Stellar Resources Ltd (ASX: SRZ) shareholders are sitting on phenomenal gains over the past 12 months, but the analysts at Shaw and Partners believe there's more upside to be had as the company's Heemskirk tin project progresses towards production.
The company's shares are up 1045% over 12 months, increasing from as low as 2 cents during the period to be changing hands for 35.5 cents at the time of writing.
Globally-significant project in development
The Heemskirk project, the company says, is "the highest-grade undeveloped tin project in Australia and the third highest-grade globally of peer company projects''.
Stellar has so far defined a resource of 13.36 million tonnes at a grade of 0.86% tin, for 115,300 tonnes of contained tin, and exploration is ongoing.
The company recently released new drilling results from the Severn deposit at the project, and Stellar said, significantly, "the intersections occur outside of the Severn Resource at shallower depths and along trend to the south of the high-grade Montana Resource''.
This meant there was the potential for the Severn and Montana resource zones to link up, the company said.
Stellar said it has immediately started follow-up drilling to test that theory, while "a second drill rig is testing additional zones along the Severn trend outside the resource to the north of Montana''.
The company added:
Prefeasibility Study work continues with focus on optimising mining and processing configuration through either a standalone operation or utilising existing nearby infrastructure, as well as mine scheduling for potential incorporation of the Severn extension plus Montana into increased production capacity. Tin prices continue to hold near all-time highs and at the time of writing this release remain above US$54,000, as tightening of global supply and disruption concerns continue, supporting the strategic case for Stellar's Heemskirk Tin Project with unencumbered offtake in a stable Tier-1 jurisdiction.
Stellar Managing Director Simon Taylor said the new drilling results were a major development.
He said:
This potential scale expansion offers significant development upside, and we are now undertaking the work to develop the resource at Severn into these new areas to incorporate into the prefeasibility study and any future definitive feasibility study. Evaluating the integration of these potential resource extension high-grade zones into our planning will allow us to deliver a thoroughly optimised prefeasibility study that maximizes long-term shareholder value.
Shares looking cheap
Shaw and Partners said in its new research note on the company that joining the two deposits would be advantageous for mine design and scheduling.
The broker has a price target of 66 cents on Stellar, compared to 35.5 cents at the time of writing.
This would constitute an 85.9% return if achieved. Stellar is valued at $120.7 million.
The post Up more than 1000% over a year, how much more upside does this ASX mining stock have? appeared first on The Motley Fool Australia.
Motley Fool contributor Cameron England has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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