

tube sampled, rotary split, etc

and whether sampled wet or

dry.

All sampling relates to drill core

• For all sample types, the

nature, quality and

appropriateness of the

sample preparation

technique.

Diamond core samples have been analysed by XRF for a full

suite of analytes including but not limited to Fe_%, Al2O3_%,

SiO2_% and P_%. In addition to this analysis the LOI was also

recorded.

• Quality control procedures

adopted for all sub-sampling

stages to maximise

representivity of samples.

For diamond drill core sampling, standards, duplicates and

blanks were interleaved randomly with the routine samples,

every 20th sample; targeting a frequency of 5%


• Measures taken to ensure

that the sampling is

representative of the in situ

material collected, including

for instance results for field

duplicate/second-half

sampling.

Field duplicates are submitted as 1 in 20 insertion rate, where

duplicates are selected the remaining half core is split to

produce a field based quarter core sample for comparative

studies.

• Whether sample sizes are

appropriate to the grain size

of the material being

sampled.

Diamond core samples were half HQ core, which is a large

diameter core for exploration drilling.

Quality of assay

data and

laboratory tests

• The nature, quality and

appropriateness of the

assaying and laboratory

procedures used and

whether the technique is

considered partial or total.

SRK deem the accredited laboratory and the requested analysis

to be suitable and sufficient for this type and style of

mineralisation deposit

• For geophysical tools,

spectrometers, handheld

XRF instruments, etc, the

parameters used in

determining the analysis

including instrument make

and model, reading times,

calibrations factors applied

and their derivation, etc.

No geophysical tools were employed, Magnetic susceptibility

has been measured when drilling below the oxide cap t0o aid

on site identification of the target material.

• Nature of quality control

procedures adopted (eg

standards, blanks, duplicates,

external laboratory checks)

and whether acceptable

levels of accuracy (ie lack of

bias) and precision have

been established.

For diamond drill core sampling, standards, duplicates and

blanks were interleaved randomly with the routine samples,

every 20th sample; targeting a frequency of 5%.

Samples are reviewed on a batch by batch basis to identify any

bias with in the analytical process.

Verification of

sampling and

assaying

• The verification of significant

intersections by either

independent or alternative

company personnel.

Mr Colin Rawbone of SRK has independently verified the

intersections derived from lithological and grade logging.

• The use of twinned holes. No twinned holes have been used to verify sampling and

assaying.


• Documentation of primary

data, data entry procedures,

data verification, data storage

(physical and electronic)

protocols.

Data has been compiled from good quality paper plans and

digitally compiled at a later date.

The data has been assimilated into the Company’s Microsoft

Excel database, after compilation and validation in Mapinfo

Software.

• Discuss any adjustment to

assay data.

No adjustment to assay data has been undertaken

Location of data

points • Accuracy and quality of

surveys used to locate drill

holes (collar and down-hole

surveys), trenches, mine

workings and other locations

used in Mineral Resource

estimation.

All drill collars are positioned with handheld GPS to an accuracy

of within 5m.

Down hole surveys are not utilised on shallow vertical drill

holes but where required on inclined holes have been

undertaken using REFLEX tools

• Specification of the grid

system used.

WGS 84 UTM Zone 29 North

• Quality and adequacy of

topographic control.

An aerial survey to 0.5 meter scale accuracy has been

undertaken

Data spacing

and distribution • Data spacing for reporting of

Exploration Results.

Diamond drill core samples are collected over contiguous

intervals of alteration as per logging. There are lengths of

diamond core not sampled. Some sampled intervals were re‐

sampled as composites, or as single duplicate samples.

Drilling has taken place on 400m spaced drill fences at 50m

intervals

• Whether the data spacing

and distribution is sufficient to

establish the degree of

geological and grade

continuity appropriate for the

Mineral Resource and Ore

Reserve estimation

procedure(s) and

classifications applied.

No Mineral Resource or Ore Reserve calculations have been

reported on the deposit at this stage.

• Whether sample compositing

has been applied.

Sample compositing was performed for reporting of diamond

drill core results, based on a weighted average as a function of

sample length versus grade.


Orientation of

data in relation

to geological

structure

• Whether the orientation of

sampling achieves unbiased

sampling of possible

structures and the extent to

which this is known,

considering the deposit type.

Drilling has been best orientated to allow a perpendicular

intercept of the surface oxide zone to be achieved.

• If the relationship between

the drilling orientation and the

orientation of key mineralised

structures is considered to

have introduced a sampling

bias, this should be assessed

and reported if material.

Based on current information no bias has been introduced

based on the orientation of drilling and relationship with key

structures.

Sample security • The measures taken to

ensure sample security.

Sula geologists maintain a full chain of custody of samples as

they leave site and are transported to the process laboratory.

Upon sample return sufficient checks and balances are

undertaken to ensure samples have not been tampered with.

Audits or

reviews • The results of any audits or

reviews of sampling

techniques and data.

All logging and sampling techniques have been audited during

an independent site visit undertaken by Mr Colin Rawbone of

SRK

Section 2 Reporting of Exploration Results

(Criteria listed in the preceding section also apply to this section.)

JORC Code explanation Commentary

Mineral tenement

and land tenure

status

• Type, reference

name/number, location

and ownership including

agreements or material

issues with third parties

such as joint ventures,

partnerships, overriding

royalties, native title

interests, historical sites,

wilderness or national

park and environmental

settings.

EL54/2011 issued by the Government of Sierra Leone 23rd August 2011 to Blue Horizon (SL Ltd). Blue Horizon (SL Ltd) is a 100% owned subsidiary of Sula Iron & Gold Plc. Full due diligence on the license was carried out by Sula’s SL lawyers and UK lawyers prior to IPO in October 2012. There are no joint ventures in place save an MOU with the Town Chief and his Elders of Dalakuru Town regarding the buildings in Dalakuru base camp. There are no historical sites, wilderness or national park and environmental settings within our demarcated license area.


• The security of the tenure

held at the time of

reporting along with any

known impediments to

obtaining a license to

operate in the area.

As above

Exploration done

by other parties • Acknowledgment and

appraisal of exploration by

other parties.

Exploration carried out by Mano River during the 1990s. Almost impossible to appraise the exploration as little or no records of the exploration were submitted to the Ministry of Mineral Resources.

Geology • Deposit type, geological

setting and style of

mineralisation.

The Ferensola project appears to be a typical weathered BIF

with an underlying fresh magnetite BIF.

Drill hole

Information • A summary of all

information material to the

understanding of the

exploration results

including a tabulation of

the following information

for all Material drill holes:

o easting and northing of

the drill hole collar

o elevation or RL

(Reduced Level –

elevation above sea

level in metres) of the

drill hole collar

o dip and azimuth of the

hole

o down hole length and

interception depth

o hole length.

All tabulated exploration collars are included in the release in

appendix B.

Table depicts all intercepts where drill holes have intercepted

mineralisation. Intercept lengths from diamond drilling are

presented as down hole lengths, not true lengths, and this is

stated in the release.


• If the exclusion of this

information is justified on

the basis that the

information is not Material

and this exclusion does

not detract from the

understanding of the

report, the Competent

Person should clearly

explain why this is the

case.

Intercepts have been omitted from this report where drill holes

have not intercepted the interpreted mineralisation. Drill

collars for each of these holes however have been recorded in

Appendix B

Data aggregation

methods • In reporting Exploration

Results, weighting

averaging techniques,

maximum and/or

minimum grade

truncations (eg cutting of

high grades) and cut-off

grades are usually

Material and should be

stated.

Weighting is calculated as a function of each sample length

multiplied by each grade, with the summed product divided by

the total sample length, to present composited intervals. A high

grade portion of these intercepts has been highlighted using a

55% Fe Cut-off grade where intervals were greater than 5m.

• Where aggregate

intercepts incorporate

short lengths of high

grade results and longer

lengths of low grade

results, the procedure

used for such aggregation

should be stated and

some typical examples of

such aggregations should

be shown in detail.

Where intercepts are reported as longer lengths of lower

grade, it is clearly stated that the higher incepts within are part

of the lower grade intercept, not in addition to the low grade

intercept.

• The assumptions used for

any reporting of metal

equivalent values should

be clearly stated.

No metal equivalents are used for the exploration results at

Ferensola Prospect.

Relationship

between

mineralisation

widths and

• These relationships are

particularly important in

the reporting of


Diamond drill sample intercepts are reported as down hole

widths.


intercept lengths • If the geometry of the

mineralisation with

respect to the drill hole

angle is known, its nature

should be reported.

Mineralisation is considered to be steeply dipping (approx. 70°

NW) with a dominant strike NE-SW. However oxidation of this

material is deemed to have affected a horizon of material

concordant with topography. Therefore the vertical holes

currently drilled in targeting this material are deemed suitable

to intercept the primary target as close to 90° as possible.

• If it is not known and only

the down hole lengths are

reported, there should be

a clear statement to this

effect (eg ‘down hole

length, true width not

known’).

This is clearly stated in the release.

Diagrams • Appropriate maps and

sections (with scales) and

tabulations of intercepts

should be included for any

significant discovery being

reported These should

include, but not be limited

to a plan view of drill hole

collar locations and

appropriate sectional

views.

Diagrams are provided that show all surface samples and the

diamond drill hole traces in plan view, plus a cross section is

provided with the intercept locations and known geology.

Balanced reporting • Where comprehensive

reporting of all Exploration

Results is not practicable,

representative reporting of

both low and high grades

and/or widths should be

practiced to avoid

misleading reporting of


Exploration results are presented in the Table 1, regardless of

grade where mineralised material has been intercepted. Grade

has been split by lithology based on logging undertaken by the

Sula geologists.


Other substantive

exploration data • Other exploration data, if

meaningful and material,

should be reported

including (but not limited

to): geological

observations; geophysical

survey results;

geochemical survey

results; bulk samples –

size and method of

treatment; metallurgical

test results; bulk density,

groundwater, geotechnical

and rock characteristics;

potential deleterious or

contaminating

substances.

Discussion of the Ferensola Prospect geology is included in the

release.

In situ density measurements are carried out using

Archimedean principles for consolidated fresh core and are

undertaken on a lithological basis.

To date no economic or extractive measures such as bulk

samples, metallurgical testing, bulk density, groundwater,

geotechnical or rock samples have been undertaken.

Further work • The nature and scale of

planned further work (eg

tests for lateral extensions

or depth extensions or

large-scale step-out

drilling).

Drill testing is identified as future planned work. At present the

infill drilling to a 200m x 50m spacing has been commenced to

increase confidence in the initial interpretations of geometry

and grade distribution. In addition 1,500m of deep drilling has

been planned to develop the fresh magnetite BIF interpreted

below the primary oxide material.

• Diagrams clearly

highlighting the areas of

possible extensions,

including the main

geological interpretations

and future drilling areas,

provided this information

is not commercially

sensitive.

Possible extensions are indicated on the plan and cross section

provided in the release.

Section 3 Estimation and Reporting of Mineral Resources

(Criteria listed in section 1, and where relevant in section 2, also apply to this section.)



Database integrity • Measures taken to ensure that data has not been corrupted by, for example, transcription or keying errors, between its initial collection and its use for Mineral Resource estimation purposes.

• Data validation procedures used.

• Data provided by field geologists is verified and checked prior to insertion into the company database using a series of excel cross check and visual validation by the senior geologist on site.

• In addition SRK have undertaken a review of the drill holes at the core shed to check the quality of the logging, along with cross-checking assay certificates against the database. Further statistical validation of the presented database was undertaken upon final receipt using Datamine Studio 3 and

Leapfrog software.

Site visits • Comment on any site visits undertaken by the Competent Person and the outcome of those visits.

• If no site visits have been undertaken indicate why this is the case.

• A site visit to the property and inspection of the sample preparation facilities has been undertaken by Colin Rawbone, a Senior Geologist with SRK; Mr Rawbone is a Qualified Person and Chartered Professional Member of the AusIMM (313771). Mr Rawbone undertook a site visit in May 2013 during the most recent drilling campaign and has since provided technical advice with respect to the then on going drill programmes.

Geological interpretation

• Confidence in (or conversely, the uncertainty of ) the geological interpretation of the mineral deposit.

• Nature of the data used and of any assumptions made.

• The effect, if any, of alternative interpretations on Mineral Resource estimation.

• The use of geology in guiding and controlling Mineral Resource estimation.

• The factors affecting continuity both of grade and geology.

• SRK considers the geological interpretation of the deposit to be robust and in keeping with projects throughout West and Central Africa.

• SRK created a geological model based on the lithological logging, assay and magnetic susceptibility data, enabling the hanging wall and footwall contacts of the BIF unit to be modelled and a three dimensional solid model to be created. The oxide cap was modelled using statistical grade boundaries and the magnetic susceptibility data to determine the base of oxidation.

• The geological zones created are primarily based on the Fe distribution and its relationship with SiO2 and Al2O3 identified through statistical analysis and are characteristic of the Project.

• The Mineral Resource Estimation has been constrained to geological units where such units are supported by associated magnetic susceptibility and grade data provided.

• Geological and grade continuity has been supported by geo-statistical analysis (variography). Limiting factors relating to grade continuity are resultant of the spatial relationship available derived from drill spacing.

Dimensions • The extent and variability of the Mineral Resource expressed as length (along strike or otherwise), plan width, and depth below surface to the upper and lower limits of the Mineral Resource.

• The Mineral Resource Estimate is based on a 3 km portion of a larger northeast-southwest regional trending magnetite BIF. SRK has created a geological model constrained by the license holdings of the company and based on the lithological logging, assay data and magnetic susceptibility readings for the project. Deep drilling has proved the continuation of magnetite mineralisation to a depth of approximately 300 m below surface. SRK have extended this mineralisation to 500 m down dip through the modelling process (RL: 200 m).


Estimation and modelling techniques

• The nature and appropriateness of the estimation technique(s) applied and key assumptions, including treatment of extreme grade values, domaining, interpolation parameters and maximum distance of extrapolation from data points. If a computer assisted estimation method was chosen include a description of computer software and parameters used.

• The availability of check estimates, previous estimates and/or mine production records and whether the Mineral Resource estimate takes appropriate account of such data.

• The assumptions made regarding recovery of by-products.

• Estimation of deleterious elements or other non-grade variables of economic significance (eg sulphur for acid mine drainage characterisation).

• In the case of block model interpolation, the block size in relation to the average sample spacing and the search employed.

• Any assumptions behind modelling of selective mining units.

• Any assumptions about correlation between variables.

• Description of how the geological interpretation was used to control the resource estimates.

• Discussion of basis for using or not using grade cutting or capping.

• The process of validation, the checking process used, the comparison of model data to drill hole data, and use of reconciliation data if available.

• A 2 m composite file was used in a geostatistical study (variography and Quantitative Kriging Neighbourhood Analysis, "QKNA") that enabled Ordinary Kriging ("OK") to be used as the main grade interpolation method. The interpolation used an elliptical search following the predominant dip and dip direction of the geological domains. The results of the variography and the QKNA were utilised to determine the most appropriate search and estimation parameters.

• The final search ellipse dimensions and sample numbers used for the first pass interpolation were selected based on the QKNA studies. Strike and dip directions of the ellipse are based upon the geological interpretation (strike -45°, dip 110°) and the presence of primary fabrics based on the weathering intensity. Dynamic anisotropy was used in the interpolation to honor slight changes in the deposit orientations.

• Grades of Fe, LOI, Al2O3, SiO2, P, Mn, CaO, TiO2, K2O, S, and MgO were interpolated into the model.

• No grade cutting or capping was applied during this estimate.

• A single block model was created using block sizes of 25 mY by 100 mX by 10 mZ.

• The interpolated block model was validated through visual checks and a comparison of the mean input composite and output model grades. SRK is confident that the interpolated block grades are a reasonable reflection of the available sample data.

• No check estimates, historical estimates or production records are available and therefore are not accounted for in the this MRE


Moisture • Whether the tonnages are estimated on a dry basis or with natural moisture, and the method of determination of the moisture content.

Cut-off parameters • The basis of the adopted cut-off grade(s) or quality parameters applied.

• Cut off parameters have been applied to each unique material type (domain) identified. This has been derived from domain specific metallurgical test work undertaken in SGS Cornwall and verified by an accredited SRK processing engineer.

Mining factors or assumptions

• Assumptions made regarding possible mining methods, minimum mining dimensions and internal (or, if applicable, external) mining dilution. It is always necessary as part of the process of determining reasonable prospects for eventual economic extraction to consider potential mining methods, but the assumptions made regarding mining methods and parameters when estimating Mineral Resources may not always be rigorous. Where this is the case, this should be reported with an explanation of the basis of the mining assumptions made.

• The Mineral Resource Estimate for Ferensola was constrained within lithological and grade based solids and within a Lerchs-Grossman optimised pit shell defined by the following assumptions; metal price of US150c/dmtu; slope angles of 43º in the oxide zones and 50º in the fresh material, depending on respective location; a mining recovery of 97.0%; a mining dilution of 3.0%; a base case mining cost of USD1.50/t and an incremental mine operating costs of USD0.03/t/12 m below the 670 m reference RL and USD0.03/t/12 m above the 670 m reference RL; process operating costs of USD2.50/t crushed DSO and high grade saprolite, all other saprolite crushed USD4.00/t and USD5.50/t crushed BIF; Fe recovery of 30% for zone 100 (Laterite), 100% for zone 110 (High Grade), 30% for zone 120 (Saprolite), 40% for zone 130 (upper saprolite) and 80% for zone 210 (Magnetite BIF).


Metallurgical factors or assumptions

• The basis for assumptions or predictions regarding metallurgical amenability. It is always necessary as part of the process of determining reasonable prospects for eventual economic extraction to consider potential metallurgical methods, but the assumptions regarding metallurgical treatment processes and parameters made when reporting Mineral Resources may not always be rigorous. Where this is the case, this should be reported with an explanation of the basis of the metallurgical assumptions made.

Environmen-tal factors or assumptions

• Assumptions made regarding possible waste and process residue disposal options. It is always necessary as part of the process of determining reasonable prospects for eventual economic extraction to consider the potential environmental impacts of the mining and processing operation. While at this stage the determination of potential environmental impacts, particularly for a greenfields project, may not always be well advanced, the status of early consideration of these potential environmental impacts should be reported. Where these aspects have not been considered this should be reported with an explanation of the environmental assumptions made.

• Sula and SRK are not aware of any additional factors (environmental, legal, title, taxation, socio-economic, marketing, political, or other relevant factors) that have materially affected the Mineral Resource Estimate. The Ferensola deposit is a greenfield site and therefore is not affected by any mining, metallurgical or infrastructure factors.


Bulk density • Whether assumed or determined. If assumed, the basis for the assumptions. If determined, the method used, whether wet or dry, the frequency of the measurements, the nature, size and representativeness of the samples.

• The bulk density for bulk material must have been measured by methods that adequately account for void spaces (vugs, porosity, etc), moisture and differences between rock and alteration zones within the deposit.

• Discuss assumptions for bulk density estimates used in the evaluation process of the different materials.

• Bulk density readings are taken based on lithological intervals thus targeting representative samples being collected. Measurements are carried out on whole core (typically 10-15 cm pieces) using a balance with top and modified under-slung measuring capabilities with a detection limit of ±1 gm. The balance is regularly checked and re-calibrated using certified weights.

• Density measurements are carried out using Archimedean principles for consolidated fresh core. The methodology involves drying the samples using a standard oven over a predefined period of time (approximately 4hours) to generate a dry sample and weighing samples in air and water using the balance. Wrapping the porous samples in plastic wrap and/or coating in wax prior to immersion prevents the sample becoming saturated.

• Samples maintain a positive correlation with respect to Fe grade with a positive relationship between Fe grade and density for samples within the oxide and fresh BIF domains. A trend line therefore can be fitted to the data distribution and a regression formula derived to calculate bulk density in the geological model.

• SRK acknowledges that the limited data available in the oxidised domains renders the process slightly less efficient in determining accurate regression based curves for the density application. SRK does not believe this discrepancy to be material and consider this method of density determination more robust than applying average densities to the oxidised domains in the block model. It is recommended that additional density data is collated for these material types.

Classification • The basis for the classification of the Mineral Resources into varying confidence categories.

• Whether appropriate account has been taken of all relevant factors (ie relative confidence in tonnage/grade estimations, reliability of input data, confidence in continuity of geology and metal values, quality, quantity and distribution of the data).

• Whether the result appropriately reflects the

Competent Person’s view

• To classify the deposits at Ferensola, the following key indicators were used, geological complexity, quality of the data used in the estimation, assay data, density data, QA/QC results, results of the geostatistical analysis and quality of the estimated block model.

• Mineral Resources at Ferensola have been classified according to the JORC code by Howard Baker (FAusIMM(CP)), an independent Competent Person as recognized by the JORC code.


of the deposit.

Audits or reviews • The results of any audits or reviews of Mineral Resource estimates.

• This Mineral Resource Estimate has been subjected to an internal review process by SRK employees.


Discussion of relative accuracy/ confidence

• Where appropriate a statement of the relative accuracy and confidence level in the Mineral Resource estimate using an approach or procedure deemed appropriate by the Competent Person. For example, the application of statistical or geostatistical procedures to quantify the relative accuracy of the resource within stated confidence limits, or, if such an approach is not deemed appropriate, a qualitative discussion of the factors that could affect the relative accuracy and confidence of the estimate.

• The statement should specify whether it relates to global or local estimates, and, if local, state the relevant tonnages, which should be relevant to technical and economic evaluation. Documentation should include assumptions made and the procedures used.

• These statements of relative accuracy and confidence of the estimate should be compared with production data, where available.

• It is the opinion of SRK that the quantity and quality of available data is sufficient to generate Indicated and Inferred Mineral Resources and that the Mineral Resource Statement has been classified in accordance with the JORC 2012 reporting code definition standards. It has an effective date of 12 December 2014.

• The quantity and grade of reported Inferred Mineral Resources in this estimation are uncertain in nature and there has been insufficient exploration to further define these Inferred and Indicated Mineral Resources as Indicated or Measured Mineral Resource respectively; and it is uncertain if further exploration will result in upgrading them to an Indicated or Measured Mineral Resource category.

• The pit optimisation undertaken to report the final MRS has not been restricted to the license boundary with the resource pit crest being extrapolated into the adjacent license. Mineralisation however has been modelled to the license boundary only. SRK also ran a second optimisation that restricted the resource pit crest to the Ferensola license so as not to encroach on the adjacent license. As a comparison, SRK has also reported the grade and tonnage of the restricted optimization.

• The restricted optimisation, using a license constraint results in a reduction of 72.26Mt of material of which 71.66Mt% (99%) is from the magnetite BIF, 0.49Mt is from domain 100 and 0.11Mt is from domain130.

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