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Stellar Resources' Heemskirk Draws Potential Offtake Interest As Tin Supply Side Tightens

Stellar Resources (ASX: SRZ) is well placed to capitalise on future tin demand as its high grade Heemskirk Tin Project in Australia attracts parties interested in offtake to fill a gap in the supply-side, expected as early as 2017, from the closure of currently operating mines.


Peter Blight, managing director of Stellar Resources, told investors at the recent "Stars in 2012" One2One Investor Forum in Sydney one of the big issues for end users is where they are going to secure their supply in the future.

"There's interest from them to invest in projects and I think that will be a source of funding for us in the future."

Heemskirk is Australia's highest grade undeveloped tin project and is set to be the country's second largest tin producer behind nearby Metals X's (ASX: MLX) already producing Renison Bell mine, just 18 kilometres away, when it comes into production in early 2015.

The company has begun a Pre-Feasibility Study at Heemskirk which is scheduled for completion in 2013.

The project hosts a Resource of 4.4 million tonnes at 1.1% tin for 48,000 tonnes of contained tin in three nearby deposits, which Blight said Stellar was aiming to expand with the 10,000 metre drilling program currently underway.

"I think what the results have been showing at the moment is that the grade is actually looking probably a little better, but we don't know until we finally pull all the numbers together and the target will be to do that probably in about the March quarter.

"We're around about halfway through that program at the present time.

"We were particularly pleased with hole ZS113 which showed the potential for a very good grade."

That particular diamond drill hole, which was drilled at the Severn deposit, recorded a high grade intersection of 12 metres at 2.58% tin from 292 metres, including 7 metres at 3.97% tin and 1 metre at 12.7% tin.

Blight also touched on the attractive metrics for Heemskirk estimated in a previously completed Scoping Study.

"The upfront capital that we've estimated from the Scoping Study is $108 million. Around 70% of that is for the plant; the rest is really mine development and infrastructure, which I guess we'll refine through the PFS."

The Scoping Study also showed an attractive rate of return and payback, including cash costs of US$12,780 per tonne which position Heemskirk competitively on the industry cost curve.

An annual tin production of 3,900 tonnes would rank the project second only to Metals X's Renison Bell mine in Australia.

Life of mine revenue has been estimated at $673 million net of smelting charges, and a 600,000 tonne per annum throughput for 7.6 years will provide economies of scale.

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