Barry FitzGerald: The Stellar credentials that put tin explorer on the map

Five weeks ago, Garimpeiro noted that tin was shaping up as one of the best performed metals for the year and that a bunch of ASX-listed tin stocks stood to benefit.
This week Garimpeiro revisits one of them, Stellar Resources (ASX:SRZ).

It was trading at 1.6c a share five weeks for a market cap of $38 million (fully diluted), and it still is.

But things have changed so Garimpeiro is going to have a deeper look at Stellar and its exposure to the metal said to benefit most from the energy transition.

Man on a mission

The big change has been the arrival of Mark Connelly as non-executive chairman. Don’t worry about the non-exec bit. Things happen when Connelly brings his deep financial and commercial expertise to a junior company.

Garimpeiro has grown old watching and waiting for Stellar’s Heemskirk tin project in Tassie’s north-west to develop some momentum towards becoming a producer and/or the asset being monetised.

Connelly is just the guy to get things going. He currently sits on the boards of a lot of juniors, but he is best known for his value creation as managing director at the former ASX-listed West African gold explorer Papillon.

It was eventually acquired by Canada’s B2Gold in 2014 for $520 million. More recently he was chairman of two other ASX-listed West African gold explorers that were moved up the value chain and got taken over – Chesser for $89m in 2023 and Oklo in 2022 for $90m.

More recently again, Connelly is chairman of Alto Metals, the owner of the Sandstone gold project in Western Australia, which is being absorbed in a $45m deal with Brightstar Resources.

Stellar arrivals

Connelly’s arrival at Stellar reunites him with the company’s managing director Simon Taylor, previously the driving force behind Oklo and a Chesser board member, and Stellar executive director Andrew Boyd, a geophysicist from the Papillon and Oklo days.

All three are recent arrivals at Stellar, so it can be said that the Connelly Gang is back together to see what they can make of the Heemskirk project.

“It is a great opportunity to get back together with Simon and Andrew,” Connelly told Garimpeiro during the week.

“My focus as a development guy will be to move things along with more speed and bring some ideas on how a development should look.

“We are well funded with about $12 million in the bank, which gives us funding to do what we need to do with the definitive feasibility study as well as giving us the runway to get all the permits that we need.

“It’s been one of those stories that has been in the spin cycle for so long. But we are going to move it along as fast as we can. It is going to have its day in the sun.”

Hooray! says Garimpeiro.

Big time investors

As mentioned five weeks ago, Stellar has been able to pull in funding in the last year from some savvy types like Nero Resource Fund (a 15.5% shareholder), Paradice (9.9%) and Regal Funds (7.5%).

They are on board with the tin thematic and Heemskirk’s status as Australia’s highest grade undeveloped tin deposit (third globally).

A recent updated scoping study, based only on indicated resources, arrived at a post-tax net present value of $75m for an initial 12 year mine life, producing 22,818t of tin-in-concentrates and assuming a $US28,000/t tin price.

Plug in more recent prices which are approaching $US34,000/t and the post-tax NPV shoots off to $147m.

But with the conversion of more of the resource to indicated status, and what comes from a rejuvenated exploration effort, it seems likely that a bigger story will emerge now that the Papillon team are in town.

What the Connelly Gang get up to will no doubt be closely watched by the Renison tin mine joint venture of $390m ASX-listed Metals X (ASX:MLX) and China’s Yunnan Tin. Renison is one of the biggest tin operations in the world and is all of 18km from Heemskirk.