Sunrise Resources (LON: SRES) shares are up 8% today. The cause of the rise in SRES shares is an update to their exploration for zinc in the US. It may well be that they’ve got something interesting there. It’s a very, very, early stage of exploration but as we say, entirely possible that there’s something economic to mine there.
The thing that slightly worries us. There often are trace elements in zinc ores - spharelite can be a source of both gallium and germanium as well as the zinc which is the main interest, But you’d never go mining for either the gallium or germanium content - the decision will always be on the economics of the zinc content. This is for two reasons. One is simply that everyone prefers to think of a mine decision as being based upon the one main product - anything extra is, well, it’s extra and not the decision maker. The other is that the marginal revenue from these trace elements it’s, well, it’s marginal.
We explored this when talking of Everest Metals. Talking about the rubidium content of spodumene is fine, it’s a reasonable guide to lithium. But suggesting that it’s going to be profitab le to mine for rubidium marks a certain unseriousness.
Sunrise Resources share price from Google Finance
The Sunrise announcement: “A review of chemical analyses from the surface mineralisation has identified anomalously high levels of the metal gallium in the high-grade zinc samples - up to 69ppm gallium. Gallium is an essential mineral in the production of semi-conductors and is increasingly used in the production of solar panels. It is also used in high frequency computer chips. It is extracted from some zinc ores and approximately 80% of the world's gallium is produced in China. China has placed some restrictions on the export of gallium and gallium compounds in response to the US's restrictions on the exports of high-end computer chips to China.”
All of that’s true but we would argue irrelevant. For that 69 ppm means that for every tonne of ore processed (ore, note, not rock) there are 69 grammes of gallium. We never are able to extract the full amount of anything, so any production would be lower than that. It’s also not a particularly high level, even for US sphalerite deposits.
We’re simply not impressed by people touting the trace element contents of their ores.
