An equity research report from GBA Capital has seen ASX-listed, Ecuador-focused copper and gold explorer and developer Sunstone Metals Ltd (ASX:STM) maintain a valuation of A$0.023 per share.
Sunstone is trading at around A$0.008 on the ASX, which GBA said “in our view doesn’t reflect fair value for the stock, considering the potential to add resource ounces via drilling out the Limon epithermal system and the numerous porphyry systems at Bramaderos and El Palmar.”
Strong Limon assays
Supporting the valuation, which is the same as when GBA Capital initiated coverage of Sunstone on July 24, 2024, are recent assays from drilling at the Limon epithermal system within the Bramaderos Gold-Copper Project along with strong gold prices.
Assays from Limon confirm previous results showing widespread and near-surface gold and silver, with resource drilling ongoing.
READ: Sunstone Metals hits high-grade gold-silver at Limon as it eyes maiden resource estimate
GBA said these results, which showed mineralisation extended into new areas and lithotypes, should support the conversion of the Limon Exploration Target (NYSE:TGT) of 30-44 million tonnes at 0.9-1.2 g/t gold-equivalent for 0.9-1.7 million gold equivalent ounces to a JORC-qualifying mineral resource estimate (MRE).
Strategy for Bramaderos
The results, such as 50.8 metres at 1.43 g/t gold equivalent and 246 metres at 0.53 g/t gold equivalent, support a picture of widespread near-surface mineralisation and align with Sunstone’s strategy to develop a gold-silver open pit before mining larger gold-copper porphyry systems at Bramaderos.
Providing further support of GBA’s valuation is that the boundaries of Limon are yet to be defined, with large-scale targets still to be tested.
This project has a 2.7-million-ounce gold equivalent resource and GBA said Sunstone was targeting +10 million ounces.
The targeted mineralisation is epithermal gold-silver but there is potential for gold-copper-silver porphyry systems at depth.
READ: Sunstone Metals expands Limon gold-silver discovery with more high-grade results
In the report GBA Capital said that while the focus was on drilling at Limon, Sunstone was also working on an initial resource for the El Palmar Project, which could be ready in the December quarter of 2024.
Positive price outlook
The report stated that the price outlook for gold remained very positive, “driven by ongoing and heightened geopolitical risks with expectations of falling global interest rates.
“The outlook for copper also remains positive, in our view.”
Sunstone’s key assets are three large-scale porphyry-epithermal projects in Ecudaor - the Bramaderos Gold-Copper Project (87.5%) the El Palmar Copper-Gold Project (70%) and the Verde Chico Copper-Gold Project (0% as earn-in is yet to start).
Valuation gap
With its ‘Investment View’ GBA Capital said there was a 130% valuation gap to A$0.023 per share. “We reiterate our valuation of A$0.023/sh, with upside risk to $0.034/sh.
“The key to closing this valuation in the near term should be the FY25 drilling at Limon, leading to a gold-silver resource in CY25.
“Continuing exploration success and resource definition at STM’s porphyry targets (eg El Palmar) would also add value.”