Sunstone Metals Ltd (ASX:STM) has attracted a ‘Speculative Buy’ recommendation in an initial research report from Taylor Collison following a potential major discovery at El Palmar Porphyry Copper-Gold Project in northern Ecuador.
The financial services firm reports that Sunstone is fully funded for the medium term with about A$21 million in cash and liquid assets.
Promisingly, Sunstone had recently intersected 480 metres of gold-copper mineralised porphyry from the surface in the first hole completed at El Palmar.
The following are the key points from Taylor Collison’s research note:
Key points
- Quality assets in a highly prospective region: Both projects are highly prospective (as confirmed by work to date) and located within the highly prospective productive cordillera of Western South America, currently the world’s largest copper producing region.
- Cashed up, insulated from vagaries of the market: By virtue of the sale of Viscaria and the other Northern European assets, the company is well cashed up with ~A$21 million in cash and liquid assets. This is an important consideration for porphyry explorers, given that they can, by virtue of the style of mineralisation, take significant drilling to “crack the code”, and even when that is done some drill holes may not be up to investors’ expectations. As such Sunstone is largely insulated from the short-term thinking on what are longer-term projects.
- Personnel with the right experience: The key personnel in Sunstone have extensive applicable and successful experience, including being involved in the Tujuh Bukit (Indonesia) and Cascabel (Ecuador) porphyry discoveries – this experience is now being applied successfully to El Palmar and Bramaderos.
- Well served by infrastructure: Both projects are in areas of good transport and utility infrastructure and are located at relatively low RLs (up to 1,500 metres) and manageable topography in the Cordillera Occidental of Ecuador – the tenements cover a mixture of farming and wooded land, with the company having good relationships with locals.
- Ecuador has turned the corner: A change to more mining-friendly politics over recent years has made Ecuador a more attractive destination, with several majors now committed to exploration and mining.
- Ongoing news flow: The company has significant exploration and evaluation programs going forward which should result in steady newsflow. This includes ongoing drilling at both projects, and an initial mineral resource estimate at Bramaderos, due in H1, 2022.