PERTH (miningweekly.com) - ASX-listed Stellar Resources has reached an agreement with fellow listed Gippsland to take full ownership of the Heemskirk tin project, in Tasmania.
In return for Gippsland’s 40% stake in the Heemskirk project, and subject to shareholder approval, Stellar would issue more than 43.5-million shares. Gippsland would also retain a net smelter return royalty over any future tin production from the Heemskirk project.
The royalty would be triggered when the tin price is A$25 000, at a rate of 1%, and would increase linearly to a maximum rate of 2%, at a tin price of A$30 000 and above.
In a joint statement on Wednesday, Gippsland said that 50% of the consideration shares from Stellar would be escrowed for six months from the date of issue, while a further 50% would be escrowed for a further six months, subject to listing rule requirements.
Stellar said that the agreement clearly staked the company as the explorer and developer of the Heemskirk tin project, and a potential future tin producer, and would make it easier for the company to attract the capital necessary to develop the project.
“This agreement is an exciting development for Stellar. It clearly stamps the future direction of the company as the explorer and developer of a world-class tin resource,” said Stellar chairperson Phil Harman.
“Given the positive outlook for the future of the global tin price, it places Stellar in a position to deliver great value to all of its shareholders.”
The Heemskirk tin project currently comprises the Queen Hill, Severn and Montana deposits, which are located immediately north-west of Zeehan. The three deposits are estimated to contain an inferred resource of 4.4-million tons, grading 1.1% tin, making Heemskirk the highest-grade undeveloped tin resource in Australia.
Preliminary studies have indicated that at the right tin price, an economic mining project could be developed at Heemskirk.
Harman said that more importantly, from recent drilling around the known deposits and comparison with similar deposits elsewhere in the world, Stellar believed that there was considerable potential to add to the overall resource with further comprehensive exploration.
Gippsland chairperson Ian Gandel said on Wednesday that by committing to this deal, the parties would ensure that the Heemskirk project was given the best possible chance of becoming a mine, which could only benefit the shareholders of both companies.
“Gippsland shareholders will benefit not only from their continued exposure to the Heemskirk asset and a royalty from that project, but also from exposure to Stellar’s other exploration projects,” he said.