Sunday, 5 February 2012

Stellar Resources advances towards BFS at Heemskirk with up to A$5.7m capital raising

Stellar Resources (ASX: SRZ) has raised A$3.1 million to advance its wholly owned Heemskirk Tin Project toward the completion of a Bankable Feasibility Study.

The company has placed 39.2 million fully paid ordinary shares with institutional and sophisticated private clients of Taylor Collison at $0.08 per share.

Stellar is also offering eligible shareholders the opportunity to participate in a fully underwritten one for six non‐renounceable entitlement offer at $0.08 per share to raise an additional $2.6 million.

The placement and entitlement offer will raise a combined $5.7 million before costs and increase the company’s cash position to about $6.5 million.
Managing director Peter Blight told Proactive Investors today Taylor Collison has fully underwritten the capital raising.

“We’ve got a full underwriting agreement, so effectively we will be raising all of the funds and that’ll launch us into this year with our drilling program at the Heemskirk Tin Project,” he said. 

Stellar recently moved to 100% ownership of the Heemskirk Tin Project with the issue of 43.5 million shares to Gippsland (ASX: GIP) to acquire its minority interest in the project.

The agreement clearly stakes Stellar as the explorer and developer of the Heemskirk Project and a potential future tin producer, and will make it easier for the company to attract the capital necessary to develop the project.

Cornerstone Backer

Resource Capital Funds has become a cornerstone investor in Stellar through its participation in the share placement.

The mining-focused private equity firm is currently investing the US$1.02 billion raised in its fifth fund, Resource Capital Fund V LP, to help its investee companies build strong, successful and sustainable mining businesses.

Heemskirk Plans

Stellar is in the process of securing a drilling contractor to begin work at the Heemskirk Project in early March.
"It will be quite an extensive drilling program through 2012 with the basic objective of adding to the resource base," Blight said.

Drilling will initially focus on expanding the Severn deposit with a follow‐up program to the highlight intersection of 6 metres at 1.1% tin reported in mid-November.

Stellar will then drill test potential extensions of Severn along strike and a number of discrete magnetic anomalies on the retention licence, as well as undertake infill drilling to improve resource certainty.
“We’ve got opportunities around that deposit and also around the other two deposits as well for drilling to add some additional tonnes, but also to increase the confidence level in the known deposits,” Blight said.

Metallurgical test work, engineering studies and environmental monitoring will also be advanced during the program.

Stellar will also use some of the funds raised to drill test its high priority exploration targets and, in particular, the St Dizier tin mineralisation.
The company is eyeing the completion of a Bankable Feasibility Study in the second half of 2013.

Highest Grade Undeveloped Resource

The Heemskirk Tin Project comprises the Queen Hill, Severn and Montana deposits which are located immediately north-west of Zeehan on the west coast of Tasmania.

The project is strategically located near necessary infrastructure such as rail and roads connecting to the Burnie Port, as well as having access to water and power.

Stellar has estimated that the three deposits comprise an Inferred Resource of 4.4 million tonnes at 1.1% tin making Heemskirk the highest grade undeveloped tin resource in Australia.

A Scoping Study showed potential for economic development with a 3.5 year payback on $108 million pre-production capital and a competitive cash operating cost of US$12,780 per tonne of tin.

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