Shares in Sirius Exploration are currently suspended pending the reverse acquisition of Njahili Resources Ltd. The enlarged AIM quoted company with base metals, diamond and gold assets in Macedonia and West Africa will be renamed Xanadu Resources Plc**. The newly formed group has an experienced management with the necessary skills to take projects through exploration and into production. The Company believes it has small scale assets which can be put into production in the near term which provide cash flow and profitability. Moreover, in Bagla Hill, it has an iron ore asset with the longer term potential to be a “company maker.”

With its experienced board, Xanadu aims to become a vehicle for further takeovers and purchases of quality assets from distressed or disinterested vendors. This company is therefore poised to play an active role in the consolidation of small cap AIM & Plus companies.

We have valued Sirius Exploration on a sum-of-the-parts valuation at £34 million, using a heavily-risk weighted model approach for each property. The components of the valuation are largely the near term production and evaluation properties with an estimated heavily risk weighted value of £26.45 million. The exploration portfolio is worth, we believe, £7.55 million. Currently, the company’s net cash position is negligible, but post the proposed £6 million fundraising, the company will have a net cash figure of approximately £5.5 million. We have not included this amount into our valuation. Post-acquisition,
the enlarged issued share capital of the company will stand at 191,331,971 shares.

Our sum-of-the-parts valuation for Sirius is 17.5 p per share. Our valuation reflects a number of factors, namely the risks inherent to each project and the significant work that needs to be conducted for an increase and upgrade of the established resource at near production stage projects. The exploration portfolio consists of properties that are in prospective mineral rich areas, with only limited exploration being carried out on these projects to date. Clearly the combined enlarged entity has assembled a diverse portfolio of mineral exploration projects distributed throughout Sierra Leone and to a lesser extent, Macedonia. As the company targets potentially open pittable, alluvial resources and higher grade zones that can be economically exploited by modern mining methods, there is scope for our valuation to increase sharply if there is additional exploration success and our risk weightings will also reduce significantly as the more advanced projects come on-stream within the next 2 years. At 6.375p, our stance would be speculative buy with a target price of 17.5p.

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