Speaking during the MST Access and NWR Emerging Copper Stars Conference yesterday, Sunstone managing director Patrick Duffy said the company’s Bramaderos and El Palmar projects in Ecuador represented potential tier one assets.

“These are high-quality, multi-decade assets, gold and copper, which we expect to be both producing, in time, 400,000 ounces gold equivalent per annum for many years to come,” he said.

“If you’ve got two assets like ours, they’re worth a lot of money and I’ve been very clear since joining the company that we need to prioritise value realisation and ensure we do the best by the shareholders.

“So we’ve been adding low-cost resource ounces, looking at ways we can scale the development of these two projects, but looking for a sustainable funding model that will enable these projects to get built and maximise value for shareholders.”

Discussions advancing

Sunstone had A$2.7 million in cash at the end of June and is yet to report its September 30 cash balance.

“We stopped drilling late last year to preserve the money that we had, and since the end of June, we’ve had another A$1.8 million of options exercised, so that’s paying for our expenditure,” Duffy said.

“At the moment, there’s still another A$2 million of options outstanding that are 200% in the money so we’re well funded.”

In March, Sunstone revealed that it was in advanced talks with two potential partners.

“Since then, others have progressed and without putting out a specific announcement and restricted on what I can say, but certainly very confident we’re going to achieve the objectives we set around that sustainable funding model process,” Duffy said.

“Hot off the press is a strategic investment being made into Titan Minerals, which is near our projects, and a great validation for both Ecuador, Titan and all the other opportunities, including ours in Ecuador.”

Earlier this week, Titan announced that China’s Lingbao Gold International Company was investing US$10 million at a premium to acquire 9.9% of the company.

Projects growing

Earlier this week, Sunstone provided an update on its Bramaderos gold-copper project in southern Ecuador, which has a resource of 2.7 million ounces of gold equivalent.

“It’s in an ideal location, as good as location as you’ll find in South America,” Duffy said.

The company has a porphyry exploration target for Bramaderos of 3.3-8.6Moz AuEq, as well as 900,000oz-1.7Moz AuEq for the Limon epithermal gold-silver deposit.

Sunstone is targeting a resource update next month.

“The primary objective of this is to increase the indicated component and start scoping studies to progress the development of this asset,” Duffy said.

Duffy said the expectation was that Bramaderos would eventually grow to more than 10Moz AuEq.

The El Palmar porphyry project sits in northern Ecuador and has a resource of 1.2Moz AuEq, based on only limited drilling.

“It’s in this elephant country where there’s huge copper deposits,” Duffy said.

El Palmar has a porphyry exploration target of 15-45Moz AuEq.

“You don’t find these type of projects in Australia anymore. These are huge deposits, and certainly both strategic and world class,” Duffy said.

Analysts bullish

A pair of research notes on Sunstone came out last week, both with positive outlooks.

Morgans analyst Chris Brown rates the company as a speculative buy with a A3.5c price target, above this week’s trading level of A2.3c.

MST analyst Chris Drew lifted his price target from A3.2c to A5.6c to reflect Sunstone’s large exploration targets.

“I think Patrick and the team did an amazing job building a large-scale asset base, but they ultimately built into a market that perhaps, over the last few years, hasn’t been so supportive for junior mining companies,” he told the conference yesterday.

“This year, as things have been improving, the focus for the company has been a lot more on that strategic process, less action on the exploration front, so that can be a little hard to be front of mind for people, but the stock is doing well.”

The stock is up 130% since the start of the year.

“I don’t think it’s too surprising to suggest that probably the next catalyst for them is likely to be the processes and the outcome on that,” Drew said.

“I think that’s going to be a key valuation marker and a validation point for the projects, and then Patrick and the team will be able to crack on with exploration and studies and just keep moving up that curve in terms of those valuation markers.”