Friedland-backed Sunrise raises $30M for scandium mine pre-construction

Sunrise Energy Metals (ASX: SRL), the Australian scandium developer backed by Robert Friedland, is looking to raise A$46 million (US$30 million) through a share placement to fund pre-construction at its main Syerston project.

The company plans to issue more than 27 million new shares priced at A$4.25 apiece, a 2.2% premium over its last closing price prior to the announcement, plus the same number of unlisted options to buy its shares, exercisable for two years. The placement is expected to comprise two tranches, it added in the release. 

The shares closed Monday up 12% to A$4.65 apiece, giving the Melbourne-based miner a market capitalization of A$574.4 million.

The Syerston project, which has been hailed as the world’s largest and highest-grade primary scandium deposit, would take two years to build and commission, the company has said.

Strategic project

The project, located about 450 km west of Sydney in New South Wales, has nearly 46 million measured and indicated tonnes grading 414 parts per million scandium, containing over 19,000 tonnes of the metal.

Widely considered a critical mineral, scandium is a vital building block for semiconductors that power mobile communications, aerospace and automotive applications. The U.S. accounts for about 90% of overall demand, but rival China controls most of the supply, making the mineral vulnerable to supply chain disruptions.

In evidence of scandium’s strategic importance, the U.S. Export-Import Bank in September expressed its interest in providing Sunrise with a loan of US$67 million, which is around half the cost required to develop the Syerston project.

A month later, U.S. defence manufacturer Lockheed Martin announced its intention to buy about a quarter of Syerston’s annual scandium output as part of the new Australia-U.S. critical minerals pact.

32-year mine

According to Sunrise, the Syerston project is capable of producing approximately 60 tonnes of scandium a year over a 32-year mine life, based on a recent ore reserve update in preparation for a new feasibility study. The latest ore reserve, amounting to 2 million tonnes at an average grade of 644 ppm, represents an 87% increase in contained scandium (now above 1,300 tonnes) over the previous estimate.

“This raising and the potential proceeds from the future exercise of options, combined with the letter of conditional funding support from U.S. EXIM Bank for up to US$67 million, gives us excellent line of sight to a comprehensive financing package for the Syerston project,” stated Sam Riggall, Sunrise’s managing director.

In addition to Syerston, the company is also developing a nickel-cobalt project in New South Wales. The project, also called Sunrise, hosts the largest cobalt deposit outside of world-leading supplier Democratic Republic of Congo, with contained cobalt of 170,000 tonnes, according to its estimates.