Stellar Resources managing director Peter Blight describes the company’s flagship Heemskirk tin project in Tasmania as the ‘best tin project listed on the ASX’. They are strong words but when you consider the combination of Heemskirk’s high grades and favourable location it is easy to see why Blight talks about it in such a way. Having listed in 2005, Stellar resources has since evolved from a mineral explorer to the project developer we see today. Now Blight is fully focused on how the company can take the Heemskirk project into production. With the price returning and a developing market for tin in its application for energy uses, it is an opportune time to be moving into production.
Heemskirk’s two defining attributes are certainly its grade and location. The resource itself is 6.3mt at 1.1% tin, Blight highlights how high that is by comparing it to the rest of the ASX where there are no other projects with that grade which have been classified as a resource. It is a huge competitive advantage for the company and places the project not far behind world class tin projects such as Minsur’s San Rafael in Peru and MetalsX’ Renison Bell mine just 18km away from Heemskirk.
Location can have a huge impact moving from mineral exploration to project development, predominantly on financing and capital requirements. Heemskirk is situated in Tasmania arguably one of the world’s premier mining districts, specifically for tin production.
There are mines in the region with a history stretching back over a century and as a result there is a significant infrastructure network with ready access to all the necessary service to construct a mine.
“The services, transport, processing infrastructure and all the skills you need are already in the area and there is a well-established environmental performance regime and well-established mining practices,” Blight says.
“Along with that we are very close to the mining town of Zeehan which has a good skill base of third-generation miners living there. Our location is a huge advantage compared to some more remote projects, particularly those in Africa where all the infrastructure has to be supported by the project.”
Stellar’s development plan is to drill out the resource with over 9,000m of core drilling targeting a definitive feasibility study in the middle of 2018. The first stage of the drill programme is to upgrade enough of the resource from inferred to indicated in order to underpin a DFS. Once the resource is in place the company can push ahead with testing the environmental performance as well as the process plant optimisation.
Heemskirk lends itself best to a capital intensive underground mining scenario, however Blight and the team have devised a ‘fast start’ approach which means they can be underground, mining and learning about the deposit with a smaller plant at less than half the price of a full-scale ramp up.
The project’s proximity to one of the world’s major tin mines at Renison is a great boon for Stellar Resources. Renison is the oldest and largest tin mine in Australia, having operated for 50 years with at least another 15 in front of it. The management team at Stellar are utilising Renison to make gains in understanding the mineralisation system and development opportunities at Heemskirk.
“The point we would make is that the tin mineralising system at Renison has a lot of similarities to Heemskirk. They are not exactly the same but we believe the same sort of mineralising processes are at work at our project as were at work generating the Renison deposit,” notes Blight.
Heemskirk has not been mined before and therefore there is the undeveloped potential of Stellar having another Renison on its hands. The Rension project has produced 23mt at 1.4% tin since 1968 with current reserves of 4mt at 1.39% tin and in total makes up nearly 40% of Australia’s known tin resources.
However, the giant project started with a 10-year mine life in the 1960s and it has seen ongoing expansion to be a major producer even since. That is a model Blight is hoping to replicate at Heemskirk once the company has a true grasp of the geology. MetalsX has broken ground recently in coming to conclusions on the geology at Renison and Blight is looking at ways to apply that knowledge to Heemskirk.
“Clearly understanding the influence of the geological structure on the distribution of mineralisation is important. Some of the processes they are using in terms of recovering tin concentrate are similar to ours, our process flowsheets are very similar and some of the modifications they have made in their process are going to be important for us as well.
“We keep a close eye on what they are doing and apply those lessons to shortcut our learning experience.”
In the same way as Renison, which did not show its true size from the beginning, Heemskirk has great potential for upside in exploration as it progresses. The deepest drill hole is only 500m from the surface and the mineralising source rocks are estimated to be at least 1-1.2km from the surface so there is a big area to explore further. The Renison model suggests there will be continuous mineralisation the deeper its drilled and Blight hopes there will be significant upside for the resource.
“The interesting thing for us is that the size of the deposit at the moment is moderate but if you look at Renison they started with something similar and ended up building a very large resource over time – you can see the potential for us,” compares Blight.
The wider market for tin is changing. While it has had applications in energy storage for some time, as the energy storage market develops so too will the global demand levels for tin. Rapidly changing technologies couple with strong market drivers such as increased communications, more renewable energy and reduced carbon emissions will lead a strong market for tin in the coming decade.
“[Tin] is involved in the energy sector with lead acid batteries. It is the fourth biggest end use for tin with consumption at around 28,000t p/a in a 360,000t market and has been growing strongly in China,” Blight explains.
“The development of the use of tin in lead acid batteries had been partly environmental to replace cadmium and other lead alloy elements. I think battery makers are finding that tin has other properties as well in terms of improving the charge carrying characteristics in lead acid batteries. At some point in the future we may see more of a role for tin in lithium-ion batteries as well.
“It’s a very favourable metal for the energy sector and we will see it used more and more. The applications in energy use are quite varied and that is one of tin’s strengths, that there are characteristics that give it an opportunity in the energy market.”
However, with the drilling programme underway, making sure the company delivers a DFS midway through next year is taking the front seat. Once that phase is completed, Stellar will be seeking to secure financing and move into construction. Blight anticipates that by the middle of 2019 the Heemskirk mine could begin production.
With the fast start approach less upfront development capital is required before mining has started so therefore the entry is quicker and there is less investment tied up in development. There is substantially less capital at risk and thanks to the staged approach the production risk is also reduced. Once production has been ramped up and established Stellar will push the project into the next phase.
“Once we have established the underground mine and completed a lot more drilling we will have an opportunity to upgrade the resource further, which could underpin an expansion of the mine.
“There’s a lot of opportunity to get this project into production relatively quickly then once it’s proved itself, increase its size.”