Sunrise shares soar as Cue diamond project is given ‘green-light’ for exploration

Sunrise Resources (LON:SRES) shares soared 25 percent this morning with the news that it can press ahead with a drilling programme on the Cue diamond project in Australia.

The diversified junior explorer’s roots are in the diamond sector. It was founded back in 2005 to acquire Tertiary Minerals’ (LON:TYM) diamond exploration assets in Finland. 

Since then it has amassed a portfolio of early stage, multi-commodity assets.

Its interests include the Long Lake gold project in Ontario Canada, a barite - barium sulphate, a non-toxic chemical used in the oil industry and in the production of paint - mine development in Ireland and diamond exploration assets in Australia and Finland.

The Cue project, which was explored by De Beers between 1994 and 2001, has been lingering in the background while Sunrise waited for an exploration licence.

It has now been granted an initial 5 year exploration licence over the 70 square kilometre area on the Yilgarn Craton, Western Australia. 

Northland Capital’s head of research David Johnson said: “the historic De Beers programme makes this more brownfield than greenfield exploration.” 

“(Cue) now comes into the reckoning as an area of diversification to add to the encouraging start to Long Lake Gold attributable for the majority of the company’s market valuation and the emerging Derryginagh barite project.” 

In many ways the Cue project is coming to the fore at an opportune time. Indeed Johnson is forecasting a re-emergence of the diamond sector. He highlights the market is currently buoyed by ‘positive noises’ on diamond prices - that are typically determined by private auctions or valuations - among companies operating in the sector.

Sunrise is now preparing the first drill programme which will get underway in the second quarter of 2011, subject to the completion of the heritage surveys and drill rig availability. 

The first drill programme will aim to sample known kimberlites, so that Sunrise can evaluate the diamond content and characteristics. 

"De Beers found diamondiferous kimberlites in two separate areas on the licence and considered that the area had excellent potential for further discoveries,” chairman Patrick Cheetham said. 

“A number of targets were defined by De Beers before their strategic decision to cease exploration in Australia and these need to be drill tested."

Sunrise will also drill some un-tested kimberlite targets at Cue - named Fennels Well and Soapy Well.

At the Soapy Well prospect there are three parallel kimberlite dykes and at Fennels Well - which is 2.5 kilometres along strike from Soapy Well - there are multiple kimberlite targets.

Sunrise shares have come quite a long way in a fairly short period of time - rising from around 0.5 pence in September to peak above 6 pence a share in January - largely driven by its progress at the Long Lake gold project in Ontario, Canada.

This morning the shares opened strongly, quickly tacking-on more than 26 percent to 4.55 pence, and after a brief pull-back to 3.675 pence, they have come back to trade at 4.35 pence a share – up 0.8 pence or 22.5 percent on the day.

Long Lake is situated in Ontario, near the famous Sudbury mining region. The site hosts a historic gold mine which produced 56,000 ounces of gold up until it was closed in 1939.

A drilling programme, which was completed in December 2010, showed that gold mineralisation extends near surface beyond the historic pit limits and confirms that mineralisation continues at depth below the mine workings - just as Sunrise predicted.

The company drilled in and around Long Lake’s historic mine workings. The programme tested near-surface gold mineralisation beyond the historic pit. It also tested the gold mineralisation adjacent to and below the historic mine workings, which reached a vertical depth of 55 metres.

The best results include 17 metres grading 2.9 grams per tonne gold, as well as 2.3 metres grading 16.1 grams per tonne gold within a 35 metre thick interval grading 2 grams per tonne gold. The highest grades reached 55 grams per tonne gold, albeit over narrow intervals.

Importantly the deepest hole in the programme has confirmed the continuation of the gold mineralisation at depth, also as predicted.

These results were further boosted by positive geophysical results earlier this month. 

Crucially these results backed up the findings of the drill programme and it also revealed several other anomalies that warrant further exploration.