Sun Metals (TSX-V SUNM) CEO Steve Robertson on the Polymetallic Stardust Project that Boasts the Best Copper Drill Hole of the Year in Canada
Gerardo Del Real: This is Gerado Del Real with Resource Stock Digest. Joining me today is President and CEO of Sun Metals (TSX-V SUNM)(OTC: SMTTF), Mr. Steve Robertson. Steve, how are you this morning?
Steve Robertson: I'm going great, Gerardo. How are you?
Gerardo Del Real: I'm doing well. I'm excited for you. I think you just released what might be the best copper hole drilled in Canada this year. Fresh off the press you intersected 100 meters grading 5% copper equivalent at the Stardust Project.
I want to talk about the team you have in place Steve. I want to talk about the history of it and what you got moving forward, but man let's talk about this intercept because it's impressive.
Steve Robertson: Absolutely, we couldn't have asked for a better result to come out of the gates with our first substantial drill program up at Stardust. The results of this hole exceeded all of our expectations, and it's been really vindicating to see this result coming out of the hard work that we've been doing over the last year.
Gerardo Del Real: Tell me about the Stardust Project. Tell me about the history of it. This isn't a new project. You're doing different things with it and I want to talk about the technical team, but let's start with the project and the history of it. Tell me the work that's been done in the past and then let's talk about how you got here and the team that you have in place that, frankly, has been brilliant technically at developing a new model for the project. Let's talk about the history of the project, Steve. Tell me about it.
Steve Robertson: Sure. Well it's got a long history, it goes back to 1944 when the first high-grade epithermal vein with high grades in silver, gold and antimony were first discovered. The miners, the old timers went in and actually mined a little bit of the vein. Then exploration took over and over the years, over the decades this system had been traced for 2.2 kilometers all the way from the high-grade epithermal veins through the mantle and chimney part of the system. And then finally in 1999 somebody first discovered the copper-gold skarn part of the system and that's where the focus has been ever since then.
It's really quite a special project because there is 2.2 kilometers of continuous mineralization that had been exposed on this property. And it's now getting to the point where we need to raise the bar a little bit in terms of our ability to focus in and find the high-grade areas and find the more continuous mineralization. I think our team has done a great job on that.
Gerardo Del Real: Now it's worth noting that Stardust is a polymetallic district in Central BC, and I think this morning's release speaks to that. Those 100 meters included 2.51% copper, 3.03 grams per tonne gold, 52.5 grams per tonne silver. So when I say it's a polymetallic district I think you'd probably agree that's accurate, Steve?
Steve Robertson: Oh absolutely. This is a classic CRD system, carbonate replacement deposit. We've got a technical advisory team that's led by Dr. Peter Megaw. Peter has worked on this project previously, so this is his second go around with this project, and we've known each other since the mid-1990s. Peter had been telling me about this project for many years. When the opportunity came to work on the project I gladly jumped at it, because I knew that this system was very unique of all the carbonate replacement deposits in North America.
It has a mineralized porphyry part of the system, the contact copper-gold skarn, the silver-zinc rich mantle part of the system, and the high grade epithermal precious metal veins. Very rarely do you ever find all those components in place. Usually you find one or two parts of the system, but Stardust is very unique in that it’s got everything. We know that it’s a big, strong, robust system. We know that it’s got high grades, and that's what makes it so attractive to us at Sun Metals.
Gerardo Del Real: Now Sun Metals is part of the Oxygen Group of companies. For people that may not be familiar can you explain what that means, Steve?
Steve Robertson: Yeah. Oxygen Group is founded by three members, Mark O'Dea, Donald McInnes and Sean Tetzlaff. Those three folks got their start together with a company called Fronteer Gold. Fronteer Gold was a company that I think was started in 2001, and over 10 years they've built it up to a company that's worth $2.3 billion and taken over by Newmont for a project they had down in Nevada called Long Canyon. The guys, when that happened, they were far too young to retire, so they formed Oxygen Group.
The best description is it's their own merchant bank where they incubate junior mining companies. So they give a platform where junior companies can grow and share resources. There's no markup, no management fee. The private owners of the Oxygen Group aren't getting rich off of the public companies. It's actually a very beneficial way for public companies to be able to grow. Just the tremendous success record that these guys have got has always been based on their ability to attract good people. Now we have the opportunity to share those good people within the group and it's really a very productive platform for us to work with them.
Gerardo Del Real: You mentioned the rich history of the project. I believe over $25 million has been invested. Can you talk to me a bit about the current market cap of the company, in light of this news here?
Steve Robertson: Yeah, our current market cap is only about $20 million, which is about the same as it was when we did our IPO in the Spring of 2018. There really hasn't been any news of substance to generate any excitement, especially in the markets over the summer where things were not all that conducive for junior mining companies. Now that we finally have some substantial news coming out I expect to see that that's going to change pretty dramatically or quickly. And I think that hopefully we'll get to a more reasonable market cap as we move forward.
Gerardo Del Real: Well, absolutely outstanding hole again and correct me if I'm wrong, I do believe it is the best copper hole drilled in Canada. How are you following this up? What's next?
Steve Robertson: Well, we're obviously going to go into this area. Hole 421 is the one where we had the rich intercept and 100 meters of 5% copper equivalent. That is clearly an indication that we have found the right area, we found the sweet spot where we need to be. This is obviously on the fluid pathway where the mineralizing fluids had passed through this area and had gone out to form some of the peripheral mineralization that's a little bit smaller and not quite as rich.
We're back into the part of the system now where we're right on track to be able to follow it to find more continuous and rich mineralization. That's the easy way to get to the threshold of tonnage and grade where we're going to need to be to go take this project to a PEA study. The sort of thing that of course we want to do is be able to get this to the point where we're going to see a possibility of a mine in its future. And so, to do that we have to build tonnes and grade. I can't think of a better place to start then right where we are, hole 421.
Gerardo Del Real: Excellent. And then there are assays still pending. Is that correct?
Steve Robertson: That's correct. We've had two news releases now on the 2018 program, we're going to continue to have news roll out over the next four weeks. As we get the results in we'll continue to release them. And this will all build toward getting a full compilation of the 2018 drilling program. After we've done that then we'll start to plan out what we're going to do in 2019.
Gerardo Del Real: I encourage everybody to go to the Sun Metals website. You did an excellent job in this release of releasing some cross sections, some videos. The website is sunmetals.ca. Really, really good graphics and videos that explain why you're as excited about the project as the market I think is going to be this morning.
Talk to me a little bit about the share structure, Steve. We touched on the market cap being slightly less than the money invested in the project thus far. What does that look like?
Steve Robertson: Yeah we've got about 78 million shares outstanding at this point. The share structure when we did our financing in the spring was $0.25 per unit, and each unit got a common share plus a full warrant. Those warrants are good for five years, but they are callable. So if our share price gets to $0.70 for 15 days or more we can call those warrants and they have a strike price of $0.35. So that would be another $9 million dollars that would come into the treasury when those come in.
About 40% of the company is owned by founders and insiders, so we have a good strong shareholder base and most of that initial financing was friends and family and close affiliates of the company. We have the shares in good hands and I think that it's going to be a pretty strong market as we move forward and get more of these results out.
Gerardo Del Real: Excellent. Well I'm looking forward to having you back on. Heck of a hole. Congratulations again and hopefully the next set of news is somewhat close to this. I don't know if you're going to be able to duplicate this but congrats again, and hopefully I can have you back on.
Steve Robertson: Alright, I'll look forward to it, Gerardo.
Gerardo Del Real: Thanks for your time, Steve.
Steve Robertson: Alright, thank you.