Analyst: Stelios Stylianou

020 7562 375

Shares recommence trading – Exploration continues inMacedonia – Company remains committed to expansion by acquisition

Shares in Sirius Exploration resumed trading on AIM today, following the company’s recent announcement of the termination of the proposed acquisition of Njahili Resources. When the announcement went out on March 3rd the Company had been assured that the minimum funding needed for the deal (£2 million) was available. This, together with a committed equity facility of £3m, would have been ample to complete the deal. In the event the minimum was not forthcoming as a result of the current turbulence of the financial markets. The company was then faced with a deadline of the end of March to conclude the Njahili transaction and find new funding. Failing to do that would have meant Sirius was in danger of losing its AIM listing. The company’s Board therefore decided to re-list Sirius on AIM in order to maintain its AIM status and in the process raised
£300,000 for working capital purposes. In conjunction with the resumption of share trading in Sirius, the company released a set of final and interim year results for the year ended 31st March 2007 and period ended 31st September 2007 respectively. We understand that even though the Njahili proposed acquisition in its current form is off the cards, Sirius is still in discussions with the target company over some form of future co-operation or joint venture deal. Whilst this is a major disappointment for Sirius Exploration and its management, the company is looking forward to channeling its energy and resources in new and existing project ventures and opportunities.

Exploration continued in Macedonia

As reflected in the managing director's report in the report and accounts the company has continued exploration on its two prospects in Macedonia. Kadiica in particular is showing great promise not only with its supergene copper blanket but also clear evidence is emerging that the

mineralised system is a copper-gold one so that one should expect satellite gold deposits around the copper core. Further to this the company not only has impressively high gold assays from two small areas
sampled by Rio Tinto but also new data that a third area was mined by the Romans for precious metals. An ASTER satellite study trained on these known sub-areas has identified further targets for field testing. The current strongly supported prices of gold and copper make this prospect particularly interesting.

Still focused on expansion

In parallel, the company is looking to expand its operations following the failed attempt to acquire Njahili  Resources, using its strong management team, expertise and knowledge of the resource sector. The company intends to continue its exploration work programme on its Macedonian porphyry copper mineral properties, namely Kadiica and Osogovo. Phelps Dodge's remaining interest from the joint venture over Kadiica and Osogovo is a 1% Net Smelter Return. In addition, Sirius has use of Rio Tinto’s Macedonian database in order to identify further exploration opportunities. Undeterred by the failure to grab Njahili the company is still in discussions with various third parties over other possible acquisitions.

Summary of announced financial results

The final results for the year ended 31st March 2007 were prepared under UK GAAP, reporting a loss for the financial year of £278,703, down from £319,064, and a basic and loss per share of 0.5p, down from 0.7p. The loss for the year is attributable to administrative expenses of £280,829, down from £322,813 the year before. The interim results were prepared under IFRS, reporting a loss for the period ended 30th September 2007 of £552,973, up from £146,033, and a loss per share of 0.8p, up from 0.3p in
the previous comparative period. The loss was attributable to £162,655 administrative expenses and £391,056 exceptional costs in relation to the abortive reverse acquisition.

On the balance sheet date of 30th September 2007, the company reported net assets of £11,334, down from £452,007, principally due to the net impact of an increased loss for the period, resulting in a carried
forward retained negative earnings figure of £1.4 million, as compared to a comparative negative earnings figure of £717,761. Cash in hand was a mere £18,347, down from £117,027. This was reflected in the company’s cash flow statement where an outflow of £258,706 from operations was met by £244,970 proceeds from the issue of shares. Post the balance sheet period, the company agreed an equity credit facility agreement with an investor, which provides £300,000 in working capital funding to accelerate
the progress of its Macedonian interests.

The Company’s current properties

The Kadiica property is a copper/gold project in Macedonia with an outlined supergene copper blanket target, currently estimated at 30,000- 50,000 tonnes of copper. This has been identified in the centre area of the claim and beneath the greater part of the Bukovic Ridge. The ground magnetic survey shows a continuation of mineralization to this blanket of enriched copper, and preliminary leach tests of the blanket core indicate that mineralization is leach-able with a minimum copper recovery of 65%. Using Rio Tinto’s data under their sharing agreement, the company has identified traces of gold within the lease area, which will be investigated in more detail during the current exploration season. One of the immediate targets of the company is to continue the exploration success encountered at Kadiica by undertaking more drilling and assessing the area in and around the centre claim. The Osogovo copper project is within the Osogovo district of Macedonia, which lies close to the border with Bulgaria, known for its lead/zinc/silver
deposits at Sasa, Toranitza and Golema Reka. Phelps Dodge initially recognized that these deposits could be the outer margins of a copper porphyry system mineralization and its work along with that of Sirius
subsequently demonstrated the presence of a large low grade mineralized copper system into the Red Ridge area of Osogovo. Exploration has therefore focused on the potentially copper rich zone
between the porphyry and lead/zinc/silver mineralization. Following Sirius’ news of terminating its proposed Njahili Resources acquisition, we have downgraded our recommendation from speculative buy to a hold, reflecting the uncertainty of the next step forward and concerns about the funding position of Sirius. However, its underlying asset portfolio retains investment appeal. HOLD.

Forecast Table

This Research Note Cannot be Regarded as Impartial as GE&CR has been commissioned to produce it by Sirius Exploration. The information in this document has been obtained from sources believed to be reliable, but cannot be guaranteed. Growth Equities & Company Research is owned by t1ps.com Ltd which is commissioned by companies to produce research material under the Growth Equities & Company Research label. However the estimates and content of the reports are, in all cases, those of t1ps.com Ltd not of the companies concerned. t1ps.com Limited is regulated by the Financial Services Authority .This research report is for general guidance only and t1ps.com Ltd cannot assume legal liability for any errors or omissions it might contain. The value of investmsents can go down as well as up and you may not get back the full amount you invested. The past is not necessarily a guide to future performance. The difference between the buy price and the sell price for smaller company shares can be significant. Before investing, readers should seek professional advice from a Financial Services Authority authorised Stockbroker or Financial Adviser.
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