Sun Metals (TSX-V: SUNM) CEO Steve Robertson Comments on 'Fabulous' 3% Copper Equivalent Drill Results at the Stardust Project & Disappointing Market Reaction

August 26, 2019

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Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me again is the President and CEO of Sun Metals (TSX-V: SUNM)(OTC: SMTTF), Mr. Steve Robertson. Steve, I feel like we just did this the other day. How are you?

Steve Robertson: I'm doing well.

Gerardo Del Real: Let's get right to it. I say that I feel like we just did this because we're going to have a very similar conversation as we did last time. You reported some results. The headline is absolutely phenomenal. The market response has not been.

Let's start with the headline which is, “Sun Metals Reports 86.40 Meters Grading 1.65% Copper, 1.56 g/t Gold and 28.8 g/t Silver or 3.00% Copper Equivalent at First Step-Out to the North in 421 Zone at Stardust Project.”

Let's get with the obvious. Those are some impressive, impressive numbers. And it's important to note that I believe that hole ended in mineralization, so that's not even the all of it as I understand it. Is that accurate?

Steve Robertson: Yeah, that's correct. This is another fabulous result. As we stepped out to the north, we continue to see very strong mineralization over substantial widths. We don't know exactly how wide the zone is up there because we did lose the hole in the bottom area where we got into some voids. This is a common characteristic in these types of deposits. You get a few voids in areas because of the hole replacement process. When the fluids come in, they dissolve limestone and deposit the mineralization.

One of the really encouraging things that we saw in this drill hole though, up above the mineralized zone we got a very thick section of skarn alteration. That skarn alteration was very, very strong. Very pervasive. It leads us to believe that things are actually getting stronger as we move to the north. We're very pleased with this result, and it helps us a lot with our understanding of the system, where it's developing, where it's coming from, and where it's going to.

Gerardo Del Real: I want to talk about what comes next as the drill program goes, but I also want to touch on the market reaction. The stock is selling off. There's obviously a motivated seller out there for whatever the reason may be. There were holes that didn't hit, right? Bottom line. You can look at the table there and it's there for everybody to look at. The sell-off is obviously related to that.

Can you explain for maybe people like myself who have never guided an exploration program, who are not geologists, who may be looking at the fact that man, there's hole after hole here of no significant mineralization. Can you explain what the approach was to those holes and why those are important when it comes to an exploration program?

Steve Robertson: Absolutely. These are part of the planning processes when we're drilling off a section of mineralization. If you hit in every drill hole, that means you haven't found where the edges of that mineralization are. It's necessary to actually bracket the mineralization by drilling a hole above and below on each one of these sections. There will be a certain number of, if you want to call them, blanks along the way. They're certainly not blanks because there's a great deal of information that we extract from those drill holes in regard to the lithology, the surrounding alteration, and that sort of thing. Those holes were quite successful in their intended purpose, quite frankly.

In regard to their relation to the market reaction, I'm not so sure that the market reaction was based on the fact that there were some bracketing drill holes included in this release. I think there's, for whatever reason, a motivated seller trying to get off a position. He or she or they are taking advantage of the volume created by a news event. We would've thought that we'd worked through this with the last drill result that came out, but quite frankly we haven't.

We're experiencing this again, but it's not going to change our focused approach to the exploration here. We're going to continue to be very disciplined as we move forward and do this exploration in a very scientific, methodical manner. At the end of the day, I'm sure that the market will reflect the value that we're building within the company.

Gerardo Del Real: You did an excellent job of being very clear that the stronger skarn alteration to the north confirms your belief, as the news release states, that the mineralizing fluids that created the system came from that direction and that the overall focus will remain there. Can you talk to me about that focus and what that looks like moving forward?

Steve Robertson: Well, the vectors have all pointed to the north all along. When you take a look at the grand scale, we've got this 2.2-kilometer-long corridor of mineralization that had previously been outlined on the property. It starts with epithermal veins in the south. Currently we're in the copper-gold skarn system in the north. Clearly, the mineralizing fluids are coming from the north going to the south.

The north is the overall trend that we want to follow. On a smaller scale, within the 421 zone we're seeing the intensity of skarn alteration increasing as we go to the north. That just confirms that this is the proper approach, and we're going to continue to follow that.

Gerardo Del Real: Tell me a bit about the directional drilling because it's resulted in some efficiencies that I think are overlooked, especially in light of the sell-off today. Right? Can you talk about that and why that's been important?

Steve Robertson: Absolutely, yeah. We're saving more than 30% of the drilling meterage that we would otherwise expend by using the directional drilling. That's with the use of pilot holes. We're drilling for a zone of intense mineralization that starts about 500 meters below surface. There's no need to go and drill the upper 500 meters over and over again when we could just use a pilot hole and keep on getting our drill holes to go into the target at various spacings, and very accurately and precisely as well.

The directional drilling has worked out well for us. It served its purpose. I think that it's resulted in us getting a number of the results that we want to.

The drill holes don't wander off. In most drill programs, you'll find that there are a number of unintended results because your drill holes can wander off target. We don't have that going on in this particular case.

Gerardo Del Real: I understand holes 441 and 442 are in progress. How is that coming along?

Steve Robertson: Good. Two drills are continuing to turn away, and the crews are being very productive. Each drill hole they seem to be get getting better at the steering part of the process with the directional drilling and the crews continue to work with high productivity.

Gerardo Del Real: Wonderful. Steve, thank you again for jumping on on such short notice. I'd love to speak to Mr. [Peter] Megaw one of these days and see what he thinks about the program and where it's headed and the potential there. Maybe we can set that up here in the near future.

Steve Robertson: Absolutely. Peter is going to be coming up to the property with me this week, so I'll have a chat to him about that, see what his availability is.

Gerardo Del Real: Let's make a conversation of it. I love it. Thank you so much, Steve.

Steve Robertson: Okay. Thanks, Gerardo.


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