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Testwork results confirm Sunrise Resources’ Derryginagh barite mine potential – Northland Capital

Last updated: 21:30 04 Nov 2010 AEDT, First published: 22:30 04 Nov 2010 AEDT

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Northland Capital Partners’ response to yesterday’s news from Sunrise Resources (LON:SRES) wasn’t much different from that of investors, who unleashed a buying spree that drove the share price up 35%.

The broker now expects Sunrise to encounter higher grade material at the project, which would exceed the already encouraging metallurgical testwork results from its 100%-owned Derryginagh barite mine that were reported on Wednesday.

Northland Capital said that the statement confirmed potential on two parameters, in relation to quality and potential to economically develop material and in relation to the wider prospectivity of the area in terms of strike extension.

The results for samples collected from within the old workings confirmed that saleable barite concentrate can be produced by low cost gravity processing, while geophysical exploration indicated significant additional strike potential well beyond the limits of the existing mine workings.

“It is encouraging that low cost separation was applied to produce high grade material even from low grade samples which bodes well for the potential of higher grades expected going forward,” said the broker.

In what Northland also called “encouraging”, a high grade barite concentrate meeting chemical specifications of the highest value natural barite fillers was produced from the samples.

Sunrise will now carry out infill gravity surveying to define sites for trenching and/or drilling and a concept study will be initiated to define the parameters for an economic mining operation.

Northland is now looking forward to the establishment of commercial parameters in the coming months, which would bring more clarity to project economics and serve as a catalyst for the valuation of both the project and the company.

Northland said that the upcoming concept study will help establish the necessary thresholds for an economic project such as operational expenses (opex) and capital expenses (capex) and annual production against prevailing market dynamics.

The broker report also noted that the low capitalisation of Sunrise would be addressed by cashflows from the Derryginagh project.

Last month, Northland, then known as Astaire Securities, said that the costs of replicating the company’s assets would outstrip the company’s current market cap.

Northland was encouraged by the market fundamentals, while calling Sunrise’s decision to diversify the portfolio sensible in light of the prevailing market.

Sunrise’s new portfolio contains an additional diamond license in Western Australia and the Long Lake brown field exploration project in Canada along with Derryginagh.

The Cue project in Australia, which was previously explored by De Beers, contains gold and PGM (platinum group of metals) targets, while also giving the company more diamond exposure.

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