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Stellar Resources Closer To Tin Resource Upgrade At Heemskirk With Stellar Results

Stellar Resources (ASX: SRZ) continues to intersect broad zones of tin mineralisation at the Heemskirk Tin Project, with the company close to half-way through a 10,000 metre diamond drilling program which will run through to April 2013.

The latest highlights include:

- ZS113W: 31 metres at 1.05% tin from 266 metres, including 7 metres at 1.78% tin;
- ZS115: 16 metres at 0.62% tin, 100 metres down‐plunge from ZS113;
- ZQ117: 6 metres at 0.42% tin, 728g/t silver, 17.49% lead and 2.59% zinc from 105 metres; and
- ZQ117: 3 metres at 0.56% tin from 396 metres, a deeper extension of the Queen Hill lode.

What is so important with these intersections (including those in the silver lead zone in ZQ117) - is that they show negligible levels of acid soluble tin, indicating that 98% or more of tin mineralisation is in the form of cassiterite, the most readily recoverable tin mineral.

Peter Blight, chief executive officer, commented: "These are pleasing results. ZS113W confirms the wide, high grade intersection in the parent hole ZS113 and hole ZS115 demonstrates that this wide zone continues at least 100 metres down plunge from ZS113 upgrading the tonnage potential for Severn.

"The intersection of ore‐grade tin mineralisation at 396 metres in ZQ117 also confirms the untested potential of the Queen Hill deposit at depth. ZQ117 intersected high‐grade silver and base metals updip from Severn and within 100 metres of the surface."

Historical mining in the Zeehan district was directed at these vein deposits which are high grade but often discontinuous and narrow.

Blight added, "Where they are within close proximity of ore grade tin mineralisation, as appears to be the case at Severn, they could be viable secondary mining targets."

The Heemskirk Resource is 4.4 million tonnes at 1.1% tin for 48,000 tonnes of contained tin in three nearby deposits, and is the highest grade tin project with a JORC Resource.

Newsflow

Importantly for investors, there will be strong newsflow in the short term, including:

- ZS119: Is complete, assay results are pending;
- ZS120: In progress targeting deep Severn mineralisation on Section 3800N. Results are
expected in late November; and
- ZS121: In progress with first of two drill targets to the south of Severn on Section 2900N. The first diamond drill hole should be complete in mid November.

The planned depth for ZS121 is 300 metres and will test a magnetic target that is coincident with Montana Beds. G91, an historical diamond drill hole on the section, intersected 5.5 metres at 0.50% tin in Montana Beds, 550 metres below surface and 200 metres below the magnetic target.

Future drilling plan

Over the next 6 months, the plan is to complete the drilling program with a further 12 diamond drill holes, including:

- South Severn Targets: 3 diamond drill holes for a total of 900 metres;
- Severn infill/extension: 5 diamond drill holes for a total of 2,100 metres;
- Queen Hill extension: 3 diamond drill holes for 1,700 metres; and
- Heazlewood exploration target (copper/gold): 1 diamond drill hole of 300 metres.

During this period, work will continue on design and costing of the processing plant.

Analysis

Heemskirk has one of the highest grade tin resources globally and has the potential to become one of Australia's largest tin producers.

A defining factor for Stellar is that Heemskirk is hosted within a known tin field, is located less than 20 kilometres from Australia's largest tin mine in Renison Bell, while also being supported by excellent existing infrastructure - including rail and road connections to Burnie Port.

The upside for Stellar and investors is that tin demand is expected to rise to 365,000 tonnes in 2012, with a supply shortfall for five out of last six years - with a lack of new tin mines.

Stella could help fill this shortfall.

Now with the 10,000 metre drilling program approaching half-way, the continued tin intersections provide a catalyst for a future resource upgrade - which is forecast for delivery March 2013. An upgrade of the mine plan will follow soon after.

Should Stella continue to increase the resource in 2013, at a time of increasing tin demand and reduced supply - then the company will be positioned to benefit with its share price being re-rated accordingly.

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