A Big year for a Sunrise in Nevada
“…A widened focus for Sunrise Resources over the past year, to target three Nevada-based industrial mineral prospects…”
Sunrise Resources (AIM: SRES) continues to pursue its flagship CS Natural Pozzolan-Perlite Project, but has evolved a balanced portfolio of ventures and royalty interests to mitigate risk exposure. Last year SRES pushed forward a second natural pozzolan project at Hazen, where commercial scale test work is progressing, and has partnered with Tosla S.A., the world leading’s sepiolite producer, at Pioche. Previous TMS coverage of SRES has looked closely at the CS Project: here we consider Hazen, Pioche and the company’s other interests.
The Hazen Pozzolan Project
Like the CS Project the Hazen Pozzolan Project aims to contribute to rising demand within the US construction industry for ‘green concrete’. Sourced from naturally occurring volcanic ash and pumice, pozzolan has a much lower carbon footprint than Portland cement, currently the industry standard. Located in northern Nevada, Hazen is intended to serve different regional markets to those earmarked for the CS Project, being well positioned for rail transport to the regional markets of northern California, the local markets around Reno and northern Nevada, and for supply to states further east.
The Project’s mining claims were staked in June 2021 to realise the promise of a substantial deposit of glassy pumice suitable for commercialisation as a natural pozzolan. Investigation to date indicates that Hazen’s pumice extends several hundred metres beyond the limits of the existing open pit, initial laboratory work indicating that the pit’s material is of similar high quality to the CS Project’s pozzolan. Last autumn SRES announced a collaborative arrangement with an existing processor of natural pozzolan for mining and test grinding of a 250-tonne bulk sample, the successful retrieval of which demonstrated that the Project’s pozzolan is free digging and amenable to low-cost mining. The sample is currently at the process plant awaiting test grinding. The plant’s owner has processing facilities and a significant marketing presence across the regions SRES has targeted for sale of the product.
The Pioche Project
The Pioche Project is also progressing quickly. The Project’s claims were staked to cover a historically documented occurrence of sepiolite, a non-swelling, lightweight, porous clay familiar to households for its use in lightweight non-clumping pet litters – a huge market accounting for the material’s most significant commercial use. Sepiolite is also used extensively in agriculture as a slow-release absorbent and carrier for chemicals and pesticides; in animal feeds as a binder and carrier for nutrients and growth promoter; as a suspending agent in paints, medicines, pharmaceuticals and cosmetics; and in high temperature drilling muds. Supply of the rare mineral is tight, the large US market currently served by a handful of producers.
Pioche sparked into life last year when SRES reached an agreement with Spanish company Tolsa S.A., the world’s largest sepiolite producer, granting Tolsa an 18-month option to purchase the Project for $1.25m and an ongoing payment to SRES of a 3pc royalty. Tolsa has completed a detailed mapping and sampling programme defining multiple beds of sepiolite, following up with a trenching programme that identified significant potential for extensions to the deposits. Earlier this year Tolsa staked a further 31 mining claims to more than double the Project’s size, ahead of a planned resource definition drilling programme over the next few months.
Other projects in Nevada
SRES has a cluster of other projects in Nevada, several available for joint venture. The Clayton Silver-Gold Project lies in the Walker Lane Mineral Belt, equidistant from the producing Mineral Ridge Gold Mine and the major Goldfield mining centre where several large gold-silver deposits are under development. Historic work at the location has intersected wide intervals of low-grade silver mineralisation. Recent drilling by SRES has confirmed indications that historic gold-silver values were under-reported, reporting an 84pc increase in the silver grade.
The Newark Gold Project is located at the southern end of the Battle Mountain-Eureka (Cortez) gold trend, lying 40km to the south and along the same structural zone as the past-producing Alligator Ridge Mine, a few miles from the producing Illipah and Pan gold mines. Newark was originally targeted for Carlin-style gold mineralisation in the 1980s following the discovery of gold anomalous values in silicified rocks in a favourable structural and stratigraphic setting. Carlin-style deposits can be both large and high-grade: a recent Barrick discovery at Goldrush contained 21 million ounces gold at a grade of 6.9 g/t. One Newark hole has intersected 47 metres of low-level gold (average 0.14 ppm gold) in jasperoid, which SRES suggests may be a significant host for Carlin-style gold mineralisation.
The Reese Ridge Project, located on the south side of the prospective Humboldt Structural Zone, lies adjacent to the Reese River geothermal system, currently being assessed for geothermal energy. Industry standard VTEM and MT electromagnetic surveys have identified a zone of low-resistivity at a depth of about 250 metres below the surface mineralisation in prospective lower-plate sediments, seemingly prospective for a number of styles of mineralisation commonly found in Nevada, including Carlin-type gold deposits, carbonate replacement lead-zinc-silver deposits and epithermal gold/silver deposits. Earlier this month SRES staked 27 new mining claims adjacent to the Ridge Limestone Project to cover targets for gold and base metals. Numerous gossans and alteration zones have been identified at surface. Grab samples have yielded 15.8pc zinc, 3.3pc copper, 0.37 g/t gold and 51 g/t silver, and pathfinder elements including arsenic and thallium.
Other Nevada interests include the company’s Jackson’s Wash claims, where a lease/option for purchase has been granted to global gold producer Kinross Gold USA, which is actively exploring in the vicinity. If Kinross elect to purchase the claims, SRES will hold a 2.5pc Net Smelter Royalty (NSR) on production. The company has 2pc NSR interests in two projects owned by Golden Metal Resources: the Garfield Copper-Gold Project, prospective for sediment hosted skarn and porphyry-style copper-gold mineralisation, and the Stonewall Gold Project, promising epithermal-style gold-silver mineralisation. SRES also holds the Myrtle Gold-Silver Project, acquired by claim staking in 2021, which has produced promising assay results through reconnaissance field mapping and sampling.
The Baker’s Gold Project
Elsewhere the company’s Australian subsidiary holds the Baker’s Gold Project, comprising two adjacent prospecting licences located near the Murchison Goldfield in Western Australia. SRES has carried out soil sampling and a preliminary programme of drilling with significant mineralisation being intersected in one drill hole, a 2m interval from 64m down hole grading 14.4 g/t gold including 1m grading 26.5 g/t gold. The company has applied for new mining leases to cover this mineralisation and ensure continuity of tenure before current prospecting licences expire. Progress has been stalled by a decision of the Australian Federal Court in favour of a claim to the land by aboriginal people. SRES is currently considering ‘if the possible costs of negotiating a Native Title agreement can be justified by the exploration results obtained to date or if these negotiations can be deferred whilst further exploration is carried out.’
Continued work on the CS Natural Pozzolan-Perlite Project
Back in Nevada SRES continues to prime the CS Natural Pozzolan-Perlite Project for commercialisation. All the elements are in place. Drill holes and trenches have been investigated, extensive analysis of a range of samples has confirmed their commercial quality, an environmental assessment has been completed, and the necessary production permits have been secured from US regulators. SRES’s internal tests using a 20pc substitution of ordinary Portland cement with natural pozzolan have demonstrated mortar strength well beyond regulatory requirements. The company has published a 27-year mine plan that includes a four-phase pit design targeting production of 14.5 million tonnes of pozzolan, starting at rate of 100,000 tonnes per year rising to 500,000, and 1.3 million tonnes of perlite starting at an annual 20,000 tonnes rising to 100,000.
The Project seeks to take advantage of shifting tectonic plates in the construction industry, a carbon heavy sector presenting one of the toughest challenges in the global move to a greener economy. Pozzolan, sometimes referred to as ‘Roman’ cement, was displaced by Portland cement – a compound of limestone, chalk, clay and shale – at late as the early 1900s. But its potential as a building material has resurfaced as the world puzzles how to green a construction sector that produces prodigious amounts of concrete, second only to water as the most used substance on Earth. Pozzolan blended cements may be cheaper, cleaner and stronger: the mix reduces the carbon embodied in cements, increases production per tonne of cement clinker capacity, and ensures more robust structures. And whereas structures made with natural pozzolan have survived for millennia, many made with Portland are susceptible to ‘concrete cancer’ caused by the reaction of the cement’s alkalis with silica, which causes the concrete to expand and crack.
Demand for pozzolan is being driven by changing dynamics in the US concrete market, as well as wider environmental considerations. Until the past few years it was produced as a by-product of coal-fired power stations, notably fly ash. But that outlet has been closing over the past decade as North American coal-fired power plants have closed in response to tougher environmental regulations and competition from cheaper renewables and natural gas. SRES is on location 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 an annual 500,000 tonnes production of high-quality fly ash off the market. 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.
Though the company’s focus is on pozzolan, SRES also wants to market its perlite, 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. There are longer-term plans for a stand-alone perlite plant where both coarse and fine grades of perlite are directed to perlite specific applications.
SRES has been engaged in discussions with several prospective customers, including cement and ready-mix companies, a major fly-ash distributor, a large building materials company, and a cement clean-tech new start. The company’s efforts to target Californian markets received a major boost last year when the CS Projects pozzolan was conditionally approved by the California Department of Transport, responsible for the award of public infrastructure construction projects across the state.
Addressing the company’s AGM earlier this year, Executive Chairman Patrick Cheetham said: ‘Our experience shows that the cement and ready-mix companies are conservative. Each has its own raw material formulas and needs to do their own detailed tests on product suitability before committing to a new source of raw material. However, once a partnership for offtake is struck, these relationships tend to be long-term and so are sources of long-term regular recurring cashflow, particularly when the material source is as large as the Company’s CS Natural Pozzolan Project.’
SRES is continuing to target discussions with the large integrated cement and cement and ready-mix companies that could both grind the pozzolan as a fly ash replacement or make pozzolan cement, and is also targeting fly ash distributors ‘who see natural pozzolan as a means to continue their business at a time when coal fly ash supplies are threatened by the closure of coal-fired power stations’. Mr Cheetham said the company had extended ‘discussions to materials companies that supply … to the concrete industry, and to the producers of new-generation cements that are based on natural pozzolans.’
Outlook
SRES continues to consider other routes to commercialisation, monitoring progress at two natural pozzolan grinding projects in Utah (Geofortis) and Arizona (Eco Material Technologies), where dedicated pozzolan processing plants are now commissioned, to assess options for ‘a more capital intensive go-it-alone strategy’. The company is able to carry out its current work, primarily the assessment of possible market opportunities and the pursuit ongoing negotiations, on a modest budget. Its most recent results reported a loss of £478,223 for the year (2021: £335,252) after administration costs of £291,860 (2021: £318,630). As at 30 September 2022, SRES had net current assets of £155,776 (2021: £399,384).
The company’s share price continues to tread water as efforts to move ahead to commercialisation proceed, at the time of writing hovering just below 0.1p, leaving its market cap at £3.6m. As we have noted in our previous reports, SRES is a prospect for the patient investor interested in taking a stake in a relatively unsung but highly prospective energy transition resource. Now moving ahead on three fronts, SRES remains one to watch carefully through 2023.
