Stellar Resources was featured in the September issue of Paydirt Magazine. The article discusses Stellar’s search for a partner to help fund the Heemskirk Definitive Feasibility Study and what’s next for Stellar.
Indonesia, the world’s largest tin exporting country, experienced a 92 per cent year on year decline in exports to 786 tonnes in September, according to Bloomberg News. The fall was far greater than expected and reflected difficulties smelters are having adjusting to the new regulation that requires all ingot sales to be conducted through an Indonesian commodity exchange. September shipments included 400 tonnes of ingot and 386 tonnes of tin solder with the later being exempt from the new regulation until January 2015.
Click here for the full Bloomberg article
Indonesian Trade Ministry figures show that refined tin exports for August have remained low for the second month in a row at 6,525 tonnes, (6,466 tonnes in July) compared to the record level of 11,048 tonnes in June, according to Bloomberg News. Compared to exports of 5,646 tonnes in August 2012, the latest numbers represent a 16 per cent rise. However, the year ago numbers were depressed by a voluntary reduction in exports to support higher prices.
The outlook for September is for lower exports month on month and year on year as exporters and buyers scramble to meet the new regulation requiring all ingot to be sold on an Indonesian exchange.
Click here for the full Bloomberg article
The tin price has outperformed other LME traded metals over recent weeks and spreads have tightened. The apparent trigger for the latest price action has been reports of disruptions to shipments from Indonesia as a result of a change in local market regulations. Indonesia is the world’s second-largest tin producer and the leading supplier to the international market. At the same time, there have been clear signs recently of an upturn in tin demand and on our estimates the global tin market was already on course to record a small deficit this year, before these latest developments in Indonesia. As such, the short-term outlook is price positive, although it should be noted this comes with Indonesian policy risk and the caveat that outside of the LME, at least, there are reported to be reasonable levels of stocks.
Click here to read the full report.
Reuters has reported that PT Timah, Indonesia’s largest tin producer has declared force majeure on ingot exports. Timah customers, uncertain about counter-party risk, have not registered to use the new INATIN contract on the Indonesian Commodity and Derivative Exchange and have no other mechanism for purchasing Timah ingot under the new trading rules that came into effect on 2 September 2013.
To read the full article click here.
On Tuesday September 3, the London Metals Exchange (LME) tin price increased by 1.8 per cent to US$21,680 per tonne in an otherwise neutral trading day for LME metal prices. The positive tin price reaction was in response to a Bloomberg news report that mentioned 30 of 47 Indonesian tin smelters have temporarily stopped tin ingot shipments. Indonesia accounts for 34 per cent of global tin supply much of which is exported in the form of ingot.
Under new regulations that came into force on 30 August, all smelters need to meet new purity standards and also must trade tin ingot contracts on an Indonesian exchange prior to export. Confusion has arisen, because five smelters are registered to trade the INATIN contract on the Indonesian Commodity and Derivative Exchange and another 18 independent smelters have registered to trade the Serumpun contract on the Jakarta Futures Exchange. The Indonesian Commodity Futures Trading Regulator does not want to see two different prices on two different exchanges and has delayed approval of the Serumpun contract until this issue can be satisfactorily addressed. The independent smelters are meeting to find a way forward and believe that exports will be disrupted through September.
Read the full report here.
Export statistics released on 19 August showed that Indonesian shipments of refined tin declined by a more than expected 42 per cent month on month to 6,466 tonnes in July 2013. Indonesia accounts for 34 per cent of the world’s supply of refined tin, and July’s drop is the biggest decline in shipments since the 64 per cent weather-related decline in January 2012.
The 42 per cent July decline compares with an expected reduction of 24 per cent following a change in regulations by the Indonesian authorities. The changes that came into effect from 1 July 2013 required an upgrade in specifications for refined exports from 99.85 per cent to 99.90 per cent tin.
One explanation for the much more significant decline in shipments could be re-stocking by smelters after record shipments of 11,111 tonnes in June 2013. However, what remains unclear in the July numbers is the extent to which they were affected by reduced shipments from non-complying smelters.
The London Metal Exchange (LME) tin price showed little reaction to the Indonesian export announcement, suggesting that the 13 per cent rise in tin prices from US$19,300 per tonne in mid-July to US$21,854 per tonne today had anticipated the Indonesian export news. If the July numbers prove to be a precursor for a sustained reduction in exports from Indonesia, lower LME tin stocks and a higher LME tin price should be expected.
The latest six-monthly survey of analysts’ London Metals Exchange (LME) price forecasts, as reported by theInternational Tin Research Institute on July 29 indicated an expected rise in the average tin price next year, with the consensus view of 17 analysts seeing the annual price rising to $23,000 per tonne next year, up from $22,000 in 2013.
All of the six companies providing forecast global supply/demand balances for tin expected the market to be in deficit in both years, with an average expected supply shortfall of some 5,000 tonnes in 2013 and 2 – 3,000 tonnes in 2014.
As reported by Reuters, an Indonesian overhaul of tin trading rules which raises minimum purity levels is expected to greatly reduce shipments from the world’s top refined tin exporter for a few months, which will potentially push up tin prices.
Last week, Stellar announcing that drilling at the Heemskirk Project has extended tin mineralisation at the Montana deposit by a further 120 metres down plunge. Drilling also confirmed the continuity of tin mineralisation between historical drill holes and current holes and increases prospectivity of the zone between Montana and Severn.
These results support the potential extension of a seven-year mine life identified in the recently completed Pre-Feasibility Study.
Sources: ITRI, Reuters
Stellar has reached a major milestone in its advancement towards production at the Heemskirk Tin Project, with results of a Pre-Feasibility Study (PFS) released this week demonstrating technical and financial viability for the project using tin price and exchange rate assumptions.
CEO Peter Blight commented, “Mine gate cash production costs of US$14,389/t are competitive and capital costs of US$114 million benefit from ready access to existing infrastructure. Importantly, multiple ore sources provide significant flexibility and have allowed a focus on grade (head grade 1.06% tin) to maximise net present value.”
Key results from the PFS include:
- Mining plan increases head grade to 1.06% tin from scoping study estimate of 0.93%,
- Annual production of 4,327 tonnes of tin in concentrate represents an 11% increase from the scoping study estimate,
- Initial mine life of 7 years with potential to expand once additional drilling within the current Severn resource is complete,
- Capital cost of US$114 million benefiting from the availability of existing infrastructure,
- Base case pre-tax NPV of A$61 million at a consensus long-term London Metal Exchange tin price of US$25,000/t and A$0.90.
The next step for Stellar will be resource expansion drilling ahead of a commitment to the Definitive Feasibility Study.
The PFS results are further detailed in the ASX announcement released on 24 July.
|Wednesday, 24 July 2013Justin Niessner|
STELLAR Resources has demonstrated technical and economic viability for its proposed Heemskirk tin mine in Tasmania, defining the project’s net present value at $A61 million.
The pre-tax estimate considers a long-term tin price of $US25,500 per tonne and could be increased as much as 67% to $102 million with a 10% increase in price of the metal.
The London Metal Exchange cash tin closed at $19,418/t overnight.The result comes with completion of Heemskirk’s prefeasibility study, which established a higher resource, higher head grade and higher annual production rate for the project.
The underground project was found to be able to produce 4327 tonnes per annum of tin in concentrate, an 11% increase from the scoping study estimate.
The mineral resource increased by 49% to 71,500t of contained tin allowing for optimised mining plans to increase the run of mine ore grade to 1.06% tin.
The initial mine life is seven years, with potential to expand after further drilling at the site’s Severn zone.
Mining is expected to combine longhole open stoping and cut and fill methods to feed a conventional gravity and flotation concentrator with a capacity of 600,000tpa.
Assuming a 70% recovery, annual tin in concentrate production was estimated at 3900t.
Pre-production capital cost has been calculated at $126.6 million including $37.9 million for the mine, assuming an 18-month period of decline and stope development ahead of first ore milling.
Direct mining and processing cash costs of $12,268/t of tin in concentrate are 4% lower than in the scoping study.
Adding mine and process plant sustaining expenditures and corporate overheads to direct costs resulted in a mine-gate cash cost of $14,386/t.
Stellar said Heemskirk, located near Zeehan, had a number of infrastructure advantages including access to the port of Burnie and loading facilities for containerised concentrate via 150km of road serviced by several regional trucking contractors.
The company noted that the area was well serviced with communications, water supply and the nearby state grid.
It said its next steps would include drilling to expand the resource and increase the average deposit grade ahead of a commitment to a definitive feasibility study.
Shares in Stellar were unchanged today at A5c.
Article originally published by MiningNews.net