RaaS Research Group has published a research note on Stellar Resources Ltd (ASX:SRZ, OTC:SLROF), a tin developer and explorer with a primary focus on its Heemskirk Tin Project in western Tasmania.
A 2019 scoping study demonstrated an economic underground mining operation that could extract around 24,000 tonnes of tin in concentrate over 11 years from Heemskirk.
Stellar is planning further work in the coming year including drilling, an updated scoping study and workstream to contribute to future feasibility studies.
The company also made a polymetallic discovery last year at its North Scamander project, also in Tasmania.
RaaS Research Group provided an upside and downside case for the $31 million capped company:
Upside case
- A step change in the mining operation in the updated scoping study;
- Discovery of new deposits in extensional drilling at Heemskirk; and
- Delineating an economic resource at North Scamander.
Downside case
- A material decrease in the tin price;
- Sector inflation since 2019 adversely impacts scoping study metrics; and
- Failure to define a resource of substance at North Scamander.
RaaS also identified potential catalysts for the company as completing an updated Heemskirk scoping study; drilling and metallurgy results from Heemskirk; and metallurgy results from Heemskirk, which are all anticipated in the first half of 2025.
RaaS notes that the company appears well capitalised to progress its near-term objectives with around A$10.4 million in cash as of June 30, 2024.
In March 2024, Stellar had a management refresh with Simon Taylor moving from non-executive chairman to executive chairman and CEO to drive the progress of Heemskirk. Non-executive director Andrew Boyd was also appointed as executive director at that time.
Projects and exploration
A significant tin resource has been established at Heemskirk, in addition to the scoping of project economics. The resource also sits within existing mining licences.
The 2019 scoping study on the project proposes to mine around 3.7 million tonnes of ore to extract about 24,000 tonnes of tin over 11 years via an underground mining operation encompassing both the Queen Hill and Severn deposits.
Capex was estimated to be A$57 million with life-of-mine all-in sustaining cost (AISC) of US$13,100 per tonne of tin. Using a tin price of US$20,000 per tonne — noting the current spot is ~US$31,500 per tonne — results in a pre-tax project value (NPV10) of A$83 million with an IRR of 45% and three-year payback. The project can utilise 100% renewable clean energy from the Tasmanian grid to power the mine.
A resource update in September 2023 detailed a resource of 7.5 million tonnes at 1.04% for 77,900 tonnes of contained tin. Of that, 3.5 million tonnes at 1.05% for 37,000 tonnes of contained tin is classified as indicated. The resource is contained within the Severn, Queen Hill and Montana deposits.
In addition, the satellite deposit St Dizier contains another 1.2 million tonnes at 0.69% for 8,200 tonnes of contained tin that is amenable to open pit mining.
SRZ commenced an exploration program at the project in July 2024 comprising 24 holes for 9,500 metres aiming to further upgrade the resource, test extensions along trend, provide samples for metallurgical test work, in addition to geotechnical and hydrological inputs.
Results will be used to update the project’s resource and provide inputs into an updated scoping study and future feasibility studies.
Stellar is also undertaking further exploration at its North Scamander Project, where it made a polymetallic discovery in September 2023, intercepting a significant polymetallic mineralised zone.