Stellar firms up nickel acquisition

Junior Stellar Gold (VSE) is going ahead with its planned acquisition of a laterite nickel deposit in the Philippines.

To acquire the Palawan project, Stellar, which has 4.8 million shares outstanding, will issue a total of 10.65 million shares in three stages.

The company will issue 3.5 million shares upon approval of the deal by the Vancouver Stock Exchange, a further 3 million shares on the signing of a joint-venture agreement with a major company, and the remaining 4.1 million shares upon completion of a positive feasibility study.

Stellar is currently talking with BHP Minerals regarding a possible joint venture.

The deposit contains about 90 million tonnes of laterite grading 1.14% nickel and 0.17% cobalt. It also hosts a near-surface saprolite layer containing 776,000 tonnes of proven, minable reserves grading 2.29% nickel.

The company intends to ship the saprolite reserve to a smelter over a 4-year period, at an estimated cost of US$3.1 million.

At current nickel prices, the saprolite production would spin off roughly US$5 million per year in cash flow.

Hitherto, few of the world’s lateritic nickel deposits have been developed, owing to the high costs incurred by energy-intensive extraction processes.

Stellar has developed a recovery process that consumes less energy and incurs lower costs than conventional processes, although a pilot plant test has yet to be carried out.