Research note.30 Apr 2023 17:23
For interest.
Shovel Ready Industrial Minerals for the
Green Economy
Sunrise Resources plc (“the Company”) is an AIM-listed industrial minerals business with
three key projects located in Nevada, USA. The Company is focused on moving its
flagship CS Pozzolan-Perlite Project into near-term production, to generate cash flow
that can be reinvested to advance and, or, monetise the other projects within its
portfolio.
The CS Project is now shovel ready, with all major permits secured. Sunrise is working
towards securing offtake agreements, or partnership agreements, with users of natural
pozzolan and, or, raw perlite to secure a route to market for its products.
Once these agreements are in place and a route to market is secured, Sunrise plans to
obtain the required funding and commence mine development. Sunrise is considering
several development options for the CS Project, which could produce a range of products,
and, importantly, all these options are expected to require relatively low capital levels,
that should be fundable for a company of Sunrise’s size.
Sunrise has also been advancing two of its other key projects at very low cost:
• The Pioche Sepiolite Project is under an option agreement with the world’s leading
sepiolite producer, Tolsa S.A. Tolsa has an option to purchase the Pioche Project for
US$1.25 million and a 3% revenue royalty.
• Commercial scale testing is currently underway at the Hazen Pozzolan Project. This
testing is being completed by an existing processor of natural pozzolan at no cost to
Sunrise and could lead to a further agreement depending on the results.
Offtake agreements, or partnership agreements, such as that secured with Tolsa, are
the key value driver for Sunrise, and once secured they will act as a catalyst to allow the
Company to transform from developer to producer.
In addition to these more advanced projects Sunrise has a portfolio of earlier stage
projects and royalty interests that help underpin the Company’s current market value
and which could also add additional value in the future with further exploration success.
Valuation
In this note we assess the value of Sunrise Resources’ principal projects. The CS project
was valued at £20.9 million using a discounted cash flow analysis and several
assumptions outlined below. The Pioche Project was valued at £1.9 million based on the
potential cash flow generated from its sale and a discounted cash flow analysis of the
3% royalty. The Hazen Project we valued at £3.6 million based on a discounted cash
flow analysis. Sunrise’s other earlier-stage projects we have valued at £1.9 million based
on a 2X multiple of the amount of capital invested to date. As a result of this analysis,
we value Sunrise Resources at £28.2 million or 0.71p per share, an upside of 691% on
the current share price.