BHP Minerals to earn stake in Stellar’s Palawan project

Stellar Gold (VSE) has agreed to allow BHP Minerals to earn up to a 70% interest in the Palawan project in the Philippines.

BHP will be responsible for all costs during the prefeasibility stage. On completion of the study, it can proceed to full feasibility by paying Stellar US$500,000.

Once the feasibility study is complete, BHP will have earned an initial 40% interest. It will be then able to buy an additional 30% for US$5 million, provided it vows to begin constructing a minimum 15,000- tonne-per-day mine within two years.

Stellar also has the right to mine and ship up to 500,000 tonnes of saprolite material per year, and intends to study the possibility of a direct-shipping operation, with the objective of starting production in one year.

The Palawan hosts an estimated 90 million tonnes of laterite grading 1.14% nickel and 0.17% cobalt. The saprolite reserve is estimated at 776,000 tonnes grading 2.29% nickel.

The underlying agreement with the owners of the Palawan project stipulates that, in order to acquire the asset, Stellar must issue 10.6 million shares in three stages.

The BHP agreement also covers the South Surigao properties in the Philippines, which Stellar can acquire, subject to a 10% net profits interest, by issuing 1.6 million common shares in stages.

Previous sampling established the properties’ potential to host a multi-million-tonne reserve of laterite material grading 1% nickel and 0.1% cobalt.