Sunrise Resources expects start of feasibility studies at Derryginagh project in 2012 - UPDATE

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Sunrise Resources (LON:SRES) expects feasibility studies to begin at its Derryginagh barite project in Ireland in 2012 along with a work programme at its diamond prospect in Australia.

The firm released its final results for the year to September 30 today, in which it said 2010/11 had been challenging, not least due to the decline in investor interest across the market for junior mining stocks.

But executive chairman Patrick Cheetham said he was encouraged by the results at Derryginagh to date.

The firm is targeting the production of white barite in south west Ireland for use as industrial filler in paint and plastics.

An important first milestone at the project was the completion in May of a positive concept study, suggesting a profitable underground operation - with output of at least 50,000 tonnes per year.

"This was based on initial estimates of mining and processing capital and operating costs and using published barite sales prices which have since risen by about 20 per cent," the company highlighted today.

There is 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, added Sunrise in the statement.

The firm posted a loss of £540,158 for the year compared to  a loss of £214,830 in 2010. Its cash and equivalents as at September 30 stood at 696,338 (2010: £340,512).

Sunrise also has gold and base-metal exploration interests in Canada and diamond exploration interests in Finland and Western Australia.

Cheetham said of today's results: "It has been a challenging period for shareholders in 2010/11 as investor interest initially focused on the Long Lake project was adversely affected when the second round of drilling did not meet market expectations.

"This was accompanied by a wider and sharp decline in investor interest in junior mining stocks during 2011 as the sovereign debt crisis continued to build.

"In this environment the positive project and market developments at Derryginagh have not received the market attention I would like but I am nevertheless encouraged by results to date and in 2012 we expect feasibility studies to commence at Derryginagh and also for work to start at our exciting diamond prospect in Australia."

"The board believes that, at this stage in its development, a diversified portfolio spreads risk and we look forward to keeping shareholders informed of new developments."

Northland analyst Andrew McGeary said in a note: "Derryginagh has the potential to underwrite the business going forward as the company pursues other, potentially higher impact, prospects."

"Having peaked at 6.7p, shares have since fallen back to 1.1p, a capitalisation of £3.4m. From such a low base there is good scope for future outperformance given progress in any one of the three key projects."