Global Hunter securties

Sunridge Gold Corp.
(TSXV: SGC)
Initiating coverage of Sunridge Gold with a Buy rating and $2.40 price
target.
Summary: We believe Sunridge Gold Corp.'s (SGC) volcanic massive sulphide deposits, rich
in polymetallic minerals (especially copper and zinc) in one of the later frontiers of underexploration,
Eritrea, will prove very valuable in a world in need of resource growth - particularly
copper. In our opinion, even under overly conservative capex estimates with only the NI 43-101
"Indicated" resources to date, we find the project economics very robust and feel the stock has
significant potential.
Highlights
We believe SGC shares at current levels represent a significant value based on conservative
estimates. We note as evidence of significant upside just on current resources: Even after our draconian
conservative capex estimates, our base case NAV of $174 million (10%; LT price deck: $1,000 Au, $25
Ag, $3.50 Cu, and $0.90 Zn) for Asamara's four projects combined with a central processing facility is
less than the June 2009 C$209 (US$196, C$209 current exchange rate = US$215) NAV "Base Case"
Preliminary Economic Assessment (PEA) study for only the Emba Derho project. We note that the
optimistic case NAV was $265 million. Granted, a PEA by nature has cost estimates +/-35%, and further
studies are needed (in process), but in essence our capex numbers are so conservative as to create
a lower NAV when amalgamating the four localized projects with implicitly no synergies - even with a
shared processing plant. Moreover, these estimates were created with mineral prices roughly half of the
current levels (i.e., gold @ $635/oz). Until the further project studies come out this year we'll use our
conservative capex numbers, but we believe it is safe to say the final NAV may well be multiples higher.
Effective strategy. The company enjoys early-mover status, having moved into the region in 2003
before the majors (for many of management originally with $1.2 Bil. market cap Nevsun) the company
acquired three attractive project areas.
Arabian-Nubian Shield, in our opinion, is one of the most mineral-rich undeveloped regional
geologies in the world. The Asamara Project Areas are in the mineral-rich Neoproterozoic Arabian-
Nubian Shield (ANS). Significant copper-zinc-silver mineralization is hosted within the Neoproterozoic
metavolcanic rocks forming part of the Asmara Syncline. How valuable can VMS deposits in the region
be? Nevsun Resources, whose sole asset is the operation of the newly commissioned "Bisha mine"
in Eritrea, has a market cap approximately two-thirds of the entire country's GDP. Bisha has operating
costs of less than $250/oz for gold.
Initial high-grade copper project with Direct Ship Ore (DSO) mitigates dilution, and improves
project economics. Derbarwa’s Supergene resource, with copper grades in the teen-percentage range
is high enough grade it will be the initial project with DSO after a simple mine and crushing process.
We conservatively expect between $55 mil. and $90 mil. in free cash flow during the approximately 18
months of Supergene mining.
Baby Bisha redux? Solid foundation and management. A significant portion of SGC's management,
including the chairman, project development and exploration managers were founders and developers
of Nevsun.
Major exploration partner. 75/25 JV partner Antofagasta Minerals S.A (ANTO:LSE) is a US$6.92 billion
market cap major integrated mining company must fund $10 million in exploration expenses, and all of
the feasibility studies on new projects.
Major quality copper projects and future supplies increasingly scarce. There are relatively few
large copper (>200 mlbs) and decent grade companies and projects available. On that score we note on
April 4th Minmetals, a unit of state-owned China Minmetals Group, this week bid $6.2 billion, including
net debt, for Perth-based Equinox Minerals Ltd. (EQN:ASX), owner of the Lumwana Copper Mine in
Zambia. Already the stock is trading 7.9% above the bid price on expectation of a higher offer.
Company Description: Sunridge Gold Corp. operates as a mineral exploration and development
company. The company focuses on the acquisition, exploration, discovery, and development of base
and precious metal projects on the Asmara Project in Eritrea, northeast Africa. It also owns interests in
four exploration properties in Madagascar.
SEE