Major copper-gold discovery in Sunstone's sights as drill permit looms
Plus, Centaurus Metals’ new nickel-cobalt discovery in Brazil gives it a big leg-up in the booming battery metals sector
1st June 2018
Conferences can be memorable for any number of reasons. And so it was this week at the Resources Rising Stars conference on the Gold Coast.
The conference kicked off on Monday night with poolside drinks at the Royal Pines, the highlight of which was the almost mystical appearance from the darkness of two zorb water balls with encased gymnastic type dancers decked out in body hugging strings of coloured LED lights.
As the zorbs drifted around the pool, conference delegates were left to wonder if the ensuing two days of rapid fire 15-minute presentations from no less than 34 miners and explorers would illuminate stories of interest.
The conference did not disappoint, with the 800 or so investor types who rocked up over the two days given a right royal rev-up by both the producers and explorers on why they should come along for the ride.
For those on the look-out for LED-lit leverage plays, the presentations from South American-focused Sunstone Metals (STM) and Centaurus Metals (CTM) were the subject of much discussion.
Sunstone chief executive Malcolm Norris has been involved in big porphyry copper-gold discoveries in the past and reckons that the company’s Bramaderos project in southern Ecuador just might be the next one.
And for the more conservative investor, Norris reminded the crowded room that the group’s advanced Viscaria copper project in Sweden provides downside protection.
Norris didn’t say so, but analysts value Viscaria at about $35 million – which is not all that far off from the company’s current market value of $40 million at 3.7c-a-share.
Viscaria is a robust project at current copper prices and Sunstone is looking to monetise the asset or bring in a partner to fund its development.
Action on that front in the months ahead will be interesting enough.
But the point here is that once the Viscaria asset is taken into account, there is precious little in Sunstone’s market cap for the upside of Bramaderos all the way over in Ecuador.
Norris gave that some context: “Sunstone today is sitting at about a $40 million market cap and we firmly believe that we are on the cusp of delivering a major discovery in Ecuador, so who knows where the market cap will go.”
Norris has been at this point before. He led the team that discovered the big Tujuh Bukit porphyry copper-gold deposit for Intrepid Mines in Indonesia when it was a $40 million company, funnily enough.
The discovery made it a $1 billion company for a while before it was controversially locked out of the project in 2012.
Norris also worked for the Brisbane-based and London AIM-listed SolGold when it moved into Ecuador and picked up the Cascabel prospect in the north of the country.
The former junior – now part owned by Newcrest – went on to make a big copper-gold discovery on the property and is now a $700 million company.
Norris reminded the room of the leveraged responses in Intrepid and SolGold to their exploration successes, and that Sunstone itself was getting ready to drill the “phenomenal porphyry target” to be found at Bramaderos (there is actually a cluster of porphyry and epithermal prospects waiting to be tested with the drill bit).
Sunstone is in good company in Ecuador – now a global exploration hotspot.
BHP, Newcrest, SolGold, Gina Rinehart’s Hancock Prospecting, and Andrew Forrest’s Fortescue are all in-country, but Sunstone is the only ASX listed junior amongst them.
The Aussie stampede into the country reflects the pro-mining measures taken by the government to encourage foreign mining investment, and the assessment by the miners that it is a place where the world’s next big porphyry copper/gold deposits are going to be found.
Actually, the country has been too successful in attracting the interest of foreign miners and explorers. The bureaucracy has struggled to keep up with approvals for exploration programs.
Sunstone’s application for a drilling permit is one of many to be caught up in the log-jam.
But, it seems the wait is almost over. “We are aware we are in the top handful of companies being reviewed and we are expecting our drill permit very, very soon,” Norris said.
Centaurus managing director Darren Gordon is a tall bloke but was walking extra tall after his presentation on the group’s copper/gold/nickel/cobalt push in Brazil’s well-endowed Carajás region got a good reception at RRS.
Trading at all of 1.2c for a market cap of just $32 million, Centaurus’ pivot to the riches of the Carajás after years of trying to make it in the iron core business in the country has seen it emerge with three key projects in quick (and cheap) fashion.
Making the running at the moment is Itapitanga, a nickel/cobalt laterite project close to the 307Mt Jacaré deposit outlined by Anglo American. After completing a hand-auger campaign to refine drilling targets, Centaurus has followed up with an ongoing RC drilling program.
Results have been encouraging, with Centaurus this week reporting broad intercepts from surface in the first 15 holes on the so-called Northern target area.
Best results included 24m at 0.94% nickel and 0.08% cobalt, and 12m at 0.94% nickel and 0.10% cobalt.
Significantly, within the broad intercepts there were multiple higher-grade cobalt intersections, as is the case across at Jacaré.
“Where we see it now with the market cap we’ve got compared with our peers in the nickel-cobalt space, we think there is plenty of upside just on that project alone,” Gordon said.
But wait, there is more. Centaurus also has two iron-oxide copper gold projects in the Carajas – Salobo West and Pebas.
Salobo West is 12km along strike from Vale’s giant Salobo copper-gold mine, which will be churning out metal in 50 years’ time.
Historic work on the Salobo West ground by Vale and Anglo American provides Centaurus with walk-up drill targets, but it first has to secure ground disturbance permits in what is a national forest area.
Centaurus’ long experience in the Brazilian way of doing things will help on that score. While the timing of the permits being issued is uncertain, it can be said that what is more certain is the broader industry’s envy in the ground being secured by Centaurus in first place.
Others are watching is the clear message there.
Pebas is in the same neck of the woods as Avanco’s (AVB) Antas copper mine, with Avanco itself currently the subject of a $420 million takeover bid by OZ Minerals in that group’s first entry in to Brazil.
The drill rig at Itapitanga will eventually move to Pebas, where the potential for high-grade structurally controlled IOCG mineralisation like that at Antas will be put to the test.
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