Sunrise Resources PLC (LON:SRES) shares surged in early trading Friday after it said it had signed a non-binding memorandum of understanding (MOU) that will pave the way for the first sales of perlite from its CS Pozzolan-Perlite project in Nevada, USA.
The AIM-listed miner said that under the terms of the MOU, the parties would negotiate a purchase and sales agreement to sell/buy a minimum quantity of raw perlite over a specified period.
Sunrise added that the purchaser, a long established buyer and processor of raw perlite, would provide commercial and logistical support and advice to Sunrise during the development of the perlite deposits on its CS and NewPerl Projects.
The purchaser would also make its production plant available to the projects for commercial scale testing, the company said in a statement.
Sunrise also said that the proposed Offtake Agreement would account for a significant proportion of the production tonnage required to justify development of its perlite deposits.
Patrick Cheetham, executive chairman of Sunrise, said: "This is a significant step forward for the Company and a key value driver for the CS Project. The perlite deposits at our CS and NewPerl Projects represent new discoveries and are creating significant interest amongst consumers of raw perlite.
He added: “The market for horticultural grades of perlite is particularly strong and we look forward to working with the Purchaser to bring the project into production. In the meantime our mine permitting work and pozzolan testwork is continuing apace."
In late afternoon trading, Sunrise Resources shares topped the London market's gainer board, up shares were up 46.2% at 0.19p.
In a note to clients, analysts at 'house' broker Northland Capital said: "It’s important to note that the current MOU for a proportion of the potential perlite production is non-binding and there remains a risk that it will not lead to a commercial offtake agreement. However, it remains an important first step towards securing an offtake agreement."
-- Adds broker comment, updates share price --