Stellar Resources extends Montana Tin deposit
Stellar Resources’ (ASX: SRZ)
drilling has extended tin mineralisation at the Montana deposit of its
Heemskirk Tin Project in Tasmania by a further 120 metres down plunge.
It
has also confirmed continuity of mineralisation between historical
drill holes and current holes, highlights a convergence between Montana
and Severn and supports extension of the 7 year mine life.
“ZM126
and ZM126W confirm the continuity of tin mineralisation at depth at the
Montana deposit and increases the prospectivity of the zone between
Montana and Severn,” chief executive officer Peter Blight said.
“This
is an exciting development as it demonstrates the potential to expand
the Mineral Resource released in February and provides support for the
recently announced positive prefeasibility study.”
Best
intersections at ZM126 were 8 metres at 0.7% tin from 455 metres
including 2 metres at 2.2% tin and 1.3% copper from 455 metres as well
as 6 metres at 0.6% tin from 422 metres at ZM126W.
Montana Drilling
The two diamond holes ZM126 and ZM 126W were completed below the Montana deposit.
ZM126
– the parent hole - collared above the Severn deposit and drilled 550
metres to the northwest to target a possible extension of the Montana
mineralisation at a depth 400 metres below the surface, or 100 metres
below the nearest historical diamond drill hole.
A wedge hole – ZM 126W - tested the zone 50 metres above and 30 metres to the east of ZM126.
ZM 126 successfully demonstrated an extension of the Montana mineralised zone at depth with the 8 metre intersection of tin.
In
addition, shearing of a massive iron sulphide unit from 452 metres to
457 metres led to poor core recovery implying that the mineralised zone
may be wider than the assays indicate and the average grade could be
understated.
Besides the mineralised intercept of 6 metres at
0.56% tin, ZM126W also intersected a secondary zone grading 1.09% tin
over 3 metres from 483 metres that was not intersected by earlier
drilling and may represent a new or additional zone to the main Montana
mineralisation.
Taken together, results from the two holes
indicate the mineralised envelope at Montana has been extended down
plunge by 120 metres. It commences at 80 metres below surface and
extends for 350 metres, remaining open at depth. The mineralisation is
also open to the west.
Montana mineralisation comprises
cassiterite within massive iron sulphides and is associated with silica
and siderite that together with the sulphides replace carbonate rich
sediments. Narrow lead and zinc veins near surface also occur in close
proximity to the tin mineralisation.
As such, Montana is closer in style to Lower Queen Hill than the pyrite/pyrrhotite stock-work that characterises Severn.
Drilling Targets
Given
the close proximity of the Montana, Queen Hill and Severn deposits, a
common source is the most likely situation with the deposits converging
towards Montana which may provide the conduit for fluids from the
granite.
From an exploration perspective, this model suggests
that the best rewards will come from following the known mineralisation
down plunge along the Oonah/Crimson Creek contact. The zone down plunge
from Queen Hill represents an attractive and relatively shallow
additional target.
Tin Outlook
Tin supply
has been in shortage for several years now with alluvial sources
becoming increasingly less reliable and more expensive.
New
supply is expected to come increasingly from hard rock mines, which will
also provide the greater certainty of supply that is a major issue for
end-users.
Tin demand is also expected to increase with the rise
of new electronic products such as tablets and smart phones, which
typically use 0.7 grams to 1.0 grams of tin.
Macquarie
Commodities noted that while the electronics manufacturing industry has
run down stocks of tin solder over the last two years, its data suggests
the market could be moving towards a period of re-stocking, which could
add to an improved outlook for tin.
Notably, while tin exports
from Indonesia had jumped 20% in June 2013 to their highest level in 18
months, this is believed to be due to exporters releasing stockpiles
before the country’s new, tighter, purity standard rules took effect in
July.
This new rule, which raises the minimum limit on tin content to 99.9% from 99.85%, is expected to halve shipments.
In
addition, the Standard Bank Group has estimated there will be a 6,000
ton tin deficit this year, the fourth consecutive global shortage.
Analysis
The
results from the two diamond drill holes highlight the strong potential
for Stellar to increase Resources at the Heemskirk Tin project, which
has a base case NPV of $61 million and a 3.7 year payback according to
the recently completed Pre-Feasibility Study.
Heemskirk already
has the highest grade, undeveloped tin resource in Australia, and any
resource increase will make it a more attractive development prospect as
tin demand rises from its use in new electronic products.
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