REG - Sunrise Resources - Sale Option Agreement – Pioche Sepiolite Project

Sunrise ResourcesAnnouncement

28/06/2022 07:00

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RNS Number : 3725Q  Sunrise Resources Plc  28 June 2022

28 June 2022

SUNRISE RESOURCES PLC

("Sunrise" or the "Company")

 

Sale Option Agreement - Pioche Sepiolite Project

 

Sunrise Resources plc is pleased to advise that it has granted an Option to
Purchase its wholly owned Pioche Sepiolite Project in Nevada, US to a US
subsidiary of Spanish company Tolsa S.A. ("Tolsa"), the world's largest
producer of Sepiolite.

 

Key Points

 

·    Pursuant to a Binding Heads of Agreement, Sunrise has granted Tolsa
an exclusive 6-month Option to Purchase the Pioche Project claims for US$1.25
million payable in cash.

·    Tolsa may extend the option for a further 12-month period on payment
of US$50,000.

 

·    Sunrise to retain a 3% net revenue royalty for a 25-year period from
the commencement of commercial production.

 

·    A nominal advance royalty of $50,000 per annum will be paid to the
Company if production is not started within 5 years for any reason.

 

·    Finders fees payable to an independent third party, 20% of future
payments, for broking the agreement

 

·    The Agreement follows encouraging results of testwork carried out by
Tolsa in Spain following a preliminary field visit to the Pioche Project in
December 2021.

 

·    Sepiolite has unique characteristics, is scarce, and there are very
few commercial deposits in the world.

 

 

 

 

Commenting today, Executive Chairman Patrick Cheetham said:

 

"We are delighted to be working with Tolsa on our Pioche Sepiolite Project. As
the world's largest producer of sepiolite, we feel Tolsa is best placed to
evaluate and develop the commercial potential of the Pioche Project.

 

There are very few commercial sepiolite deposits in the World and whilst the
Pioche Project is at an early stage we are expecting Tolsa to move quickly
with its evaluation following the signing of this agreement. There is a large
market that can be targeted in North America that is currently served by
alternative clays or imported sepiolite. Sepiolite from the Pioche Project,
being in Nevada and near to rail,  is well situated to replace some of this
supply.

 

Owing to the specialised nature of sepiolite and following the success of our
initial sampling, we have been working with an industry specialist on a
success fee basis to find a partner for the project. We are gratified that
this has resulted in a deal with Tolsa, following their own encouraging
test-work.

 

We have been able to negotiate a favourable net revenue royalty for the Pioche
Project which could be an important risk-free cash generator in the future.

 

 

 

 

 

 

In addition to our core CS Pozzolan-Perlite Project, Sunrise has a growing
portfolio of potential revenue streams from buyouts and royalty interests from
our systematic valorisation of non-core projects. In addition to the Pioche
Project, our royalty portfolio includes the Stonewall and Garfield Projects
operated by Golden Metal Resources plc, the Junction Gold-Silver Project
operated by VR Resources Ltd and the Jacksons Wash project operated by Kinross
Gold.  We also hold a portfolio of 100% owned industrial mineral and precious
metal projects and continue to seek valorisation of these assets whilst
maintaining our focus on pozzolan and perlite"

 

___________________________________________________________________________

 

 

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

 

 

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

 

About Sepiolite

 

Sepiolite is a non-swelling, lightweight, porous hydrous magnesium silicate
clay. It possesses  a high surface area due to channels in the crystal
lattice that gives it a structural nano-porosity. Its unusual crystal shape
also adds to the internal porosity and gives it a light weight.

 

Sepiolite's high surface area and porosity account for sepiolite's outstanding
sorption capacity. Just 20g of sepiolite can have an internal surface area
equivalent to that of a football field and sepiolite can absorb more than its
weight in water. The largest market globally for sepiolite is for use in
light-weight non-clumping pet litters where it has superior properties
compared to other clays used in this application.

 

With one exception, there are no significant sepiolite deposits known in the
USA, so a large potential market would exist for any new US producer of
sepiolite.

 

Sepiolite is also used extensively in agriculture as a slow-release absorbent
and adsorbent carrier for chemicals and pesticides and in animal feeds as a
binder and carrier for nutrients and growth promoter. It is also used to
decolour vegetable and mineral oils.

 

The unusual crystal shape means that sepiolite is not easily flocculated and
so it's colloidal properties make it useful as a suspending agent in paints,
medicines, pharmaceuticals and cosmetics.

 

Sepiolite, unlike other clays, is not affected by salt water and so sepiolite
drilling muds are used in oil field wells where brine formations are a
problem. It is also the only clay that is stable at high temperatures and so
is used in drilling muds for geothermal wells.

 

Sepiolite is usually mined by open pit methods and is processed by drying,
grinding and screening and may undergo further treatments and transformations
depending on the market.

 

Sepiolite is a very uncommon clay because of both its peculiar characteristics
and scarce occurrence. There are very few commercial deposits in the world.

 

About the Pioche Sepiolite Project

 

The Pioche Sepiolite Project (the "Project") is located close to the historic
mining town of Pioche in Lincoln County, Nevada. It lies within 4km of US
Highway 93, from which it can be accessed by a network of 4WD tracks, and 47km
from rail at the town of Caliente, Nevada.

 

The Project was acquired by claim staking and comprises 26 placer mining
claims (400 acres) held by Sunrise's Nevada subsidiary, SR Minerals Inc.

 

High grade sepiolite has been identified in three separate outcrops on the
claims at the base of a flat lying cap of siliceous dolomite. These deposits
are believed to have formed from volcanic ash deposited and weathered in an
extensive ancient lake system that once covered the area of the claims and was
fed by volcanoes in the surrounding areas.

 

It is considered likely that the sepiolite bed, which has an as yet undefined
thickness, is continuous beneath the silica-dolomite capping but this needs to
be confirmed with further exploration, as does the potential for multiple
sepiolite bearing beds at depth.

 

The Company's samples from outcrops have assayed 88%-90%+ sepiolite and
testwork to establish the industrial application of the Pioche sepiolite
carried out at Tolsa's Spanish labs has been encouraging.

 

As at 31 March 2022, the Pioche Project was carried in the Company's unaudited
accounts at a value of $7,664 (£5,836) and, to date, the Company has incurred
expenditure of approximately $33,000 on the Pioche Project.

 

About The Agreement.

 

The Agreement is made as a binding Heads of Terms Agreement between Sunrise's
US subsidiary SR Minerals Inc ("SRM") and Tolsa USA Inc. ("Tolsa")  The
principal terms of the Agreement are as follows;

 

1.   Tolsa has been granted a 6-month option (the "Option") to purchase the
Pioche Claims for the sum of US$1.25 million payable in cash.

 

2.   The Option may be extended for a further period of 12 months on payment
of US$50,000.

 

3.   If the Option is exercised, then, on the closing of the sale, SRM will
retain a 3% net(1) revenue royalty on all minerals and mineral materials
produced and sold from the Pioche Project claims and any claims acquired by
either party in a 2-mile radius of the external boundary of the Pioche Project
claims (the "Mineral Products Royalty").

 

4.   The Minerals Products Royalty will be payable from the commencement of
commercial production for a period of 25 years and a nominal advance royalty
of $50,000 per annum will be paid if production is not started within 5 years
for any reason.

 

Twenty percent of the above payments and any royalty payments will be payable
as a success fee  to an unrelated third party, a sepiolite industry
specialist, who has brokered the agreement with Tolsa.

 

SRM expects Tosla to undertake its own evaluation of the Pioche Claims, at its
own expense, during the option period and the exercise of the option is at
Tolsa's sole discretion.

 

(1)Net revenue is revenue net of any bonus, commissions, rebates and any other
discounts provided to unrelated third parties)

 

About Tolsa

 

Tolsa S.A., founded in Spain in 1957, is a privately owned specialist clay
mining and processing company that now operates in 95 countries including the
USA where it has bentonite mining operations in Wyoming and processing
facilities in Nevada.

 

It is the largest producer of sepiolite in the World, mainly from its mining
operations near Madrid in Spain and it is Europe's largest producer of
lightweight hygienic pet litter with 37% of the European market.

 

In 2021, Tolsa reported global turnover of  Euros 193 million, a clay
processing capacity of 1.2 million tons/year and annual production of over 1
million tons of clay products.

 

 

 

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