Sun Metals Corp. [SUNM-TSXV] said Friday DEcemver 7 that it is raising $5.16 million by way of a private placement to fund exploration at the Stardust polymetallic project in British Columbia.
The company said it has struck a deal with PearTree Securities Inc., whereby PearTree, acting as agent for the purchasers, will subscribe for up to 12.5 million flow-through common shares of Sun Metals at 41.3 cents per flow-through share. The offering is expected to close on December 20, 2018.
Sun Metals shares advanced on the news, rising 16.67% or $0.04 to 28 cents on volume of 394,600. The stock trades in a 52-week range of 12 cents and 40 cents.
The Stardust Project is located in north-central British Columbia, approximately 150 km north of Fort St James, and ranks as the companyâ€™s flagship project.
The property is host to at least one mineralized carbonate replacement system identified as the Canyon Creek copper-gold deposit. Stardust boasts a rich exploration history, dating back to 1941, the company said.
Carbon Replacement Deposits (CRD) are epigenetic, intrusion-related, high temperature sulfide-dominant lead-zinc-silver-copper-gold rich deposits that typically range from lenticular or podiform bodies referred to as chimneys and/or mantos, depending on their orientation.
Limestone, dolomite and dolomitized limestone are the major host rocks. Ores grade outward from sulfide-rich skarns associated with unmineralized or porphyry-type intrusive bodies to essentially 100% polymetallic massive sulfide bodies.
Under a September, 2017 agreement with Lorraine Copper Corp. [LLC-TSXV], Sun Metals is currently earning a 100% interest in the project, where $25 million has already been invested on exploration activities that include 80,000 metres of drilling in over 390 holes.
Sun Metals can earn the 100% interest in Stardust by spending $6 million on the project by December 31, 2021. At that point, Sun Metals must issue sufficient shares (to a maximum of 51.9 million) to Lorraine Copper, such that Lorraine will own a 30% interest in Sun.
Under the deal, Lorraine Copper will also retain a 2% net smelter return royalty (NSR) on precious metals and a 1% NSR on base metals. Sun has the option to reacquire 50% of each royalty via a payment of $1.5 million per royalty.
According to a NI 43-101-compliant resource estimate, the Canyon Creek copper-gold skarn zone at Stardust contains an indicated resource of 985,000 tonnes, grading 1.34% copper, 0.62% zinc, 1.59 g/t gold, 36.8 g/t silver and 2.92% copper equivalent. On top of that is an inferred resource of 1.98 million tonnes, grading 1.24% copper, 0.14% zinc, 1.72 g/t gold, 30.5 g/t silver or 2.65% copper equivalent.
In its October 25 press release, the company said it believes that drilling is successfully tracking a major mineralizing fluid pathway towards the heart of this high-grade system.
On November 14, 2018, Sun Metals issued a press release stating that a full mineralized intersection from diamond drill hole 18-SD-421 has now been completely assayed. It has returned a 100-metre intersection, grading 2.51% copper, 3.03 g/t gold, and 52.5 g/t silver for a 4.99% copper equivalent.
The completed results from diamond drill hole 18-SD-421 reinforce that drilling has intersected consistently stronger and more pervasive mineralization than historically encountered at Stardust by previous operators, Sun Metals said.