Scoping Study Overview

Stellar well positioned to take advantage of increasing tin demand and global supply shortages from sustainable ESG compliant Heemskirk Tin Project

In October 2019, Stellar announced the results of its Heemskirk Tin Project Scoping Study based on development of an underground mine, processing plant, tailings storage facility and surface infrastructure to mine ~ 350ktpa ore at a LOM head grade of ~ 0.95% tin from the Queen Hill and Severn tin deposits (2 of the 4 Heemskirk deposits) over a 10 year initial mine-life. The project also includes open-pit mining of the St Dizier satellite tin deposit and trucking of ore to the Heemskirk processing plant during year 11 of the mine plan.

The processing plant is expected to produce ~ 4,500 tpa of concentrate containing ~ 2,200tpa of tin. Concentrate produced will be trucked 150km to the north via sealed road to the Port of Burnie for export to smelters in Asia.

The Heemskirk Tin Project 2019 Scoping Study was undertaken for the purpose of ascertaining whether a business case can be made to proceed to more definitive studies on the viability of the Heemskirk Tin Project. It is a preliminary technical and economic study of potential project viability based on low level technical and economic assessments that are not sufficient to support the estimation of ore reserves. Further exploration and evaluation work and appropriate studies are required before Stellar will be in a position to estimate any ore reserves or to provide any assurance of an economic development case.

Economic Evaluation

The 2019 Scoping Study confirmed the Heemskirk Tin Project has attractive economics:

  • With a low pre-production capital base of A$57m, the Heemskirk Tin Project generates a pre-tax NPV10% of approximately A$83m (post-tax NPV10% of approximately A$71m), at a tin price of US$20,000/t and 0.70 USD:AUD exchange rate, to an accuracy of ±35%. The pre-tax internal rate of return of the project is approximately 45%.
  • A competitive All-In Sustaining Cost of ~US$13,100/t of tin generates ~34% operating margin based on US$20,000/t tin price and 0.70 USD:AUD exchange rate.

Heemskirk Tin Project – Key Results from 2019 Scoping Study

Sensitivity analysis undertaken as part of the 2019 Scoping Study highlights the robustness and attractiveness of higher tin prices to the Heemskirk Tin Project.

Heemskirk Tin Project – Sensitivity Analysis

Mining

A study of mining the Queen Hill and Severn deposits based on the updated May 2019 Heemskirk mineral resource estimate was completed in September 2019 by technical consultants, Mining One.

Conceptual Heemskirk Mine Design Showing Stopes based on Indicated Mineral Resource (Grey) and Inferred Mineral Resource (Brown)

Key parameters of the mine design selected for the 2019 Scoping Study include:

  • Long hole stoping underground mining method with either Cemented Aggregate Fill or Cemented Rockfill.
  • Mine access via a single decline enabling quick access to Upper Queen Hill, with an initial underground connection access to Severn, followed by an internal decline at Severn and a second connection from Queen Hill to Severn for recovery of upper Severn later in mine life.
  • Mine ventilation provided by using two exhaust shafts and an emergency escape way system designed as a second egress and fresh air intake.
  • Decline dimensions 5mW x 5.5mH
  • Ore drives dimensions 5mW x 4.5mH
  • Stope height 20 m
  • Minimum stope width 2 m
  • Maximum stope width 100 m
  • Strike length 15 m
  • Pillar width 5 m

Heemskirk Tin Project – Preliminary Production Schedule by Resource Category

The preliminary mining schedule for Queen Hill and Severn used in the 2019 Scoping Study includes total mineral resources of 3.29Mt @ 0.95% Sn after application of mining dilution and recovery factors and mining cut-off grades.

For the first 5 years of production and most of year 6, ore is mined from indicated resources. Indicated resources represent 58% of total ore mined over the 11-year life of the project.

Mining of indicated resources from the St Dizier satellite deposit has also been included in the final year (year 11) of the 2019 Scoping Study preliminary mining schedule.

Metallurgy

The Heemskirk Tin Project’s Queen Hill and Severn tin deposits are broadly similar with cassiterite being the principle tin mineral (97% of total tin) in association with coarser grained sulphides (pyrite and pyrrhotite), silicates and carbonates (siderite) and accessory fluorite and rutile. Minor amounts of lead and zinc sulphide occur in the Upper Queen Hill deposit but become less common below 1100RL.

A number of metallurgical test work programs have been completed between 2010 and 2015 on composited drill core samples from the Queen Hill and Severn deposits by ALS Metallurgical Laboratory in Burnie, Tasmania, and supervised by Worley Parsons.

The table below summarises the recovery and concentrate grade estimated from test work completed and the Life of Mine average head grades for each ore type.

Average Head Grade, Recovery and Concentrate Grade by Deposit

Processing Plant and Surface Infrastructure

Due to similarities between ore types, metallurgical test work at Heemskirk and St Dizier has used a modified version of the Renison Tin processing flowsheet. The Renison plant has operated for more than 50 years and under-gone several adaptions over its history to deal with changing ore-types. Such demonstrated flexibility will be a significant advantage for the Heemskirk processing plant.

The flowsheet for the Heemskirk processing plant was designed by GR Engineering and later reviewed by Mincore in July 2016.

Heemskirk Tin Project – Process Flow Diagram  (Mincore)

The main elements of the Heemskirk processing plant flowsheet include:

  • 2 stage crushing followed by grinding (open-circuit rod mill feeding a closed-circuit ball mill)
  • Primary sulphide flotation, regrind of sulphide concentrate and flotation of fine sulphide
  • Coarse and fine gravity separation using spirals and wet tables to produce a concentrate
  • Gravity middling regrind and recycle
  • Flotation of deslimed fine cassiterite
  • Sulphuric acid leach of concentrate to remove carbonate
  • Concentrate dressing using sulphide flotation and magnetic separation

In July 2016, engineering consultants, Mincore, completed plant layout, typical equipment drawings and a +/-35% capital cost estimate for a 200ktpa Heemskirk Processing Plant and Surface Infrastructure.

Mincore were re-engaged by Stellar in August 2019 to scale their June 2016 estimate up to a 350ktpa Heemskirk Processing Plant and Surface Infrastructure capital cost estimate which has been used as the basis for this 2019 Scoping Study.

Opportunities exist for optimisation of the flow sheet and recovery including addition of ore sorting.

Proposed Heemskirk Tin Processing Plant (Mincore 2016)

Tailings Pipeline and Storage

Tailings from the Heemskirk Tin processing plant will be thickened to recover process water and pumped via a 6.7km slurry pipeline to the planned tailings storage facility located within ML 2M/2014. Tailings water is to be reclaimed from the tailings storage facility and pumped back via return water pipeline for use in the process.

An area has been selected for a tailings storage facility located in a concealed valley on crown land with no competing land use and no observed endangered flora or fauna. The site is secured by ML2M/2014 and has no observed geological structures that might make the site unsuitable. The valley is naturally shaped to contain tailings with only a relatively small embankment required to be constructed at the northern limit, minimizing the cost of construction.

Proposed Heemskirk Tailings Storage Facility Plan (Initial Stage) and Site Photograph

Capital Costs

The Heemskirk Tin Project pre-production total capital cost is estimated to be ~A$57M.

Heemskirk Tin Project Capital Cost Summary (±35% accuracy)

Operating Costs

The Heemskirk Tin Project has competitive operating costs of ~A$123/t ore or ~US$13,100/t tin All in Sustaining Cash Cost (AISC).

Heemskirk Tin Project – Operating Costs Summary (±35% accuracy)

Environment

A Stage 1 environmental review of the Heemskirk and St Dizier project areas has been completed by John Miedecke and Partners Pty Ltd. The Stage 1 environmental review concluded that there are no environmental issues that would prevent development of the Heemskirk or St Dizier projects.

Stellar has registered the projects with the Tasmanian Environmental Protection Authority by lodging a notice of intent. The EPA has responded by issuing guidelines for the preparation of a Development Proposal and Environmental Management Plan for each of Heemskirk and St Dizier.

Stage 2 environmental surveying will be conducted in accordance with EPA guidelines and compiled into a DPEMP submission to the EPA and the West Coast Council in support of final mining approvals.

Community

The Heemskirk tin deposits surround Queen Hill a prominent topographical feature (70m elevation above town) that marks the northwest extremity of Zeehan. Housing is sparse on the town side of Queen Hill and non-existent on the northwest side of the hill.

All surface infrastructure including the mine portal, processing plant, surface stockpiles, workshops and offices are sited on the northwest side of Queen Hill above the Trial Harbour Road. The location selected prevents the transmission of noise and dust emissions into the town precinct. Mine access routes are also designed to prevent any interaction between mine vehicles and private vehicles operated within the town.

Underground mine development, particularly of the Severn tin deposit, will extend below the sparsely populated town side of Queen Hill. Much of this activity will occur below 200m from the surface and should have no impact on surface dwellings. Stellar expects to confirm this assessment with vibration and seismic modelling as part of a DPEMP.

Zeehan has a population of 728 people many of whom are involved in the mining industry and would support an increase in mining activity in the area. Stellar has conducted a number of diamond drilling programs on the town side of Queen Hill with the cooperation and support of local residents. The Company also has a good relationship with the West Coast Council who would like to see a Heemskirk workforce making use of the many unoccupied dwellings in the town.