Sun Metals (TSX-V: SUNM) CEO Steve Robertson on Further High-Grade Copper-Gold Results Expanding the 421 Zone at the Stardust Project: “Erasing Questions More Quickly Than They're Created”

October 3, 2019

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Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the CEO of Sun Metals (TSX-V: SUNM)(OTC: SMTTF), Mr. Steve Robertson. Steve, how are you this morning?

Steve Robertson: I'm doing okay, Gerardo. Thanks very much for having me on again.

Gerardo Del Real: Let's get right to it. You put out some holes. The headline reads, “Sun Metals Extends 421 Zone to Over 160 Meters at Stardust Project.” You reported on 6 new drill holes. You found high-grade copper-gold mineralization.

You would have thought by the market reaction – the stock is down nearly 18% as we speak – that you put out a news release that said that you found anomalous or trace levels of mineralization, which obviously was not the case. You got some pretty solid numbers here.

Let's get to the market reaction and then let's get to the good stuff, the release. Tell me about the market reaction. We talked a little bit off air, obviously some finicky and impatient shareholders have used this as a liquidity event. Would you agree?

Steve Robertson: Absolutely, yeah. The story that we put out today was absolutely a good news story and to see the market reaction was very disappointing. I think that this is probably something that's more related to macroeconomic events rather than our news release. The copper space has been a pretty unpopular place to be for the last month or two.

I think that folks who were in our story and saw a liquidity event coming with the good news release just took advantage of the opportunity to hit the sell button and get off their position, which unfortunately has driven our stock down on a day when we were fully expecting that we would get a very positive response in the market.

Gerardo Del Real: Let's be very transparent about some of the main takeaways from the news release. You're pretty transparent about the fact that the team believes that you're still – and this is actually a direct quote from the release – “distant from the heart of the system, which indicates there is significant, highly prospective exploration ground to the north with the opportunity to discover more of the high-grade copper-gold mineralization that we are seeing in the 421 zone.”

You also highlight that you expect to see increased consistency in grades from hole to hole as you track the mineralizing fluids to their source. Can you speak to that a bit?

Steve Robertson: Absolutely. From a geologic perspective, Gerardo, we're very happy with what we're seeing in the drill returns. This system is very strong in terms of the hydrothermal alteration and the overprinting and cross-cutting relationships that we're seeing. It's a very complex, long-lived system, which of course means something that's got lots of opportunity to provide tonnes and grade.

From the results that we just put out, you can see that there's an abundance of high-grade results that have been returned. We're continuing to stretch this zone out. We're discovering extensions to it. We've now got it over a plunge length of 160 meters, which is starting to get fairly substantial in size.

We haven't done a 43-101 update yet, but the tonnage calculation that's going to come at the end of this exploration exercise is going to be quite impressive, I'm sure. We really are very excited about the fact that we are seeing these high-grade nodules within the massive sulfide because the grade is king in these types of deposits and we're getting all of that in spades.

Gerardo Del Real: Let's talk about some of the highlight numbers. 45.55 meters in hole 436D grading 1.44% copper, 1.18 grams per tonne gold, and 27 grams per tonne silver. Hole 436D also had an interval of 24.85 meters, which graded 3.13% copper, 4.85 grams per tonne gold, and 93.5 grams per tonne silver. I could continue.

Again, what you hit was grade-wise very, very good. The reaction was not very good. I've heard some comments from non-geologists out there talking about the pinching and swelling of the system and the unpredictability of it. I think you touched on that briefly here just a second ago, but can you speak to that and address that a bit?

Steve Robertson: Well, pinching and swelling is a something that you typically see in these types of carbonate replacement systems. They do come and go. The best analogy that I've heard to exploring one of these systems is it's like you're drilling along a python. Right now we're drilling on the python where it's eating a rabbit, and we're going to keep on going. The next little spot down, maybe we'll hit a gopher, maybe we'll hit a goat. I think that that's an excellent way of thinking about this. These things do pinch and swell.

When we were down for a workshop in Mexico last spring, we went to a mine that had been in continuous operation for 300 years. It was really a very educational experience to go and see one of these systems that has been exposed. You could see the pinching and swelling all along the drift. I think that the fact that we're continuing to see very strong hydrothermal alteration in these areas, obviously there's good fluid flow through the area.

We're not pinching at all in 421. We're still continuing to see good strength, but there's no doubt in my mind that there are other pods of mineralization defined in this area with this strong hydrothermal system that we're discovering.

Gerardo Del Real: Are you satisfied with the continuity of the 421 zone thus far?

Steve Robertson: Oh, very much so, yeah. We're seeing good continuity from drill section to drill section, so we can actually correlate some of the high-grade areas. Different geologic features that we're seeing within the mineralized zone we can actually carry across from section to section. The system is actually fairly well-behaved.

Gerardo Del Real: What's the biggest question mark right now around the system? You talked about it being well-behaved and the predictability of it and the continuity being satisfactory.

What's the biggest question mark you have at this point?

Steve Robertson: Well, quite frankly, we're starting to erase the question marks more quickly than we're creating them. Within a year and a half of becoming public, we've actually got this project to the point where we're starting to think about do we have enough tonnage here whether this ia a mine or not.

I think that we've been progressing things very, very quickly. Of course, we started with a running start because the historic work that had been done on the project had already established the resource of about 3 million tonnes of about 2.8% copper equivalent, so a nice high-grade resource to get started with. I think that we're well along the way to having established another sizable tonnage portion similar to that in the new zone.

I think that we're finding everything that we really want to find in our exploration program. That's why we've taken the bold step of suggesting that we're adding another drill and we're going to put in a winter camp so that we can continue to drill throughout the winter.

Gerardo Del Real: You talked about the addition of the new drill. I couldn't help but notice that 448 and 449 are both in progress already. Is that still ongoing?

Steve Robertson: Yeah. We've got the two drills still working on site right now. The third one has not been started up yet because we've got a shortage of space in camp. Because we're going to be gearing up for a winter program, we're building roads and things like that. There's just not enough room in camp right now, but we'll rectify that very quickly. We've identified a new trailer unit that we're going to be taking up to site very quickly, get that set up, and then that'll allow us to have that third drill up and running.

Gerardo Del Real: Fantastic. Steve, thank you so much for your time. I'm looking forward to further assays and having you back on. Again, thanks for jumping on the call on such short notice and providing an update to everybody.

Steve Robertson: Thanks very much, Gerardo

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