TIDMSRES
RNS Number : 5918F
Sunrise Resources Plc
30 October 2018
SUNRISE RESOURCES PLC
("Sunrise" or the "Company")
30 October 2018
CS PROJECT - UPDATE
Sunrise Resources plc, the AIM-traded company focusing on the
development of its CS Pozzolan-Perlite Project in Nevada, USA, is
pleased to provide the following project update:
Highlights
-- Commercial trials completed for bulk samples:
Ø 2 tons of raw perlite successfully expanded in commercial
production furnace to produce horticultural grade perlite suitable
for the cannabis industry.
Ø 100 tons of pozzolan ground in commercial scale production
mill and tested positive for compliance with ASTM C618 standard for
natural pozzolan.
-- Initial three phase, 15-year mine plan completed.
-- Perlite and pozzolan process options include low capex alternatives.
-- Positive market developments:
Ø Demand for natural pozzolan expected to increase as fly ash
shortages continue to build.
Ø Horticultural grade perlite market stimulated by increasing
legalisation of cannabis.
-- Permitting timeline reviewed following regulator's procedural
changes - estimated completion (mine ready) during third quarter
2019.
Commenting today Sunrise Executive Chairman Patrick Cheetham
said: "I am delighted to be announcing the successful completion of
commercial-scale trials on bulk samples of both the pozzolan and
perlite from our CS Project. These pave the way for commercial
arrangements with the parties involved and tests are also in
progress with other potential customers. It is a good time to be
entering these markets. Cement companies and fly ash suppliers are
already grappling with a shortage of fly ash and this shortage will
be intensified when the largest supplier to western markets, the
large coal-fired Navajo Power Station in Arizona, closes as
expected in 2019. Meanwhile the perlite market in the western US
continues to be strong as more US States, and now Canada, continue
the legalisation of cannabis for which perlite provides an ideal
growing medium."
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014.
Further information:
Sunrise Resources plc
Patrick Cheetham, Executive Chairman Tel: +44 (0)1625 838 884
Northland Capital Partners Limited
Nominated Adviser & Joint Broker
Matthew Johnson/Edward Hutton/
Jamie Spotswood (Corporate Finance)
Isabella Pierre (Corporate Broking) Tel: +44 (0)20 3861 6625
SVS Securities Plc
Joint Broker
Tom Curran/Ben Tadd Tel: +44 (0)203 700 0093
Detailed Information:
BULK SAMPLING - COMMERCIAL TRIALS
As reported on 3 September 2018 the Company recently excavated a
100-ton bulk sample of natural pozzolan and an 8-ton sample of
perlite from the CS Project.
Natural Pozzolan
The 100-ton bulk sample of natural pozzolan was collected from
site by a cement company for trial grinding and subsequent testing
in a cement mix.
The Company has been advised by the cement company that the
trial was successful and that the bulk sample met all the tested
requirements of ASTM C618, the standard for natural pozzolan for
use in cement and concrete mixes.
This is an extremely positive development and the cement company
concerned has expressed a desire to continue co-operation with
Sunrise, working towards a commercial arrangement.
Sunrise has retained approximately 30 tons of the original bulk
sample and has made test samples of this available to a number of
other cement companies with whom market discussions are
continuing.
Perlite
The 8-ton bulk sample of raw perlite was initially sent to SGS
Lakefield in Canada for crushing and screening to produce a
horticultural grade raw perlite for expansion testing and to
provide data for crushing characterisation. Horticultural grade raw
perlite is the main grade being targeted for production by the
Company and for which the Company signed off-take Memoranda of
Understanding with two different companies earlier this year.
Approximately 2 tons of the resulting horticultural grade raw
perlite were then sent from SGS Lakefield to one of the two
above-mentioned companies for expansion trials in a
commercial-scale furnace.
This trial was very successful with the expander reporting
"better-than-could-have-been-hoped-for results". An expanded
perlite meeting the size requirements for horticultural perlite was
produced with by-product fines meeting the commercial specification
for water filtration grade material. The expander has expressed a
strong desire to work with the Company as a new supplier of perlite
to its facility.
Customer trials are also being arranged with other potential raw
perlite customers.
MINE PLANNING & DESIGN(1)
The mine design, which at this stage is required for permitting
purposes, was contracted to SRK Consulting in Reno some weeks ago
and has now been completed.
An open-pit mine is proposed for development in three phases
over a 15-year period. The objective of a phased approach is to
minimise the amount of the initial reclamation bond.
The Company believes that the deposits of perlite and natural
pozzolan at the CS Project will sustain a much longer mine life,
with large areas of the deposit such as the Northeast Zone not yet
drilled. However, all mine designs evolve over time and require
modifications to their mine permits from time to time and therefore
it would not be realistic to plan beyond fifteen years for
permitting purposes.
Whilst the areas of perlite and pozzolan are spatially separate,
they overlap in the Main Zone and can be developed within the same
overall pit outline.
Perlite Mining
Phase 1 perlite production (years 1-3) is scheduled to rise
quickly from an initial rate of 20,000 tons per annum (tpa) of
perlite to 100,000 tpa at the start of Phase 2 (years 4-8) and
continue at that rate throughout all of Phases 2 and 3 (years
9-15).
Natural Pozzolan Mining
Pozzolan production is scheduled at an initial rate of 100,000
tpa rising to 300,000 tpa at the end of Phase 1, reaching a steady
rate of 500,000 tpa during all of Phases 2 and 3.
Separate, alternative, mine plans have been developed for both
the Main Zone and Tuff Zone pozzolan deposits. The pit design for
the Main Zone pozzolan can supply pozzolan for the full 15-year
mine plan on its own.
The pit design for the Tuff Zone only takes in half of the Tuff
Zone deposits but can still supply all of Phase 1 and 2
requirements and over half of Phase 3 requirements on its own.
At this stage the Company is leaving its options open to develop
the Tuff Zone or Main Zone pozzolans separately or together.
Rock waste from mine pits will be stored within the Project Area
and where possible in worked out areas of the pit. The overall
waste to ore ratios are very low - 0.25 tons waste per ton of
perlite and pozzolan (combined) in the Main Zone and 0.16 tons
waste per ton of pozzolan in the Tuff Zone with most of the waste
being not being mined until after Year 8 in each case.
The Mine Plan does not include the extensive deposits of
pozzolan in the Northeast Zone of the Project Area. The Company
will include further exploration drilling in its mine permitting
Plan of Operations to take place concurrently with mining.
MINERAL PROCESSING
The Company has identified the following options for processing
and sale of natural pozzolan and perlite:
Natural Pozzolan
Ø Direct sale of as-mined ore to cement companies.
This option, as tested with the recent bulk sample, would allow
for production to start immediately after permitting is completed
and at minimal capital cost.
Ø Production of a ground pozzolan for sale to cement companies
and the ready-mix concrete companies.
This second option would require construction of a grinding
plant, most likely off-site and closer to the centres of
demand.
Perlite
Ø Production of coarse horticultural grade perlite using mobile
crushing and screening equipment.
The required mobile plant is readily available to rent or lease
and production could start immediately permitting is completed at
minimal capital cost.
As raw perlite is also a good natural pozzolan, undersized
perlite could be sold as pozzolan. It could also be stockpiled for
later processing in a fixed plant to produce a range of
finer-grained industrial raw perlite products.
Ø Production of a complete range of raw perlite products in
coarse, medium and fine grades.
This would require a more sophisticated fixed processing plant
to be built on site. A preliminary plant design has been completed
for permitting purposes.
The permitting Plan of Operations will allow for all these
possible processing options to give the Company maximum flexibility
for initial production and future processing to additional and/or
higher value products.
MARKETING & MARKET DEVELOPMENTS
Natural Pozzolan
Natural pozzolan is one of a range of materials that can replace
cement in cement and concrete mixes and which collectively are
known as Supplementary Cementitious Materials (SCMs). Traditionally
coal-fired power station fly ash has been the most widely used SCM
in the cement and ready-mix concrete market, but fly ash supplies
have been declining due to the progressive closure of coal-fired
power stations in the USA.
Companies whose businesses are built around the distribution and
supply of fly ash are now looking for alternative SCMs and to
recovery of previously land-filled fly ash ponds. One major
supplier of fly ash to western US markets is Boral Industries and
its efforts to secure new sources of SCMs are highlighted in two
recent news releases https://flyash.com/news/. Similarly, their
customers, cement and ready-mix concrete companies, are looking to
source supplies of natural pozzolan independently of their fly ash
suppliers. These are our potential customers.
The closure of coal-fired power stations is continuing apace
largely due to competition from cheaper natural gas-fired stations.
Of particular regional significance is the planned 2019 closure of
the Navajo Generating Station which is the largest coal-fired power
station west of the Mississippi and a major supplier of fly ash to
western markets. Efforts to find a buyer who would keep the plant
open a few more years appear to be failing and closure will remove
a significant proportion of the fly ash supplies to the markets we
are targeting in Nevada and California.
The Company believes that the high quality of its material puts
it in a favourable market position and that its leverage in the
markets is increasing with the expected further shortage of fly
ash. We anticipate that the price of natural pozzolan will increase
over time.
Perlite
The market for perlite is well established but in recent years
the market for horticultural perlite has been invigorated by the
growth in cannabis cultivation following the legalisation of
cannabis in various US States and, most recently, in Canada.
Only coarse grades of raw perlite from certain sources can be
expanded to produce the coarse expanded perlite used as a growing
medium for cannabis. Raw perlites from other sources shatter too
much on expansion and are not suitable.
It is therefore significant that the Company's recent commercial
trails confirmed that the coarse grades produced from the processed
bulk sample produced the expanded product that is of interest to
the cannabis industry as well as other more traditional
horticultural buyers.
MINE PERMITTING
Mine permitting in Nevada is a procedure involving many
individual steps and processes of which the National Environmental
Policy Act (NEPA) process is a key process.
In August 2017 the Federal Government issued a directive
intended to shorten the NEPA process. However, the response of the
Bureau of Land Management (BLM), the federal body responsible for
administration of the permitting procedure including the NEPA
process, has been to take certain Company reporting requirements
outside of NEPA and require that they be completed before the NEPA
process can begin.
We can report that we are on track with our own work to this
point, but given the uncertain timelines resulting from the recent
changes to the NEPA process we are currently allowing extra time
for permitting and estimate that permitting will be completed, and
that we will be mine ready, in the third quarter of 2019, rather
than in the second quarter of 2019 as previously estimated.
This may prove conservative, and the Company is working hard
with the BLM and its permitting consultants to bring forward this
timeline. Further updates will be provided as appropriate.
Notes:
1. The purpose of the mine planning has been to provide
information for the permitting Plan of Operations. The pit designs
have been developed using a geological model for the project which
is based on data from drilling, surface sampling, outcrop mapping
and extensive quality testing. Industrial mineral deposits tend to
be more predictable in their extent than gold or base metals
deposits. However, no code compliant mineral resource has been
estimated for the CS Project at this stage. In the case of
industrial mineral deposits, where the minerals are sold on
contract, it is common that resource and reserve estimates are not
made until a later stage of development. Accordingly, no financial
forecasts can be released at this time.
2. The information in this release has been compiled and
reviewed by Mr. Patrick Cheetham (MIMMM, MAusIMM) who is a
qualified person for the purposes of the AIM Note for Mining and
Oil & Gas Companies. Mr. Cheetham is a Member of the Institute
of Materials, Minerals & Mining and a member of the
Australasian Institute of Mining & Metallurgy.
Shares in the Company trade on AIM. EPIC: "SRES". Website:
www.sunriseresourcesplc.com
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
UPDGMMZGRLDGRZM
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