Option on Gold Project, Canada

 

TIDMSDS 
 
RNS Number : 3203L 
Sunrise Diamonds PLC 
05 May 2010 
 

 
 
 
                            www.sunrisediamonds.com 
                                   5 May 2010 
                    NEW GOLD (& Ni-Cu-PGM) PROJECT IN CANADA 
 
           -  Option Agreement On Long Lake Gold Mine Near Sudbury  - 
 
·     Historic production of 57,000 ounces gold from 200,000 tonnes ore at a 
recovered grade of 9 g/t gold. 
 
·     Unexploited potential below and adjacent to shallow gold mine workings and 
in outlying prospects - e.g.  6m @ 13.8g/tgold and 5.7m @ 30g/t gold in past 
drilling. 
 
·     Claims also include potential 10km extension to producing Copper Cliff 
offset dyke system prospective for nickel-copper-platinum group metals. 
 
·     Exploration to start immediately with drilling planned for summer. 
 
___________________________________________________________________________ 
 
Sunrise Diamonds plc ("Sunrise" or "the Company") is pleased to announce that it 
has secured a three year option agreement to acquire a 100% interest in the 
previously producing Long Lake Gold Mine located 20km south-west of the City of 
Sudbury, Ontario (Canada). The claims also cover potential extensions to the 
currently producing Copper Cliff dyke system at the heart of the World's most 
productive nickel-copper mining complex. 
 
The claim block, held under option from well-respected local prospector Gordon 
Salo, comprises 23 contiguous claims covering 40.3 square km ("the Property"). 
It has been assembled over a number of years and was recently expanded to 
include the Long Lake Gold Mine which was previously not open to staking. 
 
Commenting today, the Chairman of Sunrise, Patrick Cheetham said "We are very 
excited to have been granted an option over the Long Lake Gold Mine. This 
agreement secures a key objective after a long and intensive search for a new 
gold project for the Company." 
 
LONG LAKE GOLD MINE 
 
The Long Lake Gold Mine produced 57,000 ounces of gold from over 200,000 tonnes 
of ore mined in the periods 1910-1916 and 1932-1939. 
 
The average recovered mill grade was 9 grammes per tonne (g/t) gold and the mine 
tailings dumps (200,000 tonnes) which remain on site have a reported grade of 
2-3 g/t gold indicating an average mine head grade of over 11g/t gold. 
 
Most of the ore mined was extracted from a 50m diameter open glory-hole 
developed on a plunging pipe-like zone of disseminated gold and strongly 
sulphide mineralised sedimentary rock down to a depth of just 55m from surface. 
 
 
 
 
Unexploited Potential 
 
Old mine reports highlight that gold ore and waste rock were often visually 
difficult to distinguish and, today, native gold can be found in material on the 
mine waste dumps (see photos at 
http://www.sunrisediamonds.com/longlake_project.html. A mineralised grab sample 
collected by the Company from the waste pile assayed 8.8g/t gold. 
 
Furthermore, the horizontal limits of mining were reportedly defined by the 
economic cut-off grades of the day rather than any identifiable geological 
boundaries. Consequently the Company believes it likely that further gold 
mineralisation can be defined outside of the existing pit. 
 
For example - a 1937 angled drill hole located just east of the pit returned 
15.7m at 3.4g/t gold from surface. In addition a recent helicopter geophysical 
programme, which covered the mine and surrounding area, has identified a string 
of electrical conductors, possibly indicative of gold-bearing metal sulphides, 
extending from the mine in a north-easterly direction. 
 
During the two periods of historic gold production exploratory mine development 
extended beneath the glory-hole down to the fourth mine level at 105m vertical 
depth where, at that time, it was thought the ore-body was displaced by 
faulting. However, drilling in 1936 encountered high grade ore in several holes 
in unexploited areas beneath the fault and approximately 25m below the deepest 
mine workings. The results, which included intersections of 6m @ 13.8g/t gold 
and 1.5m @ 30.2g/t gold, indicate considerable potential to define further 
high-grade gold mineralisation below the existing shallow workings, as well as 
beyond the current pit limits. 
 
Since closure in 1939 the mine has been held privately and the past owners have 
been under no obligation to file details of past exploration work. However field 
reconnaissance by the Company and an extensive record search has shown that some 
exploration has taken place in an area 350m south of the mine where old 
newspaper reports highlight drilling results of 5.7m grading 30g/t gold in 1973 
with follow up results of 4.1m grading 12g/t gold in 1987. Reporting of work in 
this outlying area on the Property is incomplete and the significance of these 
high grade drill intersections remains to be evaluated. 
 
The Company intends to start exploration in and around the Long Lake Gold Mine 
immediately and expects to carry out diamond drilling this summer season. Work 
will also be carried out to evaluate the 200,000 tonne gold-tailings resource 
which remains on site. 
 
COPPER CLIFFS OFFSET - NICKEL-COPPER-PGM POTENTIAL 
 
Since 1883 the Sudbury mining field has accounted for over 25% of the world's 
total nickel production and new discoveries continue to be made. It is the most 
productive nickel-mining field in the world with over 1.7 billion tonnes of past 
production, reserves and resources. 
 
Nickel-copper-and platinum group metals ("PGM") bearing sulphide minerals occur 
in a 60 km by 27 km elliptical igneous body called the Sudbury Igneous Complex 
("SIC").  Mineralisation occurs within the SIC as well as in the neighbouring 
country rocks in close association with breccias and so-called 'Offset Dykes'. 
These are typically quartz-diorite in composition and extend both radially away 
from and concentric to the SIC . Nearly half of the nickel ore at Sudbury occurs 
in breccias and Offset Dykes in the footwall rocks of the SIC. 
 
On the south trending Copper Cliff Offset Dyke, north of the Company's Property, 
the producing Copper Cliffs South mine and the Copper Cliff North mine have 
yielded over 200 million tonnes of ore and Vale Inco Limited's Clarabelle Mill, 
Copper Cliff Smelter and Copper Cliff Nickel Refinery are located in close 
proximity. 
 
Offset Dykes have become the target of progressively more intense exploration 
interest in recent years following a number of new discoveries. The latest such 
discovery on the Copper Cliff Offset dyke was made in 2004 at Kelly Lake, to 
the south of the existing mines (in the direction of the Company's Long Lake 
property), where a resource of over 20 Mt at a grade of 3.5% combined nickel and 
copper and 5 g/t PGM has been reported. 
 
Prospecting operations by the claim holder within the Property have included 
sampling, petrological studies and limited mapping. This has identified numerous 
areas with outcropping offset-type dykes. The Property was optioned during 2008 
to Australian company Pegasus Metals Limited. At that time the Long Lake mine 
was privately held and excluded from the Pegasus option. 
 
In 2008 Pegasus Metals carried out a helicopter-borne airborne electromagnetic 
survey which, identified potential gold targets near to the Long Lake mine as 
well as a number of conductive targets for nickel-copper-PGM. Ground examination 
confirmed that at least one such anomaly is associated with an outcrop of an 
Offset-type dyke. Whilst some follow up ground geophysics was carried out, 
Pegasus Metals dropped the option during the recent global financial crisis 
before drill testing any of the anomalies. 
 
"Whilst drilling for gold is our priority at Long Lake, Sudbury is 'elephant 
country' for nickel-copper-PGM deposits and the nickel targets on the claim 
block are a real bonus. It's rare to find two such prospective but geologically 
distinct projects in the one claim block." said Mr. Cheetham. 
 
OPTION AGREEMENT 
 
The Company may acquire a 100% interest in the Property by making staged 
payments totalling Can$575,000 over a three year period, by meeting exploration 
expenditures of Can$500,000 in that period and by issuing up to 5,000,000 five 
year share warrants exercisable at 0.675p per share. The vendor retains a 3% NSR 
on the property of which 2% may be purchased by the Company at any time for the 
sum of Can$3 million. Further details are given below. 
 
COMPANY NAME CHANGE 
 
At a meeting of the Board held last Friday it was proposed that the Company 
should change its name to reflect the Company's broader commodity base. Further 
information will be given when a name change becomes effective. 
 
Maps showing the location of the project and various illustrations and 
photographs for the Long Lake project will be available on the Company's website 
at: 
http://www.sunrisediamonds.com/longlake_project.html 
 
 
 
For further information see below, or contact: 
 
Patrick Cheetham, Sunrise Diamonds plc. Tel:  [phone]. Mobile: 
[phone] 
Gavin Burnell or Antony Legge, Astaire Securities plc. Tel: [phone] 
 
The information in this release has been compiled and reviewed by Mr. Patrick 
Cheetham (MIMMM, MAusIMM) who is a qualified person for the purposes of the AIM 
Note for Mining and Oil & Gas Companies dated June 2009.   Mr Cheetham is a 
Member of the Institute of Materials, Minerals & Mining and also a member of the 
Australasian Institute of Mining & Metallurgy. 
 
 
 
 
 
 
Further information 
 
 
Company Background & Recent Strategic Developments 
 
Sunrise Diamonds plc was formed to acquire the diamond exploration interests of 
Tertiary Minerals plc in 2005. Since then the Company has made a number of new 
kimberlite discoveries in Finland and expanded its portfolio of diamond 
exploration interests in Finland. Exploration is continuing and drilling of 
certain targets is planned for 2010. 
 
In 2009 the Company made a strategic decision to expand its geographical focus 
as well as its commodity interests and in October 2009 the Company announced an 
application for an exploration licence in Western Australia prospective for both 
diamonds and Ni-Cu-PGM (the Cue Project). Exploration for this project is 
scheduled to start after the grant of the licence which is expected mid-2010. 
 
In September 2009 the Company was awarded an exploration licence in south-west 
Ireland for the industrial mineral barite (the Derryginagh Project). Past mining 
of high value filler grade barite and more recent drilling has indicated the 
potential for a modest scale mining operating that could, in time,  produce a 
valuable cash flow for the Company. Most recently the Company announced 
promising results from initial metallurgical testwork and product testing and 
further work is planned. 
 
The option agreement for the Long Lake project now brings a new key gold project 
for the Company and completes this stage in the strategic development of the 
Company's project portfolio. 
 
The shares of Sunrise Diamonds plc are traded on AIM (trading symbol "SDS"). At 
the last closing mid-price of the shares on 4 May, the Company had a market 
capitalisation of GBP1.67 million. 
 
 
Detailed Terms of Agreement - Long Lake Option 
 
The Company has been granted as of 4 May 2010 ("the Effective Date") a three 
year option to acquire 100% of the Project subject to the arms-length vendor 
retaining a 3% Net Smelter Return (NSR) Royalty on future mine production. 
 
1.   Option: 
 
In order to maintain the option over a period of three years : 
 
(a)  The following cash payments are to be made: 
 
         (i)   Can$27,500 on the Effective Date 
(ii)  Can$50,000 within 12 months from the Effective Date 
         (iii) Can$117,500 within 24 months from the Effective Date 
 
(b)  Share Warrants are to be issued as follows: 
 
         (i)    2,500,000 Share Warrants on the Effective Date 
         (ii)   2,500,000 Share Warrants within 12 months from the Effective 
Date 
 
Each Share Warrant allows the vendor to buy one new ordinary share in the 
Company at the mid-market price on the Effective Date on the terms set out 
below.  The issue of share warrants in 1(b)(ii) to be subject to the directors 
of the Company having sufficient authority from shareholders given at the next 
Annual AGM or EGM and in the event that the directors are not so authorised the 
Company will pay the Vendor a cash amount equal to 2.5 million x the price 
difference between the exercise price and the mid-market price of the shares 
averaged over the 30 day period prior to the day shareholders withhold such 
authority. 
 
(c)  The following exploration expenditures must be incurred on the Project: 
 
         (i)   Can$100,000 within 12 months from the Effective Date 
         (ii)  Can$150,000 within 24 months from the Effective Date 
         (iii)  Can$300,000 within 36 months from the Effective Date 
 
2.   Exercise of the Option 
 
The Company may exercise the Option within 36 months of the Effective Date and 
after all of the above option payments have been made, the Share Warrants issued 
and the above expenditures met, by making a further payment of Can$380,000. 
 
The Company has made payment under 1(a)(i) above and the Board has authorised 
the initial issue of warrants in 1(b)(i). It is now committed to the initial 
exploration expenditure 1(c)(i), but may withdraw from the Option Agreement at 
anytime thereafter. 
 
3.    Exercise of Share Warrants 
 
All Share Warrants will lapse 5 years from the Effective Date and to the extent 
that they are issued will become exercisable as follows: 
 
(a)  1,000,000 Share Warrants will be exercisable from the Effective Date. 
 
(b)  a further 1,000,000 Share Warrants will be exercisable from a date 12 
months from the Effective Date provided that the cash payment in paragraph 
1(a)(ii) above has been made. 
 
(c) a further 1,000,000 Share Warrants will be exercisable from a date 24 months 
from the Effective Date provided that the cash payment in paragraph 1(a)(iii) 
above has been made. 
 
a further 2,000,000 Share Warrants will be exercisable from a date 36 months 
from the Effective Date provided that the Option has been exercised. 
 
4.    NSR Royalty Interest 
 
The Company may at any time after exercising the Option elect to purchase one 
third of the Vendors retained 3%NSR royalty for Can$1 million and an additional 
one-third of the 3%NSR Royalty for an additional Can$2 million and will retain a 
right of first refusal to purchase the remaining one-third of the 3%NSR Royalty. 
 
 
 
 
 
This information is provided by RNS 
            The company news service from the London Stock Exchange 
   END 
 
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