CEO Interview: Sun Metals Corp. (TSX-V: SUNM)(OTC: SMTTF)

Written by Gerardo Del Real
Posted April 22, 2019

Joining us today is the President and CEO of Sun Metals Corp. (TSX-V: SUNM)(OTC: SMTTF)

One of the most exciting stories of 2018 is ready to follow up on that success with an aggressive exploration program that could be a company maker. Read on to learn about what happened last year and where Sun Metals goes from here.

To your wealth,

gerardo-sig

Gerardo Del Real
Editor, Junior Mining Monthly and Junior Mining Trader.


Gerardo Del Real: This is Gerardo Del Real for the Outsider Club. Joining me today is the President and CEO of Sun Metals Corp. (TSX-V: SUNM)(OTC: SMTTF), Mr. Steve Robertson. Steve, how are you, all the way from London, today?

Steve Robertson: I'm doing great, Gerardo. How are you?

Gerardo Del Real: I am well, I am well. I'm excited to share the Sun Metals story with listeners and readers of the Outsider Club. Now for those that may not be familiar, could you provide a brief background into your flagship? Because the bottom line is — and that's the Stardust Project — the bottom line is last year you hit, I think it was the best copper intercept in all of Canada. It was 100 meters grading nearly 5% copper equivalent. That was pretty significant because the average width of the historic resource that was in place, I believe was around the four-meter mark. So I want to get into what's next and how we follow that up, but I'd love for you to introduce the story a bit.

Steve Robertson: Sure. Well, I'll tell you, this is a very exciting exploration play for us. I don't think that there's anything more exciting out there for the 2019 exploration season. This is truly a disruptive discovery. We found something where it shouldn't be. We found a major carbonate replacement system in northern British Columbia. Most of these types of systems are found down in northern Mexico. We hit an intercept that would actually stand out in any one of those big systems down in Mexico.

So this is very exciting for us. You're right. It's a game changer in the fact that the new zone that we've hit is 100 meters of mineralization, as opposed to the average thickness of 4.3 meters. So we're very excited to get out into the field and get the drills turning so we can see how extensive this is.

Gerardo Del Real: You are not the only one that is excited, nor is the team the only ones that are excited. You attracted the interest of Teck. Can we talk about that a bit? Because that's a big deal.

Steve Robertson: Yeah, it is a big deal. After we released the results last December, we went and talked to Teck and asked if they wanted to participate in a financing. They were very quick to say yes they did. And we actually raised that money at quite a premium. Teck paid $0.28 on the back end when we were only trading at $0.22 at the time. And because of the structure that we use, the charity flow-through structure, we were able to raise the front end at $0.413. So that was actually almost a 100% premium over our trading value at the time. And I think that really turned a lot of heads, got a lot of people to pay attention to this story and start to follow what we're doing.

Gerardo Del Real: And shares are trading near the $0.60 level Canadian as we speak. So that's obviously worked out in the short term. Teck is not into this for the short term, nor are you. So tell us a bit about the Stardust Project. Tell us about the history of it, and then let's talk about what everybody wants to know. How are you going to follow up that 100 meters of nearly 5% copper equivalent?

Steve Robertson: Yeah, okay. Well, it's a historic project that's been around for a while. It was discovered back in 1944 and over the years there's been 87,000 meters of drilling and 427 drill holes on the property, which was great. It really was a sizable system already. There was a 2.2 kilometer-long corridor of mineralization that was continuous from one end to the other. But the fact that we're now down to this zone where we've got thicker mineralization, this is characteristic of what happens when you get into the more proximal part of the system where you're getting closer to the source of the mineralization, the source of those mineralizing fluids.

And so what we're going to do this next season, hole 421 was the only hole to penetrate through the fault that was just above that zone. And so now we've got 360 degrees of open ground around that and we're going to go in with a directional diamond drilling technique so that we can actually steer the diamond drill and very precisely step out where we want to so we can continue to trace that mineralization out and find out how big it is.

Gerardo Del Real: The project is located in northern British Columbia. I know that May typically is about the time that you're able to get back in there. What kind of timeline are you setting for the next stage of the exploration program and when can we expect to see drills turning?

Steve Robertson: Yeah, you're exactly right. Mid-May is our target right now. We're sending a couple of guys up at the beginning of May to just check the snow conditions and make sure that we're still on track for that, but we anticipate opening camp in the middle of May. We'll get two drills turning right away and of course there will be a little bit of a lag before we get the first results though. But we should have a nice steady news flow through the summer after we start to report.

Gerardo Del Real: Fantastic. So the initial program, if I understand it correctly, you just said it's going to be two drills turning. Do you have an idea of how many meters you plan on drilling initially?

Steve Robertson: We'll get a minimum of 15,000 meters. This program, as I mentioned, is going to be done using the directional diamond drilling technique. And one of the big advantages we have with that is we use a pilot hole and then daughter holes that will spur off of it. So per target, we'll actually have to consume far fewer meters. And so probably be able to save 30 to 40% of the meters that we would otherwise drill if we were going to drill everything from surface. This is going to end up giving us a lot more holes into the target zone and give us a better definition of how big things are before we get to the end of the season.

Gerardo Del Real: Now is the bulk of that drilling going to be dedicated around hole 421, which provided that fantastic intercept last year?

Steve Robertson: Yeah. I think that we're going to continue to focus on that area and as long as we're following the mineralization and finding the continuity, I don't think there's a better target on the property to follow up with so we might as well continue to concentrate there.

Gerardo Del Real: It's a tough resource market for speculators that dedicate themselves just in the resource space or just to the resource space. You've done a phenomenal job of attracting the interest of a major, completing a financing. Can we talk about the cash position and what that looks like for this program? Because you don't have to go back to market if you don't want to.

Steve Robertson: No, that's right. With our $5.2 million that we raised just before the new year, we are able to fully fund the 2019 program. We also have, in addition to that, about another $1.5 million in the treasury right now. So we're well situated for this season. I think that hopefully if we intersect the results that we're looking for, I think that the share price will make the next financing a little bit less dilutive.

Gerardo Del Real: You've set shareholders up for success with the transaction with Lorraine Copper. Can you explain to readers why you were so eager in tidying that up before the next round of exploration?

Steve Robertson: Yeah, that was really a common sense move forward. There was a win-win for the Lorraine shareholders and Sun Metal shareholders. The Lorraine shareholders were going to face a tax event. If we were going to earn in on the property, we would have had to issue 31.5 million shares to Lorraine. And instead of doing that, we actually took over the company, which didn't trigger a tax event for the Lorraine shareholders. And as a result, we were able to issue only 28 million shares or 27.5 million, I think it was, shares. In addition to that, they had 1.5 million Sun Metal shares in their treasury that we're going to be able to get back. And so that makes it even cheaper for us. So really this was a win-win-win all around. Of course the big advantage for Lorraine is those shareholders get to fully participate in the exploration this coming season.

Gerardo Del Real: Well, in this tough market, Steve, there's only one way to add value to shareholders and that's by discovering things of significance. You might have a tiger by the tail here. Again, I said it last time we spoke, I can't wait to start seeing the results and seeing what you have there. Anything you'd like to add, Steve?

Steve Robertson: No, I think you summed it up well, Gerardo. It's all about getting out in the field. That's where the value is added, by getting the drills in the ground and seeing more mineralization. So we're very eager to get started.

Gerardo Del Real: Steve, I'm eager to have you back on once the results are trickling in. Thank you so much.

Steve Robertson: All right. Thank you.

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For the past decade, Gerardo Del Real has worked behind the scenes providing research, due diligence, and advice to large institutional players, fund managers, newsletter writers, and some of the most active high-net-worth investors in the resource space. Now, he is bringing his extensive experience to the public through Outsider Club, Junior Mining Monthly, and Junior Mining Trader. For more about Gerardo, check out his editor page.

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