Stellar Resources' (ASX: SRZ) drilling has confirmed that Severn mineralisation of good thickness and grade at its Heemskirk Tin Project in Tasmania continues at depth after intersecting 7 metres at 0.85% tin from 535 metres.
"Importantly, ZS120 has extended the Severn mineralised envelope from 450 to 550 metres below surface and augurs well for a resource increase in the review scheduled for March quarter 2013," chief executive officer Peter Blight said.
Drill hole ZS120 had returned assays of 3 metres at 1.04% tin from 514 metres and 21 metres at 0.63% tin from 534 metres including 7 metres at 0.85% tin from 535 metres.
ZS120 represents a successful test of a position more than 200 metres down‐dip from ZS113 on section 3750N by confirming the thickened zone observed in the earlier hole continues at depth and also contains lodes of higher grade.
Further results will follow with two diamond drill holes currently underway with one testing a lateral extension of Severn to the southwest and the other an infill hole.
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.
It hosts a Resource of 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.
An ongoing Pre-Feasibility Study at Heemskirk is scheduled for completion in 2013.
A previously completed Scoping Study had indicated upfront capital of $108 million, of which 70% is for the plant.
This also showed an attractive rate of return and payback, including cash costs of US$12,780 per tonne which positions 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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