REG - Sunrise Resources - Market Study and Pozzolan Project Update

Sunrise ResourcesAnnouncement

15/09/2023 07:00

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RNS Number : 5216M  Sunrise Resources Plc  15 September 2023

 15 September 2023

 

SUNRISE RESOURCES PLC

("Sunrise" or the "Company")

 

Market Study and Pozzolan Project Update

 

Sunrise Resources plc is pleased to provide the following project update and
to release the findings of a market study commissioned by the Company to
evaluate market opportunities and market growth predictions for cement and the
use of supplementary cementitious materials ("SCMs"), including natural
pozzolan, in the USA, and California and Nevada in particular.

 

Key Points

 

The Market Study:

 

·    was commissioned by the Company with Cement Distribution Consultants,
Amsterdam to examine the cement markets in California and Nevada which are
being targeted by the Company with its CS and Hazen natural pozzolan projects
in Nevada.

 

·    provides the Company with a detailed breakdown of cement markets,
county by county in California and for the two main population centres in
Nevada (Reno-northern Nevada and Las Vegas-Henderson).

 

·    details the production profiles of all cement producers and ready-mix
companies in California and Nevada and details movements of cement within and
between different US states.

 

Forecasts, considering the US as a whole:

 

·    The consumption of cementitious materials (including ordinary
Portland cement) is forecast to increase at 10% annualised rate from just over
129 million tonnes in 2021 to over 154 million tonnes by 2030.

 

·    The production of ordinary Portland cement will be largely static as
no new cement plants will be built or existing plants expanded.

 

·    The increased consumption of cement will come entirely from increased
use of the main SCMs.

 

·    US consumption and production of natural pozzolan will increase from
a very low base in 2021 to nearly 6 million tonnes per annum by 2030.

 

Forecasts for California and Nevada:

·    Production of natural pozzolan is forecast to increase substantially
in both states based on known resources of volcanic natural pozzolan which
include both the Company's Hazen and CS Projects in Nevada.

 

·    The Company's natural pozzolan projects are well placed to benefit
from these structural changes in the cement and concrete industries.

·    California and Nevada together are expected to produce 62% of all
SCMs consumed in the US.

_________________________________________________________________________

 

 

Commenting today, Executive Chairman Patrick Cheetham said:

 

"The study that we have commissioned provides a detailed breakdown by volume
and location for all cement production and use of cement and SCMs in the USA,
and is already proving to be a useful tool in our endeavours to find a
development partner for our natural pozzolan projects in Nevada."

 

"The Company is currently waiting for a bulk sample from its Hazen natural
pozzolan project to be test ground in a commercial grinding mill by an
existing producer of natural pozzolan. It is also discussing joint development
of its CS Natural pozzolan Project with three companies. One, a large cement
and ready-mix group, has successfully completed an extensive programme of
testwork. The second is a materials company that is currently undertaking its
own testwork programme on CS natural pozzolan. The third is a cement company
that is just starting its evaluation of the project."

 

_________________________________________________________________________

 

 

Further information:

 Sunrise Resources plc                  Tel: +44 (0)1625 838 884

 Patrick Cheetham, Executive Chairman
                                        Tel: +44 (0)207 628 3396

 Beaumont Cornish Limited

 Nominated Adviser

 James Biddle/Roland Cornish
                                        Tel: +44 (0)207 469 0930

 Peterhouse Capital Limited

 Broker

 Lucy Williams/Duncan Vasey

 

Shares in the Company trade on AIM. EPIC: "SRES".

Website: www.sunriseresourcesplc.com (http://www.sunriseresourcesplc.com)

 

Market Abuse Regulation (MAR) Disclosure

The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulations
(EU) No. 596/2014 which  forms part of UK domestic law by virtue of the
European Union (Withdrawal) Act 2018 ('MAR'). Upon the publication of this
announcement via Regulatory Information Service ('RIS'), this inside
information is now considered to be in the public domain.

 

Detailed Information

 

The following information has been extracted from a market study commissioned
by the Company with Cement Distribution Consultants of Amsterdam ("CDC") to
examine the cement markets in California and Nevada which are being targeted
by the Company with its CS and Hazen natural pozzolan projects in Nevada.

 

The market study provides the Company with a detailed breakdown of cement
markets, county by county in California and for the two main population
centres in Nevada (Reno-northern Nevada and Las Vegas-Henderson). It also
details the production profiles of all cement producers and ready-mix
companies in these two states and details movements of cement within and
between different US states.

 

Much of the information is commercially sensitive but summary information of
possible interest to shareholders has been included in this news release.

 

Moreover, the report is helping the Company to identify a wider range of
potential partners for the development of its natural pozzolan projects in
Nevada.

 

Cement Markets

California cement production of around 10.7 million tons per annum ("mtpa") is
located almost entirely in southern California. CalPortland Cement ("CPC", a
subsidiary of Japan's Taiheiyo Cement Corporation in Japan) is the largest
cement producer in California with an installed capacity of 4.5 mtpa. Cemex is
second with 3.1 mtpa and Mitsubishi is the third largest with a capacity of
1.4 mtpa. The California plants are currently working at a high-capacity
utilisation.

Only CalPortland's Redding plant with a capacity of about 0.6 mtpa supplies
northern California directly following the closure of Heidelberg Cement's
Permanente plant at Cupertino near San José in northern California.

The cement market in Nevada is much smaller than in California. Nevada's
cement consumption in 2022 was 1.7 mt. Of this volume about 0.7 mt is produced
in Nevada's only cement plant at Fernley by Nevada Cement (Eagle Materials)
and the rest is supplied from California, Arizona and Utah. Nevada Cement has
a rail terminal in Sacramento, supplied from its Fernley cement plant and it
has recently purchased a ship import terminal in Sacramento.

The California cement market is strongly influenced by the overall cement
market in the wider Southwest US as the combined states of Nevada, Arizona,
Utah, New Mexico and Colorado have a structural cement deficit which is
compensated from the cement plants in southern California.

When cement consumption is low in the region, the region is largely
self-sufficient with only small inflows from the large cement plants in
southern California. These plants then supply a significant part of their
production by rail to the northern California market. In these periods (e.g.
during and after the 2008 - 2011 financial crisis) there are no cement imports
into California.

When cement consumption in the southwest US grows then an overall deficit
builds and this is then filled by the cement plants in southern California
which direct their output more to the region and reduce the supply (by rail)
to northern California. The corresponding shortage in northern California is
then resolved by imports from Asia via the ship terminals. The ship terminals
are mainly owned by the cement producers. When cement demand in the southwest
US grows further the cement plants in southern California direct more cement
to the region and when they cannot fully supply the southern California market
anymore the local cement terminals in the port of Los Angeles, Long Beach open
up.  Here, also, the import terminals are owned by the cement producers.

Ready-Mix Companies

Most cement and SCM's are destined, with sand and gravel aggregates, for the
production of concrete in pre-cast concrete structures or for use by the
ready-mix industry.

In California and Nevada, the production and sale of concrete is dominated by
the major cement producers who are vertically integrated. Nevertheless, there
are a significant number of large independent ready-mix companies owned by
non-cement producing materials (aggregate) companies, some of which are
showing interest in adding natural pozzolan to their mix of products.

Natural Pozzolan

All of the cement producers in southern California have shown interest in
natural pozzolan as an SCM and CPC is currently permitting a deposit of
natural pozzolan near to their Mohave cement plant in southern California. In
northern Nevada, Nevada Cement is producing natural pozzolan from a
third-party quarry near Reno.

Independent production of natural pozzolan is currently taking place at
dedicated grinding plants in Utah (Geofortis) and Arizona (Kirkland Mining
& Drake Cement) where the market is either internal or with the ready-mix
companies and with fly ash suppliers producing blended fly ash/natural
pozzolan products.

Market Forecasts

In the Company's announcement of 23 May 2023,which followed the 2023 Symposium
of the Natural Pozzolan Association, the Company presented its views on the
direction of travel of the cement industry which is looking to reduce the
Portland cement clinker component in cement manufacture through the
introduction of 1L, 1P and 1T cements where limestone (1L) and natural
pozzolan (1P) are introduced as clinker extenders and substitutes or used
together in Ternary blends (1T).

CDC has provided the Company with forecasts to 2030 of consumption and
production of cement and the three main volumetrically important SCMs - fly
ash, ground granulated blast furnace slag ("GGBS") and natural pozzolan. This
data has been provided independently from the market study commission by the
Company. The forecasts are detailed and cover every state in the USA. CDC has
also provided 2021 figures for comparison which is taken as a baseline year
when natural pozzolan was in its infancy.

The forecast and comparison are shown the attached Tables 1-3 which show the
2030 forecasts and 2021 comparisons for the US as a whole, and for California
and Nevada separately.

Considering the US as a whole, Table 1 shows that:

·    the consumption of cementitious materials (including ordinary
Portland cement) is forecast to increase at 10% annualised rate from just over
129 million tonnes to over 154 million tonnes by 2030.

 

·    the production of ordinary Portland cement will reduce, albeit
marginally, as no new cement plants will be built nor existing plants expanded
so cement clinker production will be relatively steady.

 

·    the increased consumption of cement will come entirely from increased
use of the main SCMs through the production of blended cements or by blending
SCMs and cement at the ready-mix or casting plants or at various cement
terminals.

 

·    fly ash production will reduce from over 24.3 mtpa in 2021 to 15.7
mtpa in 2023 but consumption will increase and be met from overseas imports
and/or reclamation of historically ponded fly ash.

 

·    US consumption and production of GGBS will increase marginally,
constrained by domestic and international availability, and changing iron and
steel making technologies.

 

·    US consumption and production of natural pozzolan will increase from
a very low base to nearly 6 mtpa by 2030.

Whilst looking at the US is instructive, when those same statistics are
considered on state-by-state basis there are substantial regional differences.
These differences arise due to the availability of different SCMs in different
states, transport costs and state-to-state infrastructure etc., as well as
varying state legislation on mandating SCM use and decarbonisation of the
cement industry.

Of primary interest to Sunrise are the target markets in California and
Nevada.

Tables 2 and 3 show comparable statistics for California and Nevada
respectively for 2021 and 2030. The tables show that:

·    production of cement will increase in both states through increased
use of SCMs in line with predicted national trends.

 

·    consumption of fly ash will increase only marginally and the
production of fly ash in Nevada will cease. This reflects the lack of fly ash
production and ponded fly ash in California and Nevada.

 

·    production of natural pozzolan will increase substantially in both
states based on known resources of volcanic natural pozzolan which include
both the Company's Hazen and CS Projects in Nevada.

 

·    California and Nevada together are expected to produce 62% of all
SCMs consumed in the US.

 

Project Updates - Hazen and CS Natural Pozzolan Projects

The Company's natural pozzolan projects are well placed to benefit from these
structural changes in the cement and concrete industries and the forecast
increase in the market for natural pozzolan.

The Company is currently waiting for a bulk sample from its Hazen pozzolan
project to be test ground in a commercial grinding mill by an existing
producer of natural pozzolan. It is also discussing joint development of its
CS Project with three companies. One, a large cement and ready-mix group, has
successfully completed an extensive programme of testwork. The second is a
materials company that is currently undertaking its own testwork and the third
is a cement company that is just starting its evaluation of the CS Project.

 

Note: The news release contains certain statements and expressions of belief,
expectation or opinion which are forward looking statements, and which relate,
inter alia, to the Company's market forecasts,  proposed strategy, plans and
objectives or to the expectations or intentions of the Company's directors.
Such forward-looking statements involve known and unknown risks,
uncertainties, and other important factors beyond the control of the Company
that could cause the actual performance or achievements of the Company to be
materially different from such forward-looking statements. Accordingly, you
should not rely on any forward-looking statements and save as required by the
AIM Rules for Companies or by law, the Company does not accept any obligation
to disseminate any updates or revisions to such forward-looking statements.

 

 

 

 

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