Time for the Sun to Rise in Nevada and beyond for Sunrise Resources?
“…with a share price which has risen steadily this year, the Sunrise Resources share price may look to expand a little more like perlite itself if the anticipated drilling programme begins to prove the CS project potential…”
If you have been fortunate enough to visit the Pantheon in Rome, you may well have wondered how something so monumental and yet ethereal as its dome could have stood for nearly 2000 years.
In addition to the architectural genius of the emperor Hadrian’s engineers, its durability is due to the supple strength of the unsung silica- and aluminium-rich material pozzolan. The Romans mastered the art of mixing pozzolan with lime to form cement-like compounds that constructed the infrastructure of empire – the roads, ports, viaducts, bridges, temples and monuments we still admire today.
This ‘Roman’ cement was displaced by Portland cement in the early 1900s. But it is in demand again today, being increasingly used to strengthen and facilitate the chemical resistance of Portland cement, and to contribute to the long process of greening the construction industry. The mix of materials used to produce Portland cement is carbon-intensive, responsible for 5pc of global CO2 emissions. Pozzolan, which derives from naturally occurring volcanic ash and pumice, ensures a more environmentally sustainable cement mix.
That matters in a world that uses prodigious amounts of concrete. Since the turn of the millennium China has poured more cement every two years than the US managed in the entire 20th century, and in the time it takes you to read this sentence the global building industry will have poured more than 19,000 bathtubs of concrete. If the cement industry were a country, it would emit more CO2 than any other nation than China and the US.
Nevada’s pozzolan and perlite potential
Sunrise Resources (AIM:SRES) is seeking to take advantage by establishing itself as one of the world’s leading pozzolan suppliers. Led by Executive Chairman, Patrick Cheetham, a former Dragon Mining and Archaean Gold director, and current Chairman of Tertiary Minerals, Sunrise is focused on realising the potential of its 100pc-owned CS Project, an asset in Nevada highly prospective for pozzolan and an associated mineral, perlite.
Perlite is a glassy volcanic raw material which when heated in a furnace pops like popcorn, expanding into a pale low density material used in various household and industrial applications, including garden pots that aid water retention and aeration, insulation and fire proofing, paint texturing, plaster and concrete fillers, and industrial cryogenic storage vessels.
The CS Project field’s lunar landscape is marked by enigmatic peaks formed by significant deposits of pozzolan, which extend below the level of the plane for some 150 feet. Preparations are well advanced for a drilling campaign: 34 drill holes and 11 trenches have been completed; extensive analysis of a range of pozzolan and perlite samples has confirmed their commercial quality; the necessary permits have been secured from the US Bureau of Land Management; and an environmental assessment completed successfully.
Sunrise’s most most recent production update, published on 27 October, announced that test perlite samples are being sent to five prospective customers for testing in their commercial facilities. A mobile crushing and screening plant is being constructed onsite to process the 100-ton bulk sample, a prototype for the first production facility planned by the company. Sunrise also wants to build a grinding facility to produce a fine ground pozzolan ready for sale.
The company is moving forward with detailed engineering and financial planning with a view to beginning commercial production next spring. And it has published a 27-year mine plan that includes a four-phase pit design targeting production of 14.5 million tons of pozzolan, starting at rate of 100,000 tonnes per year climbing up to 500,000 tonnes per year, and 1.3 million tons perlite starting at minimum rate of 20,000 tonnes per year climbing up to 100,000 tonnes per year.
Moving into a changing market
Sunrise is hoping to take advantage of changing dynamics within the American pozzolan and perlite markets. Until the past few years demand for US pozzolan has been supplied principally as the by-produce of coal-fired power stations, notably fly ash. But that supply has been falling dramatically over the past decade due to the rapid closure of coal-fired power plants across the country in response to tougher environmental regulations and the decline in the cost of natural gas and renewables. Since 2010 half of America’s coal-fired power stations have been closed or scheduled for closure.
Natural pozzolan of the kind Sunrise plans to mine is filling the supply gap. The company is ideally located to address a particularly acute shortage affecting the west coast pozzolan and perlite markets caused by the closure of the region’s largest coal-fired power station in Arizona, which has taken 500,000 tonnes per year of high-quality fly ash off the market. Sunrise hopes to meet the demands of the concrete companies that had come to rely on the ready supply of fly ash pozzolan the station produced.
Opportunities are also opening in the US perlite market. Perlite is a particularly effective medium for the cultivation of cannabis, a market rapidly growing in North America, and beyond, as the plant is legalised: the global legal cannabis market was worth an estimated $12.2 billion in 2018 and is projected to grow at a compound annual rate of 26.7pc.
Preparing for launch
Sunrise’s aspirations for the CS Project are supported by the company’s legacy portfolio of drill-ready precious and base metal projects, which include the Clayton Silver-Gold and Newark Gold projects in Nevada, and the Bakers Gold Project in Australia. The company’s October update included news of progress towards the start of drilling at Clayton and preparations for drilling at Newark and Baker’s.
Sunrise intends to sell or make these opportunities available as joint ventures to allow it to concentrate executive, operations and financial resources on advancing the CS Project through to production. The company is fully funded for all of its planned work programmes, with a £750,000 placing this August following £200,000 and £350,000 fundraises in February and last November. Its most recent half-yearly results for the year ended 31 March announced a small group loss for the six-months’ period of £151,378, as compared to £157,139 for the six months to 31 March 2019.
The pandemic has so far had little impact on the company’s progress. It has been able to purse its preparatory work without issue so far this year, and the scheduled commencement of its drilling programme next year may coincide with an easing of corona restrictions.
Sunrise Resources would seem, then, to be an interesting prospect for commodities investors: a company with a clear plan to serve a clearly-identified market, and with a share price that has risen steadily this year, but still cheap at levels around 0.25 GBX. That price may begin to expand a little like perlite itself if the anticipated drilling programme begins to prove the CS Project’s potential.
Below, is Patrick Cheetham’s Interview with Proactive in late July where the Sunrise Resources chairman hails the mine permit for CS perlite-pozzolan project
The author was remunerated for this article but does not hold shares in the company.