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Fair enough, I've probably just got my pessimistic glasses on due to what was an ultimately disappointing RNS and the subsequent slide in the share price.
I'm not sure that's strictly accurate jon. What PC said was:
" Further to its announcement of 16 November 2020, the Company has been advised by potential customers who are trialing the Company's raw perlite that they have experienced exceptional demand for horticultural perlite in 2021 with one reporting the highest demand in its decades-long history and a large backlog in orders that need to be filled.
This is a very positive indicator for the Company's development plans. However, as a result these potential customers have been reluctant to cease commercial production in order to use their production facilities to test the Company's product and as a result testing was delayed, cut short and, in one case, not yet started. Only one potential customer has provided detailed feedback to date, describing the test as "promising but inconclusive". The expanded perlite product was described as having a good, low, bulk density and it had a good white colour, but it was too fine grained."
So, the process is on going but delayed due to other pressing demands on the businesses involved.
pedro, I know the CRMC have to do commercial trials. I was querying the costs of doing more trials with the perlite customers for further expansion tests and whether this is wasted money if we're hoping CRMC by CS outright. 1Investor has pointed out that the value in going through this exercise is to show a position of strength to the CRMC.
That being said, selling raw perlite doesn't look like it is a position of strength really, given that after all the talk of sending samples to multiple customers only one actually wanted to test it. That is the more disappointing aspect of the recent RNS not the fact that they failed to crush it to the correct size.
1investor, yes I favour a sale as well. I am a little nervous that the signs are pointing towards a JV though. I do hope you are right and this just a case of keeping all the options open so we can't be lowballed by the CRMC.
Jon - The CRMC would obviously want to trial the goods in the real world before making a purchase - lab tests are one thing (and a necessary thing) but running the material through their processes and plant is clearly and essential requirement.
1Investor - yes I fully agree with your assesement - sale is more likely and I think we will hear more on this following successful trials by the CRMC
jonjb, because discussions are still at a preliminary stage and it would be negligent of the company to put all of it's eggs in one basket by ceasing discussions elsewhere. Continuing activity in other directions also demonstrates to any prospective buyer that we have options and choices, which has a bearing on negotiating power and price.
I favour a JV less, simply because a JV is a route you take in the early stages of things to share risk. The CS project has been largely de-risked and all a JV would do is share shareholder value and, as I've mentioned before, introduce potential complication and conflict.
I think a sale is more likely and I suspect we won't have to wait too much longer to find out.
Only one question that I want answered. Sale, JV or go it alone?
I think I'm moving in the direction of it being a JV now. If CS was going to be sold to a CRMC why go to the expense of trying to run more perlite trials?
Dubliner,
Thank you for the detailed explanation. I am newbie to the mining investments and I am still at the learning stage.
It is interesting to put whole puzzle together using previous RNS, the company's presentations and of course the knowledge of the members in this BB.
Patrick may be able to elaborate on the status of the upstream supplier, but Irrespective of that and perhaps more crucially is that the market is expanding hugely by liberalisation and a growing number of industrial applications and whatever the final CS outcome, there will be no shortage of customers for CS perlite and CS pozzolan. Rather like land, natural resources aren’t being made anymore and finding them isn’t easy. The only issue which is currently indeterminable is precisely when it will all come together.
1investor - thanks and generally agree with you wider point that this issue can be resolved and there are lots of positives still.
SGD - thanks and some good questions from you there - nice and straightforward.
Horlety - You said;
"More likely our crushing and screening contractor is overwhelmed with the orders from the regular customers"
My understanding is that most of the expanders who we are dealing with are being serviced by a single upstream provider who has their own Perlite mine and will have no doubt their own crush/screen equipment.
How busy Kimball are IMHO is not linked to how busy the Perlite expanders are. The kit we are hiring is general mining equipment and not Perlite specific. I just guess Kimball are busy full stop.
Many moons ago PC told us the driver/enabler to us supplying to multiple expanders is that this last remaining Perlite supplier to these multiple expanders is setting up their own downstream expanding Operations so would be in competition with them.
I would love to know more about the state of play in this regard. Is their existing supplier still willing to supply them or not? If they were still willing to supply then you might question why the expanders would wish to switch to us as a supplier of their Perlite. If their current supplier is planning to stop supplying them have they given notice of that?
I would love Patrick to provide a current status update in this regard because whilst I accept these expanders are pretty busy right now they don't seem in any hurry to test our product!
Cont'd
The apparent inconsistencies (!), I believe can be explained, by what’s going on behind the scenes, and it would be helpful if you can go as far as you can in explaining where we are and allaying shareholder frustration?
Dubs, thanks for the analysis of the twists and turns surrounding the crushing/screening issue.
I do think that regular contributors are placing more emphasis on this single, albeit regrettable, issue than it merits. It’s general frustration which seems to be driving comment on this issue rather than the bigger picture.
I don’t think, for example, that the sale of horticultural grade perlite under contract to the cannabis industry, whilst a welcome potential additional outlet for elements of the CS resource, is going to be the main or ultimate destination here. Nor, as some have suggested, is the mishap with grading going to destroy relationships or reputations. Annoying though they are, these things happen and everyone in business knows they happen particularly in instances such as this; geologists attempting to serve a potential industrial customer, in this case with preliminary samples. As far as “Global Cannabis Inc.” is concerned, it’s forgivable. It’s not the end of the world. It’s the frustration of delays which is getting to shareholder, not the absence of potential which we all know is there and largely proven.
The aspect of the CS Project which is key, is the current and progressing cooperation which is taking place with the CRMC. It’s not as fast as we’d like but it’s clearly heading towards one of two outcomes; an outright sale of the CS Project, which I favour, or some form of long term relationship. The results of the continuing collaborative approach between SRES and the CRMC are very positive and clearly emphasised in the Tuesdays news release:
“The Company has commissioned independent strength testing of mortar blocks made using a 20% substitution of ordinary Portland cement with natural pozzolan from a sub-sample of the 500-ton bulk sample in accordance with ASTM C618 (the test standard for natural pozzolan). Results show a mortar strength well in excess of the requirements of ASTM C618 after just 7 days curing. This result is consistent with previous laboratory testing of CS natural pozzolan by both the Company and the CRMC. Accordingly, the Company is expecting positive results from the CRMC's commercial trials once complete.”
I don’t think our perlite is a side show by any means but it’s not the main event, it’s part of it and if shareholders focussed on the ongoing CRMC dialogue a little more and a less on the regrettable but inadvertent “Kimball **** up” the mood might change and the real potential, and progress, here might begin showing itself in the share price.
PC needs to answer some important questions on Wednesday, that is clear, many of which have been expounded here in recent days. If Patrick is reading shareholder views here, it would be better to be as candid as possible with shareholders in the Webinar rather than gloss over the issues and frustration caused by the delays, whilst observing corporate responsibility.
Cont'd
Oh dear, we don't seem to have much luck with crushers, do we? A year ago there was a similar problem with the pozzolan - in that case it wasn't ground finely enough! (Some may recall I emailed PC and got clarification that the problem was indeed with the crusher, not our product.) This does make it particularly annoying to see a similar mistake happening again.
Looking for a positive, at least PC didn't take the easy excuse of blaming covid, though that might have made it harder to get someone on site for quality checking.
I believe PC does look at this BB, so will be aware of what is needed from the webinar:
- How did this problem happen, and how will we ensure it doesn't happen again?
- What exactly is the CS strategy, and what are the timescales?
- If we're taking CS into production, when will we see some kind of road map?
- Personally I don't want the distraction of discussing the PM projects right now.
Dubliner, great analysis as always; "frustration" is certainly the word of the week (month, year, ...)
Dubliner,
as per latest RNS:
'Further to its announcement of 16 November 2020, the Company has been advised by potential customers who are trialing the Company's raw perlite that they have experienced exceptional demand for horticultural perlite in 2021 with one reporting the highest demand in its decades-long history and a large backlog in orders that need to be filled.'
More likely our crushing and screening contractor is overwhelmed with the orders from the regular customers. We are in the queue and not a such priority as we are one off customer for them at the moment.
oops sorry for the double post - I took a phone call at home and when I got back the post I made was not there so I tweaked the word version I had made slightly and re-posted. Sorry!
Thanks 987 for the compliment and hope you are well....
If I can hog the floor for a little minute longer please.
One other observation I would make is this.
In Tuesday’s RNS Patrick said;
“The supply of a coarser particle size can be resolved with small adjustments to the crushing and screening process but in this case only 100 tons of material was available for processing and there was insufficient opportunity to optimise the crusher and screen settings”
He then says;
“The Company is now working with its crushing and screening contractor to modify the processing circuit to achieve a coarser product for further trials. The contractor has indicated that a process plant should be available for late March/early April. A larger bulk sample, 200 tons of raw perlite, is already on hand for this work”
These statements seem to be a little at odds with each other where one minute we just need small adjustments and then talk about modifying the processing circuit and a date that is at least 4 weeks hence.
I have worked out for some time that this test processing kit was not setup at our CS site. In fact I believe it was setup at the location of our mining contractor – the guys who dug the Pozz and Perlite bulk samples for us. A reasonable deduction is that the Perlite processing kit was taken away from the Contractor site (by Kimball I guess) after that 100 ton was processed and now we have to wait for another month for them to deliver similar kit back to site.
So once again we are back to waiting and it feels this could have been avoided. I repeat again my frustration whilst still holding a reduced number of shares here. I really hope that PC puts his best foot forward in the webinar next week and injects some enthusiasm to rally us shareholders or I will consider selling my remaining holding.
Thanks 987 for the compliment and hope you are well....
If I can hog the floor for a little minute longer please.
One other observation I would make is this. In Tuesday’s RNS Patrick said this;
“The supply of a coarser particle size can be resolved with small adjustments to the crushing and screening process but in this case only 100 tons of material was available for processing and there was insufficient opportunity to optimise the crusher and screen settings”
He then says this;
“The Company is now working with its crushing and screening contractor to modify the processing circuit to achieve a coarser product for further trials. The contractor has indicated that a process plant should be available for late March/early April. A larger bulk sample, 200 tons of raw perlite, is already on hand for this work”
These statements seem to be a little at odds with each other where one minute we talk of small adjustments and then talk about modifying the processing circuit and a date that is at least 4 weeks hence.
I have worked out for some time that this test processing kit was not setup at our CS site. In fact I believe it was setup at the location of our mining contractor – the guys who dug the test samples for us. A reasonable deduction is that the kit was taken away from site (by Kimball I guess) after that 100 ton was processed and now we have to wait for another month for them to deliver similar kit back to site.
I am currently invested in other Companies that seem to achieve so much in short time periods but everything here takes ages. I repeat again my frustration whilst still holding a reduced number of shares. I really hope that PC puts his best foot forward in the webinar next week and injects some enthusiasm to rally us shareholders.
@Dubliner - concise, accurate analysis as usual. Chapeau.
Some of the more hysterical board members here would do well if they were to adopt a similar fact based approach to their investing and consider their comments before hitting the Post Message button.
The old Abraham Lincoln quote “better to remain silent and be thought a fool than to speak and to remove all doubt” springs to mind.
Regards,
987ihg654fed321cba
Hi Safe,
Good to hear that you plan to take a more pragmatic approach to understanding developments at Sunrise. You also said this;
“I did not see any suggestion in the RNS that the appointed contractor had messed up”
Ok from the 27th October RNS PC said;
A. “The Company has recently contracted Kimball Equipment Company of Reno, Nevada to supply and operate a mobile crushing and screening plant to process a 100-ton bulk sample of raw perlite from the Company's CS Project”
B. “The plant will comprise a crusher, high frequency screens and associated conveyors and will be a basic version of the plant that is proposed for the initial production facility”
C. “The perlite bulk sample will be processed into two separate size-grades of horticultural raw perlite. Interest in a new source of raw perlite has been very strong and material will initially be sent to five potential customers who will expand the raw perlite in their commercial facilities. Plans to supply additional customers are in progress”
It is clear what Sunrise expected in terms of the Contractor processing the raw material and providing 2 different grade sizes.
In Tuesday’s RNS we had this info;
“The Company's testing and analysis shows that during the crushing and screening process carried out by the Company's contractor the screens operated inefficiently resulting in over-crushing of the perlite and the inclusion of too much fine perlite in the products and that this is likely to have adversely affected the quality of the expanded product. The supply of a coarser particle size can be resolved with small adjustments to the crushing and screening process but in this case only 100 tons of material was available for processing and there was insufficient opportunity to optimise the crusher and screen settings”
It seems clear to me that whomever operated the crush/screen plant (presumably Kimball) did not have the settings quite right. We probably did have in the samples some Perlite at the correct size. But due to screens not being set/working correctly it seems like some over crushing happened and some finer material got through the processing. It is a bit like the cat litter we use at home, there are typically large granules but also some much finer ones.
My issue is whether SRES had anyone overseeing the processing to check the produced material looked correct. It feels to me that the Contractor knew things were not quite right but sent the stuff out anyway,
Safe, another point. I believe in the past that you have complained at Sunrise sending out Pozz and Perlite samples free of charge. Perhaps you will now look at things in a slightly different light. This customer spent time and effort/cost (heating our samples would not be cheap) testing what we supplied and it presumably cannot be used or is sub standard. If we had charged for this material I think the customer would be mightily cheesed off.
GLA
I have to agree with you Safetrader, this is a basic Project Management **** up 100%
No commenst from Mineralex then so far, along the lines of 'all is well at Sunrise Resources' .....'Everything'
More like all is taking forever at Sunrise Resources...........and i mean Forever
Correct me if I am wrong, but I seem to recall PC making it clear that he was aware of the fact that the crushing process would involve a number of grades / sizes as an end product to suit a range of potential customers. If that were the case, then surely it would have made sense to have a range of sizes processed that potential buyers could pick their preference from to move towards a larger sampling.
This is such a fundamental mistake, I can't help but suspect that this may be a smoke screen to buy some time. Either the BOD got this wrong, or the contractor did. I did not see any suggestion in the RNS that the appointed contractor had messed up.
To crush such a large sample too finely for the potential customers need could surely have been avoided by implenting a very basic quality / quantity control process. God knows, the company have had more than enough time to plan this better.
I am genuinly now trying to adopt a more pragmatic understanding of developments, but this really does push the boundaries of that.