It has also confirmed continuity of mineralisation between historical drill holes and current holes, highlights a convergence between Montana and Severn and supports extension of the 7 year mine life.
"ZM126 and ZM126W confirm the continuity of tin mineralisation at depth at the Montana deposit and increases the prospectivity of the zone between Montana and Severn," chief executive officer Peter Blight said.
"This is an exciting development as it demonstrates the potential to expand the Mineral Resource released in February and provides support for the recently announced positive prefeasibility study."
Best intersections at ZM126 were 8 metres at 0.7% tin from 455 metres including 2 metres at 2.2% tin and 1.3% copper from 455 metres as well as 6 metres at 0.6% tin from 422 metres at ZM126W.
The two diamond holes ZM126 and ZM 126W were completed below the Montana deposit.
ZM126 - the parent hole - collared above the Severn deposit and drilled 550 metres to the northwest to target a possible extension of the Montana mineralisation at a depth 400 metres below the surface, or 100 metres below the nearest historical diamond drill hole.
A wedge hole - ZM 126W - tested the zone 50 metres above and 30 metres to the east of ZM126.
ZM 126 successfully demonstrated an extension of the Montana mineralised zone at depth with the 8 metre intersection of tin.
In addition, shearing of a massive iron sulphide unit from 452 metres to 457 metres led to poor core recovery implying that the mineralised zone may be wider than the assays indicate and the average grade could be understated.
Besides the mineralised intercept of 6 metres at 0.56% tin, ZM126W also intersected a secondary zone grading 1.09% tin over 3 metres from 483 metres that was not intersected by earlier drilling and may represent a new or additional zone to the main Montana mineralisation.
Taken together, results from the two holes indicate the mineralised envelope at Montana has been extended down plunge by 120 metres. It commences at 80 metres below surface and extends for 350 metres, remaining open at depth. The mineralisation is also open to the west.
Montana mineralisation comprises cassiterite within massive iron sulphides and is associated with silica and siderite that together with the sulphides replace carbonate rich sediments. Narrow lead and zinc veins near surface also occur in close proximity to the tin mineralisation.
As such, Montana is closer in style to Lower Queen Hill than the pyrite/pyrrhotite stock-work that characterises Severn.
Given the close proximity of the Montana, Queen Hill and Severn deposits, a common source is the most likely situation with the deposits converging towards Montana which may provide the conduit for fluids from the granite.
From an exploration perspective, this model suggests that the best rewards will come from following the known mineralisation down plunge along the Oonah/Crimson Creek contact. The zone down plunge from Queen Hill represents an attractive and relatively shallow additional target.
Tin supply has been in shortage for several years now with alluvial sources becoming increasingly less reliable and more expensive.
New supply is expected to come increasingly from hard rock mines, which will also provide the greater certainty of supply that is a major issue for end-users.
Tin demand is also expected to increase with the rise of new electronic products such as tablets and smart phones, which typically use 0.7 grams to 1.0 grams of tin.
Macquarie Commodities noted that while the electronics manufacturing industry has run down stocks of tin solder over the last two years, its data suggests the market could be moving towards a period of re-stocking, which could add to an improved outlook for tin.
Notably, while tin exports from Indonesia had jumped 20% in June 2013 to their highest level in 18 months, this is believed to be due to exporters releasing stockpiles before the country's new, tighter, purity standard rules took effect in July.
This new rule, which raises the minimum limit on tin content to 99.9% from 99.85%, is expected to halve shipments.
In addition, the Standard Bank Group has estimated there will be a 6,000 ton tin deficit this year, the fourth consecutive global shortage.
The results from the two diamond drill holes highlight the strong potential for Stellar to increase Resources at the Heemskirk Tin project, which has a base case NPV of $61 million and a 3.7 year payback according to the recently completed Pre-Feasibility Study.
Heemskirk already has the highest grade, undeveloped tin resource in Australia, and any resource increase will make it a more attractive development prospect as tin demand rises from its use in new electronic products.
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