SOUTHEAST ASIA SPECIAL — BHP, Stellar work Philippine nickel project

While due diligence work continues on its Palawan nickel property in the Philippines, Stellar Gold (VSE) is proceeding with a prefeasibility study for the export of saprolite nickel ore.

BHP Minerals is conducting a due diligence review of Palawan’s lateritic nickel resource prior to signing a joint venture with Stellar.

The proposed deal with BHP gives the major the right to earn up to a 70% interest in the Palawan nickel project. BHP would earn an initial 40% interest by completing a feasibility study, at which point it would have the right to buy an additional 30% in return for US$5 million and a commitment to build a minimum 15,000-tonne-per-day mine within two years.

Palawan contains an estimated laterite resource of 90 million tonnes grading 1.14% nickel and 0.17% cobalt plus a saprolite resource of 776,000 tonnes grading 2.29% nickel.

Terms of the BHP agreement allow Stellar to export up to 500,000 tonnes of direct shipping grade saprolite per year.

Stellar has retained Rescan Engineering to complete the prefeasibility study for a 300,000-tonne-per-year direct shipping operation. Stellar also hired Nilsson Mine Services, which will develop a preliminary mining plan.

Drilling will provide additional data to characterize and expand the saprolite resource.

The feasibility work on the saprolite material should be completed by the end of September, and Stellar believes site preparation and pre-stripping could begin as early as this December.

In the meantime, BHP is working on its due diligence review, including a reassessment and confirmation of the laterite resource, as well as confirmation of land tenure.

BHP started its due diligence work in January, and Stellar expects the program to be completed by mid-July at a cost to BHP of roughly US$500,000.

BHP’s work to date has included the resampling and assaying of 98 test pits, and Stellar reports that preliminary results from the work compare well with the original data.