Saturday, September 30th 2023

Sunrise Resources PLC

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A dawn of a green Sunrise


“…Sunrise has a clear strategy to serve a well defined market, offering building materials that will become ever more important as the global economy takes on the challenge of greening one of its most carbon intensive sectors. The company is well positioned to take advantage of the particular conditions that apply in the western US construction sector…”


One of the toughest industries to green as business and governments renew their efforts to meet their net zero pledges following the recent COP26 conference is the construction sector: the mix of materials used to produce the industry standard Portland cement accounts for 5pc of global carbon emissions.

Sunrise Resources (AIM:SRES) is seeking to establish itself as a leading supplier of pozzolan and perlite, materials sourced from naturally occurring volcanic ash and pumice that have a much lower carbon footprint, offering the promise of a new ‘green concrete’. 

Led by Executive Chairman, Patrick Cheetham, a former Dragon Mining and Archaean Gold director, the company’s flagship asset is its 100pc owned CS Project in Nevada, permitted for the production of 500,000 tons per year of pozzolan and 100,000 tons per year of perlite. The field’s lunar landscape is spiked by outcrops formed by significant deposits of the materials, which extend some 150 feet below the surface. Preparations are well advanced for a drilling campaign: drill holes and trenches have been completed; extensive analysis of a range of samples has confirmed their commercial quality; an environmental assessment has been completed; and the necessary permits have been secured from the US Bureau of Land Management.

Earlier this year Sunrise delivered a 500 ton pozzolan sample for commercial trials to a prospective client, an established US cement company seeking alternatives to the fly ash it has previously used for its concrete mixes. Sunrise’s own tests using a 20pc substitution of ordinary Portland cement with natural pozzolan have demonstrated mortar strength well beyond regulatory requirements. Perlite samples have also been sent to interested companies. Sunrise 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 tons per year rising to 500,000, and 1.3 million tons of perlite starting at an annual 20,000 tons rising to 100,000. The company is working to divest or farm-out a legacy portfolio of drill-ready precious and base metal projects to allow it to concentrate its resources on advancing the CS Project through to production.

The pozzolan and perlite markets


In promoting the use of pozzolan and perlite as a concrete mix Sunrise is seeking to reacquaint the industry with its heritage. Pozzolan, sometimes referred to as the ‘Roman’ cement, was mixed with lime to construct the infrastructure of the classical world, its durability evidenced by the roads, ports, viaducts, bridges, temples and monuments we still admire today. It was only displaced by Portland cement, a compound of limestone, chalk, clay and shale, in the early 1900s.

But it is in demand again as governments and industry set out on the long road of greening a construction sector that uses prodigious amounts of concrete. As one colourful Financial Times article puts it, 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. In the course of its rapid growth over the past few decades China has poured more cement every two years than the US managed in the entire 20th century.

Whereas pozzolan is suitable for heavy infrastructure, perlite is a low density glassy volcanic raw material suitable for 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.

Demand for both is driven by changing dynamics in the US concrete market, as well as wider environmental considerations. 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 North American coal-fired power plants in response to tougher environmental regulations and cheaper renewables and natural gas (at least until the current supply squeeze). Since 2010 half of America’s coal-fired power stations have been closed or scheduled for closure. Sunrise is positioning itself to address a particularly acute cut in the supply of fly ash on the west coast caused by the closure of the region’s largest coal-fired power station in Arizona, which has taken 500,000 tons per year of high-quality fly ash off the market. The Biden administration’s dual commitment to investing in US infrastructure while respecting the country’s net zero commitments promises to further stimulate demand for alternatives to traditional concrete. The $1.2tn infrastructure bill signed into law earlier this month includes about $550bn in new spending on roads, bridges, tunnels, airports and broadband networks.

Trends in the US health market are also opening fresh opportunities for perlite producers. The material 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 more than $12bn in 2018 and is projected to grow at a compound annual rate of 26.7pc. The United States Geological Survey science agency estimates there was an 8pc rise in US consumption in 2019, an increase sustained through 2020 due to the new cannabis legislation, and higher demand for horticultural products during lockdown.

Progress this summer and autumn


Since our last report on Sunrise in March, the company has acknowledged ‘frustrating delays’ in the pozzolan and perlite trial process, but progress towards commercial production continues. A test grind on a 500 ton bulk sample sent to its prospective client was completed in May, with the material successfully ground to the target size. If the company continues to pursue its interest it will use its own milling facilities to ensure a low capital cost, low risk start up to production before considering a purpose-built process plant. In August the prospective client confirmed progress in its due diligence process, announcing that preliminary test results from two commercial concrete pours showed the pozzolan samples had demonstrated concrete strengths that exceeded 24-day target strengths after just seven days. Sunrise expects ongoing progress ‘will provide the basis for a more structured arrangement’ with the company, adding that ‘the bleak long-term outlook for coal fly ash supplies in the USA’ had prompted ‘a number of additional companies’ to request its natural pozzolan samples.

Perlite trials are being undertaken by another prospective client. Sunrise says these are taking longer than anticipated for reasons that are actually indicative of promising longer term conditions, noting that the company testing its sample has as yet been unable to commit resources to the trial due to heavy demand for its own horticultural perlite product. There have also been technical issues. The test results have so far been mixed due to the inclusion of too much fine perlite in the samples provided for testing, but ‘it is expected that this issue can be resolved when the 200 ton sample is processed for further trials’. Otherwise ‘the CS raw perlite produced a good low density expanded product with good rates and attractive appearance and would be a premium product for the US market’. In August Sunrise reported that all customer trials for expansion of horticultural grade perlite had been successfully completed and that it is working with another contractor to fine tune the density of its perlite to ensure it is calibrated to the right grade for prospective clients. Alongside the opportunities for horticultural perlite Sunrise continues its evaluation of production opportunities for industrial and construction grades of perlite, which it has produced successfully on a laboratory scale.

Farm-out strategy


The company is also progressing its strategy to sell or farm-out its non-core assets, undertaking modest drilling work to confirm their value. Sunrise says that drilling results from its 100pc owned Clayton Silver-Gold Project, also in Nevada, confirmed the presence of significant silver mineralisation and that ‘a number of interested parties are currently reviewing data with a view to partnering with the Company in the further exploration of the project.’ Soil sampling at another wholly owned Nevada asset, the Sundance Gold Project, in same area as the Denton-Rawhide Gold-Silver Mine that produced 1.8m ounces, has identified gold in soil anomalies undergoing further testing. In June the company reported high-grade gold assay results from a drill programme at the Baker’s Gold Project in the Murchison Goldfield of Western Australia. The five holes drilled included intercepts of a 2m grading 14.4 g/t gold from 64m downhole, and a 2m grading 11.5 g/t gold from 64m downhole. This summer Sunrise sold Garfield and Stonewall, two early-stage mineral exploration projects – also in Nevada – to AIM-listed Power Metal Resources, generating a a combined profit of £33,329. Sunrise will retain a 2pc net smelter return royalty in respect of the properties. And last month Sunrise granted Kinross Gold U.S.A Inc a lease and option to purchase 25 mining claims at another Nevada asset, Jackson’s Wash, with the grant to Sunrise of a 2.5pc net smelter royalty.

Sunrise is financed through periodic fundraisings until such time as cashflow can be derived either from sale of assets or future operations. The company raised money for its current programmes last year through a series of placings worth £1.3m. 



Sunrise has a clear strategy to serve a well defined market, offering building materials that will become ever more important as the global economy takes on the challenge of greening one of its most carbon intensive sectors. The company is positioned to take advantage of the particular conditions that apply in the western US construction sector, where fly ash supplies are under pressure. Sunrise’s share price has drifted down to around 0.2p since touching a high of 0.33p in January, reflecting the somewhat drawn out nature of the commercial trials process. But progress has been made this year, with the prospect of commercial production on the horizon if the due diligence procedures by prospective clients are successfully completed. We continue to note Sunrise as one of AIM’s more intriguing natural resources prospects.