Special Report: With some of Australia’s best assets, Stellar Resources is well placed to take advantage of tin’s resurgence.
Right now, tin is the glue that holds things together.
Tin production is mainly used as a solder component for electronic circuit boards and microchips, which accounts for about half of its global consumption.
But it could become so much more.
A 2018 MIT study, cited by Rio Tinto Ventures boss Andrew Latham, showed future tin demand spiking on the rise of autonomous and electric vehicles, advanced robotics, renewable energy, and advanced computing and IT.
But regardless of the EV story, visible tin stocks are now very, very low, and the consensus is that there’s a real supply issue going forward.
London Metals Exchange (LME) tin stocks have been at record low levels since the second quarter of 2017.
Check out this five-year chart:
International Tin Association’s James Willoughby says there is “potentially significant” supply pressures for some major existing production to 2022.
“There are a number of other projects with potential and clearly higher prices would accelerate market entry,” he says.
And for Australian miners and explorers, the exchange rate is their friend; current prices of around $US19,700/t works out to be about $28,700/t in local currency.
Good prices and a positive outlook has put the spotlight back on a number of Australian developments, including Stellar Resources’ (ASX:SRZ) advanced Heemskirk Tin project in Tasmania.
Heemskirk Tin Project: Momentum is building
Stellar wants to become Australia’s second largest tin producer, supported by an excellent portfolio of assets.
Its Heemskirk Tin project, near the historic mining town of Zeehan, has two major competitive advantages.
One: its location in an established tin mining region means the company has access to all the major inputs required to start a mine, quickly and cost effectively.
Skilled labour and existing infrastructure including power, sealed roads and water is a significant advantage.
The West Coast of Tasmania and the town of Zeehan is a mining area and there is strong community support and other key stakeholders for the mine to be developed. Also, baseline environmental studies undertaken by Stellar have shown that there are no major environmental issues related to development of the project.
Two: it is the highest grade undeveloped tin project in Australia, and the third highest globally.
At 1.1 per cent, the only higher-grade tin project in Australia is the operating Renison tin mine, 18km away.
Recently appointed non exec director Gary Fietz has important experience in exploration management, resource evaluation and project development. He says when it comes to tin, grade really is king.
“You need greater than 1 per cent tin to make good returns on an underground tin mining project,” says Fietz.
“We are at 1.1 per cent with the new resource upgrade, and that really differentiates Stellar from a number of ASX listed companies with tin projects that are mostly all south of 1 per cent.”
A recent resource update for Heemskirk has increased the level of confidence in the 6.6Mt at 1.1 per cent Sn (containing 70,930t of tin metal) resource. This is a crucial step towards production.
Mineral resources are categorised in order of increasing geological confidence from inferred, to indicated, to measured.
An indicated resource means a company has sufficient information on geology and grade continuity to support mine planning and studies which determine project viability.
At Heemskirk, the size of the indicated component of the resource has improved by 64 per cent from previous estimates to 2.1 million tonnes grading 1.1 per cent.
This higher confidence in the updated resource now underpins the ‘Fast Start’ project development study, which is currently underway, Fietz says.
“It will allow the company to release production targets and financial statements on the project and, ultimately, it gives us all the confidence needed to develop the project.”
Stellar wants to get into production, quickly and cheaply by mining the deposits sequentially.
The Heemskirk Tin project comprises of two major deposits known as Severn and Queen Hill, along with two smaller deposits know as Montana and Oonah. There are also a couple of prospective satellite projects nearby, called Razorback and St Dizier.
The Queen Hill deposit outcrops at surface, which means Stellar could start mining Queen Hill quite quickly. Then they would tap the bigger Severn deposit later.
The ‘Fast Start’ development will focus on a smaller initial production rate in order to keep the capital costs down and commence mine production as soon as possible.
Stellar managing director Peter Blight told Stockhead that the company is also examining a couple of other early production options.
“We put out our scoping study on developing the St Dizier project, located 20km from Heemskirk, in January. The idea is that we could truck ore from an open pit to be processed at a central plant,” says Blight.
The other early production option is Razorback, about 10km from Heemskirk.
“It has a tailings dam from the historic mine that it may be possible to reprocess, and there’s also ore in the bottom of the pit floor,” says Blight.
“We don’t have a resource yet, but it has the potential to become early production and early cash flow for us,” he says.
“Razorback and St Dizier both offer early production potential and cash flow – either on their own or incorporated into the overall Heemskirk project.”
As part of the Fast Start project, Stellar is looking at building a modular style plant, which can be expanded later as the project evolves and gets bigger.
Generating this early cashflow will help the fund the ramp up of Heemskirk and exploration of surrounding tenements, where the upside is absolutely huge.
The next Renison?
Renison, 18km from Heemskirk, is Australia’s oldest and largest tin mine. It started with a five-year mine life in 1968 and is still going strong. Right now, the mine is over 1km deep.
Stellar believes that it could be sitting on something similar.
Blight says Heemskirk and Renison share the same ore genesis and geology.
“If you look at the geology, it’s a very convincing argument that the genesis of the deposit is a granite source, which is about 1 kilometre from the surface,” he says.
“We can identify a number of factors that tell us we are looking at the same geology, the same genesis of deposits.”
“Renison have a history of 50 years of mining and they keep finding more tin; we are standing where they were 50 years ago.
“There’s a lot more tin to be found where we are, once a mine is developed the real underground exploration gets going.”
Fietz says the deepest holes drilled at Heemskirk are 500m below the surface. Renison has been drilled and mined to at least 1km.
“From 500m to 1km depth is all exploration upside,” he says. “I absolutely believe we could be sitting on another Renison.”