Sula Iron & Gold, a London-listed mining firm focused on Sierra Leone, said on Tuesday it had found gold of almost “bonanza grade” and its board would forgo their salaries while the company exploits the resource.
The latest assay at the Ferensola gold project in the Sula Mountains of Sierra Leone shows a gold grade of 19.3 grams, or 0.7 of an ounce, per tonne, the company said.
“These high-grade results once more provide strong evidence that in Ferensola we have a serious gold province,” said Sula CEO Roger Murphy, adding that the find was “on the verge of bonanza grade”.
The gold price on world markets is about $1,300 per ounce .
Along with the rest of the mining sector, Sula was hard hit by the commodity price crash of 2015-16 and, in common with other companies with small market values in areas perceived as high risk, it is struggling to attract finance.
Murphy said the plan was to enter a low-cost phase of analysing data and suspending board pay for the foreseeable future to maximise shareholder returns. He is the company’s eighth largest shareholder, according to Reuters data.
Murphy also said Sula, which has iron ore deposits as well as gold, would be happy to “do a deal” with China’s Shandong Iron and Steel Group, which operates the neighbouring Tonkolili iron ore mine.
The advantage of gold for a small mining company is that it requires little infrastucture compared with a bulk commodity such as iron ore.
There is no official definition of bonanza grade for gold but analysts say most gold mines around the world only produce about 5 to 6 grams per tonne. One of the highest grade mines in the world is Klondex’s Fire Creek in Nevada where reserves are 42 grams per tonne, the company website says.
Analysts remain cautious and WH Ireland on Tuesday maintained its “speculative buy” recommendation on Sula stock. (Reporting by Barbara Lewis; editing by David Clarke)