Sunrise Resources (LON:SRES) told investors today that it is funded for the work programmes planned at its key projects for this year.

Following a £600,000 fundraising in February, Sunrise had £1.02 million in the bank at the end of March, which it said ensured that it can continue to advance the Derryginagh and Cue projects through 2012.

At Derryginagh, which is in Ireland, the company is currently evaluating potential for a modest scale mning operating producing high-value white barite for use as industrial filler.

The results from the first drill programme at the project confirmed that high-grade extensions to the barite vein system exist well below the old mine workings.

It has been estimated that there is sufficient tonnage potential to support an annual production of at least 50,000 tonnes of barite for several years as mineralisation remains open at depth.

At the Cue diamond project in Western Australia, drill sites have been laid out and a surface sample of the Cue 1 kimberlites has been collected for further evaluation.

An Aboriginal Heritage Survey is required before drilling can begin and this is now in progress, said Sunrise. The drill programme aims to collect samples for a preliminary evaluation of diamond content and quality.

Sunrise Resources (LON:SRES) says that its continued feasibility work is justified at the Derryginagh barite project as drilling returns high grade results.This morning the company revealed results from the company’s first drill programme at the project in south-west Ireland.

The findings confirm high-grade vein intersections below historical mine workings, Sunrise said.

The best results included a 3.6 metre intersection containing 89 per cent barite from a depth of 200 metres and a 3.2 metre intersection of 61 per cent barite from 220 metres. Sunrise says the barite mineralisation remains open at depth and along strike.

"These results confirm that high-grade extensions to the Derryginagh barite vein system exist well below the old mine workings, and below the level of previous drilling carried out in the 1980s,"  said chairman Patrick Cheetham.

"The dimensions of the vein system outlined by drilling to-date are encouraging and further feasibility studies are justified."

Sunrise is now planning further feasibility work at the project.

Barite is an industrial mineral that has many uses, it is most commonly used as a weighting agent in drilling and as a filler in paint. Sunrise believes that the Derryginagh barite is of a sufficient quality to be used as a ‘premium’ paint filler, and as such its market value is estimated at around £200 per tonne.

“The market seems to be warming to the barite story given recent strong pricing and demand fundamentals which we see continuing,” said Andrew McGeary, analyst at Northland Capital.

The analyst added: “The (drill) campaign has successfully extended the mineralisation at depth, and demonstrated high grades with good continuity.”

According to McGeary it is expected to be a relatively simple task to extrapolate the thickness of Derryginagh’s barite mineralisation so that Sunrise can gain a good understanding of the deposit.

“Thus, while it is not ruled out at this stage, a JORC resource may not be necessary to progress the deposit. The next stage is likely to comprise some form of scoping study incorporating the new data,” he said.

Sunrise Resources says that its continued feasibility work is justified at the Derryginagh barite project as drilling returns high grade results.

This morning the company revealed results from the company’s first drill programme at the project in south-west Ireland.

The findings confirm high-grade vein intersections below historical mine workings, Sunrise said.

The best results included a 3.6 metre intersection containing 89 per cent barite from a depth of 200 metres and a 3.2 metre intersection of 61 per cent barite from 220 metres. Sunrise says the barite mineralisation remains open at depth and along strike.

"These results confirm that high-grade extensions to the Derryginagh barite vein system exist well below the old mine workings, and below the level of previous drilling carried out in the 1980s,"  said chairman Patrick Cheetham.

"The dimensions of the vein system outlined by drilling to-date are encouraging and further feasibility studies are justified."

Sunrise is now planning further feasibility work at the project.

Barite is an industrial mineral that has many uses, it is most commonly used as a weighting agent in drilling and as a filler in paint. Sunrise believes that the Derryginagh barite is of a sufficient quality to be used as a ‘premium’ paint filler, and as such its market value is estimated at around £200 per tonne.

“Having peaked at 6.7p last year, shares have fallen back to below 1p, a capitalisation that reflects little potential for the portfolio,” analyst Andrew McGeary said in a note to clients.

“From such a low base there is good scope for future outperformance.” 

McGeary says this outperformance could come from any one of the firm’s three projects – the Derryginagh barite project, the Long Lake gold project and diamond exploration.

This morning Sunrise announced the completion of its first drilling programme at the Derryginagh barite project in south-west Ireland. Assay results are expected later this month.

“Encouragingly (barite) mineralisation has been extended to 180 metres below surface, compared to the 60 metres extent of the old workings which is significant,” the analyst said.

“On visual inspection, thicknesses are said to be in line with shallower intersections and of high grade.” 

“Whilst news on potential for lateral extension is less positive, this remains inconclusive at this stage and the deposit also remains open along strike.”

McGeary reckons Derryginagh has the potential to underwrite the Sunrise business going forward as the company pursues other, potentially higher impact, prospects. 

At Derryginagh Sunrise is targeting the production of white barite for use as industrial filler in paint and plastics. An important first milestone at the project was the completion in May 2011 of a positive concept study, suggesting a profitable underground operation with output of at least 50,000 tonnes per year.

The recently completed drilling comprised six holes for a total of 892 metres and has been successful in extending the known barite vein system to approximately 180 metres vertically below surface. 

This represents a significant depth below the old workings where the drill intercepts, based on visual inspection, have thicknesses in line with shallower historical intersections and are visually estimated to be high-grade.

Geological logging of the drill core is being completed and results will be evaluated together with down-hole survey data to allow more detailed information to be released after assay results become available.

Sunrise expects to start feasibility studies for Derryginagh this year.

The group sees a substantial market for white barite in Europe which has traditionally been supplied from China, but the Chinese deposits are becoming exhausted and remaining reserves are being reserved for a growing domestic market.

It is planning a modest-sized underground mining operation feeding a low cost gravity separation plant producing high-value filler grade barite.

Barite is the mineral form of the chemical barium sulphate. It is an environmentally friendly, non-toxic natural product. It is chemically and physically unreactive, has a high specific gravity, and low oil adsorption. It also has good sound-deadening and radiation-shielding properties. 

Its properties make barite suitable for use as a weighting agent in oil industry drilling muds and as higher value industrial filler in, for example, paint plastics, brake linings and acoustic panels. 

Adds comments from broker Northland Capital

Drilling work on Sunrise Resources’ (LON:SRES) Derryginagh barite project is set to resume early next month after the group hired a new drill contractor today.

Last month the group halted work at Derryginagh and terminated the previous drill contract. The company said that the decision was made because the contractor’s progress was ‘unacceptably slow’.

This morning Sunrise announced that it has now signed a new drill contract, with Irish firm Priority Drilling Ltd, and the drill programme will resume in the week starting October 10.

Once work resumes Sunrise expects that the drill programme will take about 6 weeks to complete, and assay results will be available about 6 weeks after that. 

Initially the drill programme began at the beginning of April. Barite is an industrial mineral that has many uses, it is most commonly used as a weighting agent in drilling and as a filler in paint. 

Importantly Sunrise believes that the Derryginagh barite is of a sufficient quality to be used as a ‘premium’ paint filler, and as such its market value is estimated at around £200 per tonne.

Sunrise completed a concept study for Derryginagh in May, with positive results. The study suggested that a profitable operation could be developed for an output of at least 50,000 tonnes per year of barite. This drill programme, aimed at the defining a JORC mineral resource, is the next step for the potential mine development.

Northland Capital analyst Andrew McGeary highlighted that today’s update was a ‘timely reminder that Sunrise is more than a one project company’, following the last round of drill results from the Long Lake gold project in Canada, which disappointed. 

“Whilst lacking some of the lustre of the gold project (which still offers prospectivity), we continue to view Derryginagh as a potential useful cash flow generator and near term production opportunity,” McGeary said in a note to clients. 

“This drilling campaign should help firm up on that belief. “Following the retracement after the Long Lake announcement, we believe (the valuation for the) shares look undemanding.”