Stellar Enhances Economics of Heemskirk Tin Project in Tasmania

Stellar Resources (ASX:SRZ) announced the results of its prefeasibility study optimization studies for its Heemskirk tin project in Tasmania. The studies revealed a 62 percent increase in net present value to AU$99 million and the preproduction capital cost was reduced to AU$110.3 million.
As quoted in the press release:

• 62 percent increase in NPV to AU$99 million
• Preproduction capital cost reduced to AU$110.3 million
• Average tin recovery increased by 4.5 percent
• Total operating cost reduced to AU$21,355/t Sn (US$14,949/t)
• Project cash flow positive at bottom-of-the-cycle tin price US$15,500/t and 0.70USD/AUD exchange rate
• Project’s position on tin industry cost curve greatly improved
• Greater geological understanding points to increased NPV with drilling
• More definitive drilling to commence once funding is in place

The optimized NPV has used the same price assumptions as those used in the earlier PFS NPV estimate (i.e. tin price (US$25,500/t), exchange rate (0.90USD/AUD) and discount rate (8%pa real)). The long-term tin price assumption of US$25,500/t for 2019 and beyond was recently supported by cost-curve analysis undertaken by the International Tin Research Institute (“ITRI”).
Optimization has added A$38m to the value of the Heemskirk tin project increasing the NPV by 62% to A$99m. As Figure 1 shows, metallurgical optimisation added A$18m through a 4.5% improvement in average recovery. The benefit of a reduction in mining cost has been offset by an increase in the processing cost. Simplification of the processing plant and other reductions in pre-production capital added A$16m to the valuation with another A$4m added through faster mine development than originally planned.

Peter Blight, managing director of Stellar, commented:

The successful results from the optimisation program have greatly enhanced the economics of our Heemskirk tin project. This outcome capitalises on the outstanding results from the March 2015 metallurgical testing program and more recently on the benefits from mining efficiency and processing cost studies. This work has placed Stellar in a strong position to accelerate definitive feasibility drilling and studies once funding has been secured. I would like to thank the significant effort from our staff and contractors in achieving this great result.

Click here to read the full Stellar Resources (ASX:SRZ) press release.