Stellar Resources (SRZ.AX) has confirmed it will drill an additional two holes as part of its Phase 1 drill program. These two holes will add approximately 1,900 meters of drilling and will consist of two diamond drill holes for wedging, as the company is trying to target the potential depth extensions below the currently known tin resource on the Severn zone. That resource has already been drilled out to a vertical depth of approximately 500 meters and these new holes will provide better insight as to what’s hiding below the current resource estimate, as previous drilling indicated the mineralization remained open at depth, below the 500 meter vertical limit.

Drilling these additional holes (which is a positive development, given how the tin price is evolving) will bring the total amount of meters drilled to 4,900 meters. The originally planned 3,000 meters will be completed in seven holes where Stellar Resources will be targeting the depth extensions of four previously mined silver-lead lodes.

While the Phase 1 drill program still has to start, Stellar Resources is already working on a Phase 2 drill program as well, which will mainly consist of infill drill holes to upgrade the inferred resource to an indicated resource which could then be used for a pre-feasibility and/or a feasibility study on the project. As a reminder, the PEA outlined an after-tax NPV10% of A$71M based on a tin price of A$28,600/t but the current tin price is approximately 30% higher (despite the stronger Australian Dollar). Using the current spot price will likely almost double the NPV, so it’s definitely worth investigating the expansion potential at Heemskirk as the PEA only included 3.7 million tonnes of rock at an average grade of 0.94% tin.

Disclosure: The author has no position in Stellar Resources. Please read our disclaimer.

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