Sunstone Metals Ltd (ASX:STM) is a well-credentialed and funded company that looks to have made significant recent discoveries at both the Bramaderos and El Palmar properties in Ecuador, according to Taylor Collison.
The financial services firm has reiterated its ‘Spec Buy’ recommendation for Sunstone, noting that drilling results to date have highlighted the potential for both projects to further deliver with work on the areas outside of the core targets, with Verde Chico also now adding further discovery upside.
The following is an extract from Taylor Collison’s research update:
Our view
Sunstone Metals has continued to successfully progress its Ecuadorean porphyry copper-gold prospects, which are also prospective for epithermal gold-silver mineralisation. Ongoing work, particularly at the key porphyry targets continues to return results typical of globally significant porphyry deposits, highlighting the potential for Sunstone to deliver to investors.
Ongoing drilling, subsequent to our March 2022 Update, has further advanced the contiguous Alba and Brama prospects at the Bramaderos Project in Southern Ecuador, and the El Palmar prospect within the overall El Palmar Project in Northern Ecuador, with the latter close to Solgold’s (LON: SOLG, market cap of ~A$1.3 billion) Cascabel Project, which includes the 2.6 Bt Alpala deposit.
At Alba/Brama, drilling has defined mineralisation over an area of 1,100 m x 400 m to a depth of at least 400 m, with the significant expansion potential now being drill tested. The results of drilling will be used in an initial Mineral Resource Estimate (“MRE”) for the combined prospects to be delivered later in 2022. Many of the overall broad mineralised intersections include higher grade zones, underlining the potential for high grade “sweeteners” in the deposit; a similar situation occurs at El Palmar, and which is typical of the better quality porphyry deposits globally.
In addition to ongoing drilling at Alba and Brama, the Company, with three rigs on site, has recently commenced drilling at other largely untested priority prospects at Bramaderos.
Drilling at El Palmar, which has delivered intersections of up to 163.55 m @ 0.71 g/t Au and 0.2% Cu, continues to deliver quality intersections. However, with only 19 holes completed (and assays received for 12) it is early days yet at this 700 m diameter porphyry intrusive complex with mineralisation open, which has the potential to host a major deposit.
Like Bramaderos, El Palmar contains several highly prospective targets outside of the current focus of drilling that have not been drilled, with the Company working up drill targets.
Most recently, the Company has announced the signing of a Letter of Intent to acquire 100% of the 2,872 ha Verde Chico Project, to the west of El Palmar. Historical work (with the most recent being in 1998) has identified up to 24 m @ 21.2 g/t Au in trenching over a series of gold veins, with this underexplored concession being considered highly prospective for epithermal gold-silver and porphyry gold-copper mineralisation.
In summary Sunstone is a well credentialed and funded company that looks to have made significant recent discoveries at both the Bramaderos and El Palmar properties. Results to date also highlight the potential for both projects to further deliver with work on the areas outside of the core targets, with Verde Chico also now adding further discovery upside.
Key points
- Quality assets in a highly prospective region: Ongoing work has demonstrated the potential to continue to deliver positive results, located within the highly productive cordillera of Western South America, the world’s largest copper producing region.
- Cashed up: Being well cashed up, in what is looking more like an adverse market, means Sunstone is in a good position for the medium term, particularly given the porphyry target style. These can take considerable time and cost to “crack the code”, and have a habit of throwing up surprises, however with the chance of a world-class prize in the offing. The financial position also allows the Company to take a methodical and considered approach to activities.
- Personnel with the right experience: The key personnel in Sunstone have extensive successful and applicable experience, including being involved in the Tujuh Bukit (Indonesia) and Cascabel (Ecuador) porphyry discoveries – this experience is now being applied successfully to Sunstone’s projects.
- Well served by infrastructure: All projects are in areas of good transport and utility infrastructure and are located at relatively low RLs (up to 1,500 m) 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 programmes going forward which should result in steady newsflow.