500Mt + Limestone JORC in 3.5 Months – What Happens If They Pull It Off

Estrella Resources (ASX: ESR) – Timor-Leste Limestone Project Investment Analysis

Executive Summary:
Estrella Resources (ASX: ESR) has unveiled a transformational limestone project in Timor-Leste, targeting a JORC-compliant 500 million tonne limestone resource by 30 September 2025. This analysis provides comprehensive valuation scenarios and market comparisons based on that milestone, incorporating both short-term and long-term share price projections under varying resource outcomes. We compare Estrella to peers with similarly large industrial mineral assets, review Timor-Leste’s geological context for limestone, and assess macroeconomic factors (demand growth, pricing trends, infrastructure needs) influencing the project’s value. We also present due diligence findings on Estrella’s new strategic partner, PT Raka Energi Mandiri (REM). All valuations use publicly available data and standard Australian market conventions.

Key Highlights:

• Resource Potential: Estrella aims to define a resource of at least 500 Mt of high-grade calcite-rich limestone (the Baucau Formation in Timor-Leste) which lies directly above its manganese targets. Initial assays indicate very high calcium carbonate purity (~97–98% CaCO3) with low impurities, suitable for cement, environmental remediation, and various industrial uses.

• Strategic Offtake Agreement: A binding Master Agreement with Indonesia’s PT Raka Energi Mandiri (REM) grants REM exclusive marketing/offtake rights for up to 500 Mt of limestone over five years. REM will earn 1 unlisted share option (exercisable at A$0.05) per tonne sold, up to 500 million options if the full target is achieved. This performance-based structure closely aligns REM’s incentives with shareholder value creation.

• Joint Venture Structure: A new joint venture, Estrella Murak Rai Timor Lda, is 70% owned by Estrella and 30% by Timor-Leste’s state entity (Murak Rai Timor), capturing 100% of limestone sales proceeds. This partnership secures local support and meets ASX requirements for foreign projects (aligning with Timor-Leste’s mining code and sovereign interests).

• Development Milestones: Estrella’s timeline is aggressive – define the resource by September 30, 2025, complete a scoping study by November 30, 2025, and obtain mining/export permits and port approvals by December 31, 2025. These near-term catalysts, if achieved, would significantly de-risk the project and activate the offtake arrangement.

• Valuation Upside: We project significant share price upside if the limestone project is successfully developed. Under a base-case sale price of USD $15/t (≈A$22.50/t) and an estimated net margin of ~15%, 500 Mt of limestone would generate roughly A$11.25 billion in revenue and about A$1.69 billion in net profit (approximately A$0.42 per share, assuming 4 billion shares outstanding). Even applying very low earnings multiples (2x–4x P/E), this implies a potential valuation on the order of A$0.84 to A$1.68 per share. An upside pricing scenario of USD $25/t (≈A$37.50/t) could roughly double the profit potential (to ~A$3.75 billion net, or ~A$0.94 per share), indicating even higher share price targets (e.g. ~A$2.82 at 3x P/E). In the interim, partial progress (e.g. confirming the resource without yet achieving production) would likely yield only modest stock gains, whereas full development and production could re-rate the stock by many multiples of the current price.

Valuation Scenarios and Share Price Projections (2025–2030):
Estrella’s share price outlook will hinge on the extent to which the 500 Mt limestone resource is verified and commercialized. We model three scenarios:

Scenario 1: Inferred Resource Only – Base Outcome (Stagnation). Estrella delineates ~500 Mt by Sept 2025, but mostly in the Inferred JORC category (lower confidence). Development progress then stalls at scoping study stage or slows considerably. In this case, the resource remains “on paper” without substantial advancement toward mining. By late 2025, simply proving the tonnage could justify a modest uplift (perhaps doubling the pre-deal share price, into the A$0.06–0.08 range) as the market begins to assign some in-ground value and the REM agreement is triggered. However, an Inferred-only status may cap the immediate upside since further drilling and studies would be needed to demonstrate economic viability. After the initial excitement, the stock might drift or retrace if no further progress is made. Through 2026–2027, the share might hover around A$0.06–0.08, reflecting a very steep risk discount (on the order of only A$0.10–0.15 per tonne of resource value). For context, Cassius Mining’s ~400 Mt limestone in Madagascar is valued at well under A$0.05/tonne by the market when unadvanced, which would imply ~A$25M value for 500 Mt – far below Estrella’s current market capitalization. Estrella’s REM offtake option and parallel manganese exploration could justify a somewhat higher relative valuation than Cassius, but if no further de-risking occurs, the stock could ultimately slide back toward pre-deal levels (A$0.03–0.05) by 2030 as the market loses interest.

Scenario 2: Measured & Indicated Resource – Moderate Success (Partial Development). In this scenario, 2026–2027 bring substantial drilling and study progress. Suppose by 2027 Estrella upgrades a significant portion of the limestone to Measured or Indicated categories (hundreds of millions of tonnes) and completes a positive Scoping Study (targeted by late 2025, leading into a Pre-Feasibility Study by 2026). This would provide concrete project economics (estimated capital and operating costs for quarrying and shipping). At that point, peer comparisons become more relevant. For example, Mayur Resources (ASX: MRL) pursued a 382 Mt limestone project in PNG and its Definitive Feasibility Study (DFS) demonstrated a post-tax NPV8 around US$133M (~A$200M) for a phased development, supporting a market cap in the $150–200M range. If Estrella can show similarly robust economics (e.g. prove it can profitably export tens of millions of tonnes per year), the market may start valuing it on a discounted cash flow or NPV basis rather than just per-tonne speculation. By 2028, with an Ore Reserve declared and a funding plan emerging, Estrella’s share price might reasonably trade in the A$0.20–0.40 range (market cap $400–800M, depending on how advanced and derisked the project is). This would equate to roughly 0.3–0.6x of a project NPV, which is typical for projects at the feasibility stage pre-financing. The share price trajectory under this scenario would be a steady climb: perhaps around A$0.10 by 2027 once resource confidence is established, ~$0.20 by 2028 after feasibility and permits, and rising toward ~$0.30–0.40 by 2030 if construction is imminent. Notably, in this moderate scenario, it is assumed that full production has not started by 2030 (maybe trial shipments or small-scale operations at most), so the valuation remains based on expected future cash flows (heavily discounted for remaining execution risk). Still, Estrella would by then be valued more in line with advanced industrial mineral developers or small producers. Signing an initial offtake agreement or strategic partnership during this period (for example, a cement company or nickel refiner committing to purchase a portion of the limestone) could further re-rate the stock, as it would validate the commercial aspect, much like a gold explorer securing a streaming deal can boost its price.

Scenario 3: Full Development to Production – High Success Case. This scenario envisions Estrella rapidly advancing the project to production by the late 2020s. After defining the resource, the company fast-tracks feasibility studies, secures mine and export permits by 2025–26, arranges project funding, builds the mining operation and dedicated port infrastructure in 2026–27, and begins large-scale limestone exports well before 2030. Achieving this aggressive timeline would mean overcoming significant logistical challenges, but if successful, Estrella could reach substantial annual sales volumes by 2028–2030. By 2028, actual revenues (and potentially profits) would start to materialize, allowing the market to value the company on earnings and cash flow multiples. For illustration, consider a production rate on the order of 50 Mt/year by 2030 (half of the REM agreement’s maximum run-rate). If the net operating margin is around A$8–12 per tonne (which assumes a sale price in the $20–$25/t range and cost of ~$10–15/t), that output would yield roughly A$400–600 million in annual EBITDA. Even at a conservative 3x EV/EBITDA multiple (appropriate for a bulk commodity operation in an emerging market), the implied enterprise value would be on the order of A$1.2–1.8 billion. Estrella’s 70% project share would make its portion of enterprise value roughly A$0.8–1.3 billion. If by then the share count has increased to ~4 billion (due to financing equity raises), one could envision a share price in the ballpark of A$0.30–0.45 from that EBITDA-based approach. However, as the project becomes a reality, higher valuation multiples could be justified. Infrastructure-like businesses can trade at 5–6x EBITDA (for example, established cement or lime producers often trade around ~8x EV/EBITDA, though a single-asset operation in Timor-Leste would warrant a discount). At 5–6x EBITDA, and especially if higher production or pricing is achieved, Estrella’s share price could potentially push well above A$1.00. Indeed, using the earlier simplified earnings approach: ~A$1.69B net profit (annualizing the full 500 Mt over five years) translates to about A$0.42 EPS, which at even a 3x–4x P/E multiple would imply ~$1.26–$1.68 per share. Thus, the successful execution of the “500 Mt in 5 years” vision points to a company valuation well above A$1 billion (a multi-bagger from today’s ~$90M market cap). It must be emphasized that this outcome requires near-flawless project delivery: timely permits, an estimated $100–200M of capital for the mine and port (obtained via a prudent mix of debt and equity), and actual market uptake for the limestone at the forecasted price. Any significant shortfall – for instance, achieving only 10–20 Mtpa in sales instead of the targeted 50–100 Mtpa – would proportionally reduce the valuation.

Investor Implications: In summary, by 2030 Estrella’s share price could range from essentially flat (or even lower) in a disappointment case, to around $0.30 in a mid-case where the project is partly de-risked, up to above $1.00 in the base success case – and potentially well beyond $1 if limestone prices or achieved volumes exceed the base assumptions. This wide range of outcomes reflects the early-stage, high-risk/high-reward nature of the project. At the current ~A$0.05 share price, the market is valuing Estrella at a speculative fraction of the potential success-case value, indicating substantial upside if management meets key milestones, but also considerable downside if those hurdles prove insurmountable. Investors should monitor each milestone closely (resource size and category, scoping study economics, permitting progress, financing deals, construction updates, etc.) and adjust expectations as Estrella moves along these scenario trajectories.

Comparison to Peer Companies with Large Industrial Mineral Assets:
To put Estrella’s limestone venture in context, we compare it with other listed companies (ASX and international) that control similarly large industrial mineral deposits (limestone or analogous bulk materials). These comparisons offer insight into how the market currently values such assets at various development stages:

• Estrella Resources (ASX: ESR): Targeting a 500 Mt high-purity limestone resource (exploration stage; Timor-Leste; JV with state holding 30%). Offtake agreement in place (REM for up to 500 Mt over 5 years, conditional on milestones). Current market cap is around A$88 million (mid-2025), implying an enterprise value of approximately A$0.18 per tonne on the 500 Mt target (higher if one adjusts for the early stage/probability of success).

• Cassius Mining (ASX: CMD): 340–440 Mt limestone @ ~97–98.6% CaCO3 (JORC Indicated + Inferred) at Soalara project, Madagascar. Early exploration stage (no PFS yet) and no offtake partners. The project is coastal (~28 km to port) but remains unfinanced and unpermitted. Market cap is only about A$15 million (2025), equating to roughly A$0.04 per tonne in the ground – reflecting the heavy discount applied to large resources that lack development progress or partnerships.

• Mayur Resources (ASX: MRL): 382 Mt limestone (several deposits) in the Central Cement & Lime Project, Papua New Guinea. DFS completed; Phase 1 development (including a quicklime plant of 0.5 Mt/yr and 0.5 Mt/yr limestone quarry) is fully permitted and construction has commenced. Offtake MOUs in place for quicklime and strategic local partnerships established. The project’s NPV8 for Phase 1 is ~US$133M (~A$200M). After a recent equity raise, Mayur’s market cap is around A$176 million, implying roughly A$0.45–0.50 per tonne (reflecting its advanced status and near-term production plans).

• Arianne Phosphate (TSX-V: DAN): 472 Mt high-grade phosphate (apatite) reserve (~7.1% P2O5) in Quebec, Canada – analogous in scale as an industrial mineral deposit. Feasibility study done, but the project requires very high capex (>$1B) and has been stalled awaiting financing/partners. No offtake agreements yet. Market cap is around C$70M (~A$80M), which is about A$0.17 per tonne – a higher valuation per tonne than Cassius but still low, reflecting significant development hurdles and financing needs.

• VRX Silica (ASX: VRX): ~1,000 Mt of high-purity silica sand resources (with ~200 Mt in Reserves) across multiple projects in Western Australia. Bankable feasibility studies completed on its primary projects (Arrowsmith North & South), and permitting is in progress. Offtake MOUs signed with Asian glass manufacturers, though substantial infrastructure (rail/port) is required. Market cap is roughly A$70 million, which comes out to about A$0.07 per tonne on its total resource (or higher ~A$0.20/tonne if considering only the reserve), again reflecting the early stage of development and infrastructure challenges.

Key takeaways from peer comparisons: Early-stage, large industrial mineral deposits tend to have very low enterprise value per tonne metrics. Cassius’s limestone at ~$0.04/t and Arianne’s phosphate at ~$0.17/t demonstrate that until a project secures development funding, permits, and offtake, markets will heavily discount in-ground tonnage (often 95%+ below theoretical project NPV). Estrella at roughly $0.18/t (implied on its target resource) is already toward the higher end for an exploration-stage asset. This suggests the market is giving some credit for the REM offtake deal and the Timorese government partnership, which increase the odds of commercialization relative to a completely standalone project like Cassius. As Estrella hits milestones and moves closer to production (more akin to Mayur’s stage), its per-tonne valuation could rise substantially – but the reverse is also true: if progress stalls, Estrella’s market cap could contract despite the large resource base (much as Cassius’s does).

Timor-Leste Limestone Geology and Context:
Timor-Leste’s geology is exceptionally rich in limestone, owing to the country’s origin as an uplifted coral island arc. Understanding this context highlights the potential significance of Estrella’s target and why a 500 Mt limestone discovery is plausible here.

Geological Setting: Much of Timor-Leste is underlain by sedimentary formations, including extensive reefal limestone units from the Miocene to Pleistocene epochs. The primary unit of interest is the Baucau Limestone Formation, a Pleistocene-aged fossil coral reef complex that forms a cap over large areas of eastern and northern Timor. This formation is characterized as a clean, chalky coral limestone with very high calcium carbonate content. Estrella’s team has observed that the Baucau Formation on its tenements is “several hundred metres thick” in places – indicating a very large volume of near-surface material, consistent with the multi-hundred-million-tonne exploration target. Beneath the limestone lies the Noni Formation, which hosts supergene manganese mineralization. This stratigraphic relationship (limestone capping manganese) is fortuitous for Estrella’s dual-commodity strategy: drilling for manganese inherently penetrates the limestone cap, so the company is able to gather data on limestone thickness and quality from the same drill holes. In practice, every hole drilled provides information on the limestone, enabling rapid delineation of that resource alongside the manganese exploration. Geologically, the Noni Formation (hosting Mn) is older, with the younger Baucau limestone unconformably overlying it.

Historical Limestone Usage: Timor-Leste has known of its limestone abundance for a long time. During Portuguese and Indonesian administration, limestone and marl were among the few minerals actively quarried, mainly for local cement production and construction needs. A United Nations geoscience report noted “widespread occurrences of limestone and marl, especially in the eastern and western coastal areas of Timor-Leste, [which] have been among the few minerals exploited for many years.” These were small-scale quarries producing lime for construction mortar and agricultural lime (to neutralize acidic soils). No large-scale export operations were developed historically, primarily due to infrastructure and market access limitations. Notably, higher-value carbonate occurrences exist in Timor (e.g. high-quality marble in certain districts), underscoring that carbonate rocks are pervasive and often high-grade.

One ambitious plan in the late 2010s was the proposed Baucau Cement Project by TL Cement, a private company. Government documents cited that Baucau was chosen for a cement plant due to the “high quality and abundance of limestone in the area, estimated to contain more than a 100-year supply.” The plan was to build a 1.65 Mt/year cement plant, leveraging a nearby limestone deposit. While the limestone resource for that project wasn’t publicly quantified, a “100-year supply” at 1.65 Mt/year suggests on the order of ~165 Mt of accessible limestone. This underscores that Timor-Leste indeed hosts very large limestone deposits; Estrella’s 500 Mt target, while ambitious, is geologically credible given the extent of the Baucau Formation. The TL Cement project, however, faced delays due to environmental and community concerns (for example, locals were worried that quarrying could impact karst water systems). The takeaway for Estrella is clear: community engagement and environmental management will be critical. Much of Timor’s limestone is karstic (cavernous) and tied to groundwater systems, and some caves have cultural significance. Estrella has already initiated community consultations and land access agreements to address these sensitivities.

Regulatory Environment and Permitting in Timor-Leste: As of 2025, Timor-Leste’s mining sector is nascent. The government passed a new Mining Code in 2021 to attract investment, and sees minerals like limestone, manganese, and gold as potential diversification away from oil revenues. However, the regulatory processes are largely untested on projects of this scale. Estrella’s experience – securing Exploration and Evaluation Licenses (EELs) over a 195 km² area, obtaining a Category B Environmental Permit to drill, and eventually needing a full mining license – will likely set important precedents in the country. Government officials, including the CEO of Murak Rai Timor (the state mining partner) Jose Gonçalves, have publicly welcomed Estrella’s limestone initiative as a “significant opportunity” for the nation, implying high-level political support. Timor-Leste’s leadership is interested in leveraging projects like this to develop infrastructure (roads, ports) and boost economic growth. Nevertheless, bureaucratic delays and limited administrative capacity could affect timelines. Estrella’s target of achieving all permits by the end of 2025 is extremely tight – essentially moving from resource definition to mining license in about one year. By comparison, in a jurisdiction like Australia this process often takes 2–3+ years. Timor-Leste may fast-track strategic projects, but investors should be prepared for potential delays in approvals beyond 2025. Any slippage in permitting schedules would in turn push back the production timeline, feeding into the differences between our scenario outcomes.

Deposit Scale and Comparables: A 500 Mt limestone resource would be world-class in scale. For perspective, many limestone quarries feeding cement plants have reserves in the tens of millions of tonnes, sufficient for decades of operation at modest production rates. For example, a large integrated cement plant might have an associated limestone quarry of 50–100 Mt to sustain it. Estrella’s project, by contrast, envisions quarrying limestone as a bulk export commodity at a scale more akin to a coal or iron ore operation. There are precedents internationally: in the Middle East and parts of Asia, some large limestone deposits are mined specifically for export to steel and cement markets (Oman, for instance, exports significant limestone and has reported resources in the hundreds of millions of tonnes; similarly, limestone deposits in Myanmar’s Mawlamyine region, used historically by Thai cement producers, have been estimated at over 400 Mt). Those examples, however, are often developed by major industrial players or state-owned enterprises. Estrella is unusual as a junior miner attempting to commercialize such a large deposit, which is why its partnerships with REM (for market access) and with the Timor-Leste government (for local support) are so important.

In summary, Timor-Leste’s geology provides abundant, high-quality limestone and historical data confirms major deposits like Baucau. What’s new is the commercial vision to export limestone at scale. Estrella’s success will depend on bridging the gap between geology and infrastructure – essentially turning a static resource into an exportable commodity. The support of the Timorese government, the favorable characteristics of the formation (high purity and proximity to the coast), and parallels to other large deposits all suggest that the 500 Mt target is technically credible. The burden now lies in drilling it out and managing the environmental and social aspects to ensure the project can progress sustainably.

Market Dynamics, Pricing, and Valuation Considerations:
The attractiveness of Estrella’s limestone project must be evaluated in light of broader macroeconomic and market factors, including demand drivers, commodity pricing, cost structure, and competition, as well as choosing the right valuation approach for a project of this nature. We consider these aspects to refine the investment case:

Demand Drivers for Limestone in Southeast Asia:

1. Nickel/Cobalt Refining (HPAL) – Environmental Neutralization: The boom in nickel laterite processing in Indonesia (fueled by EV battery demand) is a pivotal new source of limestone demand. High Pressure Acid Leach (HPAL) plants, which produce nickel and cobalt from laterite ore, generate highly acidic process streams that must be neutralized. Calcite (limestone) is an ideal neutralizing agent, reacting with sulfuric acid to form gypsum and other inert by-products. Indonesia’s nickel output has skyrocketed in recent years (the country is now the world’s largest Ni producer), and environmental regulations are tightening on how HPAL tailings are managed. REM’s interest in Estrella’s limestone explicitly stems from this trend – as REM’s director Gregory Dhana noted, limestone can help “clean up the mining industry” by treating acidic waste from the EV supply chain. Each HPAL plant can consume hundreds of thousands to over a million tonnes of limestone per year for neutralization. For example, the Taganito HPAL plant in the Philippines uses roughly 600,000 tpa of limestone for its acid circuits. With over a dozen HPAL projects in Indonesia operating or under development, aggregate limestone demand from this sector alone could exceed 10–15 Mt per year by the late 2020s. Estrella’s vision of supplying 50–100 Mt per year is clearly aimed at capturing a large portion of this environmental remediation niche.

2. Construction and Infrastructure – Cement and Aggregate: Southeast Asia is experiencing an infrastructure and construction boom – from new highways and urban development (Indonesia is even building a new capital, Nusantara) to ongoing urbanization across the region. Cement demand in ASEAN is robust, growing around 4% annually and approaching 300 Mt/year. Limestone is the primary raw material for cement clinker; roughly 1.4 tonnes of limestone are required per 1 tonne of clinker. While most large cement producers have captive limestone quarries, some countries (e.g. Bangladesh, Maldives) lack quality limestone and import it. Even within Indonesia and the Philippines, certain regions face shortages and either import limestone or transport it long distances domestically. A high-purity source like Timor-Leste’s could find a market as a “sweetener” in cement blends (because low-impurity limestone can improve clinker quality and reduce kiln maintenance). Additionally, limestone and lime are used in infrastructure directly (crushed rock for road base, lime for soil stabilization, etc.). A recent market study projected the Asia-Pacific limestone market (across all uses) will grow from ~US$75 billion in 2022 to ~US$106 billion by 2029 (~4% CAGR), which includes uses in construction, steelmaking (flux), chemical industries, etc. The key point is that demand is on an upward trajectory, suggesting that new supply, if cost-competitive – can likely be absorbed.

3. Agriculture and Environmental Remediation: High-purity limestone has applications in agriculture (as agricultural lime, or “aglime”, to neutralize acidic soils and improve crop yields) and in environmental protection (water treatment, flue-gas desulfurization in power plants, acid mine drainage remediation). Countries like Vietnam, Thailand, and Indonesia have large farming sectors that use lime, and as environmental standards rise, more wastewater treatment facilities and mine sites require lime/limestone for purification. These markets are smaller and more fragmented than cement or HPAL, but they provide diversified outlets. Estrella’s mention of possible uses in “glass, agriculture, and environmental remediation” indicates the company is aware of multiple demand segments beyond the core cement/HPAL focus.

In summary, the demand side outlook is favorable: Southeast Asia is likely to require substantially more limestone and lime over the next decade. Indonesia’s calcite (high-grade limestone) market alone is expected to expand over 60% by 2032. This macro context supports the timing of Estrella’s project – the goal is to be coming online just as regional demand surges.

Limestone Pricing and Revenue Potential:
Limestone is not traded on global commodity exchanges; its pricing is highly dependent on location, quality, and end-use. Several factors influence the price of limestone: purity (high-purity commands more for certain applications), sizing (crushed vs lump), and the buyer’s sector (cement vs chemical vs agriculture). Some indicative pricing for bulk limestone in the region (2024–25 estimates):

• Bulk construction-grade limestone (for cement/aggregate): In regional trade (for example, shipments from Vietnam or Thailand to Bangladesh), bulk limestone has been quoted around US$10–20 per tonne FOB for 30–50 mm lumps used in cement making or as aggregate. Shipping costs add a few dollars per tonne depending on distance. Timor-Leste to Indonesia is a relatively short haul (roughly 500–2000 km to likely destinations), which is an advantage – large Handymax/Panamax vessels could keep freight to perhaps <$5/t. Indonesia does have domestic limestone (quarried for a few dollars per tonne in areas like Java), but transporting it to the nickel hubs (mostly on Sulawesi and other islands) is costly. Therefore, delivered limestone to HPAL sites in Indonesia might fetch on the order of ~$20/t for high-grade material (conceptually, roughly ~$10/t mine-gate plus ~$10/t shipping/handling).

• High-purity chemical or environmental grade limestone: This can command higher prices in processed forms. For instance, Ground Calcium Carbonate (GCC), a powder used as an industrial filler, can sell for $50–$150/t, but that involves significant processing. Quicklime (CaO, produced by calcining limestone) sells for ~$100–150/t in Asia. Estrella is not currently planning to build kilns to produce lime on-site (no mention of such value-add yet), but it could be a future option. If selling into HPAL, Estrella might need to crush the limestone to fine size; its very high purity could justify a slight premium in those contracts (since HPAL operators want limestone with minimal impurities like MgO, sulfur, etc.). REM’s “green mining solutions” angle suggests they will try to market Timor limestone as an environmentally friendly choice, but practically speaking, pricing will remain competitive with other sources – Indonesian domestic and imported limestone will set the baseline.

• Long-term contracts vs spot pricing: Industrial limestone is typically sold under long-term supply contracts (e.g. 3–5 year agreements) often at fixed prices or with formula adjustments for fuel, etc. Estrella/REM would likely negotiate directly with nickel refiners or cement companies for multi-year offtake deals. Such contracts provide stability but can cap upside if market prices spike unexpectedly.

For our financial modeling, we assume an average realized price of A$22.50/t (USD $15/t) FOB as a base case for high-grade limestone exports from Timor-Leste. If the full 500 Mt were sold at that price, the total gross revenue would be on the order of A$11.25 billion. Of course, significant costs must be deducted to arrive at profitability (including mining, processing, transport, port operations, royalties, and the government’s profit share through the JV).

Cost Considerations: Timor-Leste offers relatively low labor costs compared to Australia, but many inputs (fuel, explosives, equipment) will be at international parity prices. Mining limestone itself is straightforward and low-cost: likely on the order of $2–4/t for drilling, blasting, and crushing, since the deposit is at surface, flat-lying, and has minimal overburden (Estrella has noted the deposit’s geometry is ideal for low-cost quarrying). The largest cost component will be logistics – getting the rock from the quarry to ships. Estrella plans to use the existing Port of Com initially, which is a small port on Timor’s north coast. Com would likely need some upgrades (larger stockpile areas, maybe a conveyor or ship-loader) to handle millions of tonnes per year efficiently. The company has also mentioned developing a dedicated export facility for the long term, possibly a new port or a causeway to allow loading larger vessels offshore. Building a dedicated port could take 1.5–2 years if started in 2026, meaning large-scale export capability by 2027–2028 (which aligns with our Scenario 3 timeline). If port approvals are delayed, initial exports might have to use barges and transshipment, which would cap volumes and raise per-tonne costs. Road transport will also factor in: limestone will need to be hauled from the mine site to the port, likely by truck or conveyor. Fortunately, Estrella’s concession areas are near the coast (the project map shows tenements just south of Com and along the coast), which should keep haul distances short and logistics simpler.

All told, an overall supply chain operating cost (mine + process + inland transport + ship loading + marine transport) on the order of ~$10–15/t is a reasonable planning estimate. Using the earlier pricing assumption of ~A$22.5/t, this implies an operating margin in the ballpark of ~$8–12 per tonne, or roughly a 35–50% operating margin. We note this is broadly consistent with our scenario assumptions above (e.g., margin of $5–10 at slightly lower prices).

Permitting: Timor-Leste’s environmental and export permitting will be crucial to the project’s timeline. Estrella must produce comprehensive Environmental Impact Assessments covering issues like dust, noise, water management, and the protection of karst ecosystems. Community consent is another gating item – land in Timor often has communal ownership, so compensation and agreement with local communities are essential. The company has begun these discussions early, which is promising. ASX investors will be watching for news on the Environmental Permit issuance and the granting of the Mining License. Each of those, if achieved on schedule (targeting late 2025), would be major de-risking milestones that could lift the share price and pave the way for project financing.

Capital Funding: Developing a full-scale limestone export operation will require substantial capital investment. Estimates vary, but roughly $100–200M might be needed to establish the quarry, processing facilities, and port infrastructure, plus additional working capital to ramp up. Estrella’s current balance sheet is modest (cash of ~A$3.15M as of March 2025), so significant external funding will be required. The likely approach would be a combination of equity raises and debt financing tied to offtake agreements. For instance, the company might secure a project finance facility from a bank or strategic partner once it has a binding offtake in place, but such debt would likely cover only part of the cost (especially given the sovereign and execution risks). Equity will probably shoulder a meaningful portion; investors should expect further share issuance. Our scenario analysis implicitly assumed dilution – in the success case, we used ~4 billion shares (roughly double the current count) to model the outcome post-financing. The degree of dilution and funding mix will affect ultimate returns per share, so management’s ability to raise capital at increasingly higher share prices (after hitting milestones) will be key to preserving value for existing shareholders.

Due Diligence on PT Raka Energi Mandiri (REM):
A critical component of Estrella’s investment case is its partnership with PT Raka Energi Mandiri (REM). As the exclusive marketer and offtaker for Timor-Leste limestone, REM’s credibility and capability are important to assess. Our findings on REM are as follows:

Overview: PT Raka Energi Mandiri is described as a “family-owned business that combines trust, tradition, and technical know-how in the trading of mining products.” Headquartered in Indonesia, REM’s origins and core business lie in the coal sector. It has active operations in East and Central Kalimantan and in Maluku – regions known for coal mining and power generation. REM specializes in coal logistics and energy commodities trading. In practical terms, they act as intermediaries, moving bulk commodities from producers to end-users, leveraging strong local networks. This background in bulk commodity logistics positions REM well for handling limestone exports.

Key Personnel: Public statements about the Estrella deal have named Gregory Dhana N. as a Director of REM. In his quoted remarks about the partnership, he emphasized REM’s mission to “provide a cleaner, more environmentally friendly mining industry and better future for our children,” indicating that REM’s leadership is attuned to ESG trends and sees limestone as a way to pivot from coal into "green" solutions. Other key individuals at REM aren’t publicly identified, but given it is family-owned, it’s likely that members of the owning family (perhaps bearing the “Raka” name) hold top management roles. The REM team presumably has deep expertise in supply chain management – coordinating trucking, barging, and transshipment – which is directly relevant for moving limestone in Indonesia’s archipelagic geography.

Ownership and Structure: REM is privately held and not publicly listed, so its financials are not disclosed. However, one can infer it operates at a moderate scale: to have operations across multiple provinces, REM likely owns or contracts significant fleets of trucks, barges, and other equipment. They probably maintain supply contracts with Indonesian coal mines and off-take agreements with power plants or industrial users. REM isn’t one of the giant global commodity traders, but rather a niche regional player. The partnership with Estrella shows an entrepreneurial approach – they identified an opportunity to diversify into limestone trading. It’s worth noting that Estrella’s joint venture in Timor-Leste (Estrella Murak Rai Timor Lda) is between Estrella and the Timor-Leste state, not REM. REM itself doesn’t have equity in the project; instead, REM’s incentive comes from the offtake agreement’s option structure. REM will receive up to 500 million ESR options (at $0.05 strike) if they successfully broker up to 500 Mt of limestone sales. In effect, REM’s reward is like a commission – they only benefit significantly if they deliver on sales (since the options only have value if Estrella’s share price goes above $0.05). This structure aligns REM’s interests with the project’s success and ensures they have to perform to be rewarded (no guaranteed buyout or fixed fee – they must find buyers and facilitate sales to earn their upside).

Capabilities and Network: REM has stated it possesses “an extensive and reliable distribution network, enabling them to reach various market segments throughout Indonesia.” This likely means they have established relationships with cement plants, coal-fired power stations (which use limestone for flue-gas desulfurization), and mining operations that need reagents like lime. In Kalimantan, REM would be well-versed in export logistics, since the Indonesian coal industry (where they operate) exports hundreds of millions of tonnes annually, requiring coordination of trucking from mines to river ports, barge transport to seaports, and vessel loading. REM can apply this know-how directly to limestone: advising on transport methods (e.g. whether to use large ships at Timor or barge to a transshipment point), coordinating with ship operators, and managing the supply chain to end-users. Interestingly, REM’s presence in Maluku signals something relevant – North Maluku (Halmahera island) is an area where new HPAL nickel plants are being built. If REM is active in Maluku, they may already be involved in logistics for those nickel projects (supplying coal or lime, for example). This would give them an existing client base and experience that can be leveraged to introduce Timor-Leste limestone into those same operations as a substitute or additional source.

Related Ventures: As a family enterprise in Indonesia, REM likely has a portfolio of related business ventures beyond just coal trading – possibly in power generation (diesel gensets or small power plants for mining sites), or in logistics assets (owning trucks, tugboats, etc.). The emphasis in their marketing on “innovative and environmentally friendly solutions” suggests they might be positioning to get involved in renewable energy or remediation services as well. For instance, REM might have looked at projects for mine rehabilitation (using limestone to neutralize acid mine drainage from coal mines). If so, Estrella’s limestone could complement those efforts.

Financial Strength and Role in Offtake: The scale of the offtake – up to 500 Mt in 5 years – is huge, equating to 100 Mt/year, which would make REM one of the largest bulk commodity handlers in the region if it were directly purchasing that volume. However, the deal structure indicates REM is not expected to buy the limestone on its own account (there’s no take-or-pay clause obligating REM to purchase unsold tonnage). Instead, REM’s role is to “assist in marketing and selling” the limestone. This implies REM will act more as a broker or agent: they will line up end customers (e.g. an Indonesian nickel refiner or cement company), and those customers will enter into purchase agreements with the Estrella JV. REM then gets to exercise its options as limestone is ordered and paid for by these end-users. In other words, REM doesn’t need to finance the entire limestone volume itself – it leverages its contacts to facilitate deals and takes a cut (via the options, which appreciate in value). This is sensible, because expecting a small private firm to bankroll $5+ billion worth of limestone (500 Mt × even $10/t) was never realistic. Instead, Estrella has essentially outsourced its marketing department to REM, giving them equity incentives rather than requiring them to put up capital.

From a due diligence standpoint, a prudent investor would ask: Has REM handled large supply deals before? If REM typically moves on the order of 5–10 Mt of coal per year for clients, jumping to 50–100 Mt of limestone is still a leap. However, given the complexity of coal logistics in Indonesia (which often involves coordinating many small miners and navigating challenging river systems), if REM has thrived in that environment, they likely have the project management skills needed for limestone exports out of Timor (which will revolve around one source and a simpler sea route). It would also be worth examining whether REM’s owners have strong political or industry connections – in Indonesia, a local partner’s effectiveness can often come down to who they know. The fact that Estrella chose REM suggests there was some vetting; presumably, REM demonstrated it has the right relationships to navigate Indonesian import regulations, port clearances, and to find buyers among Indonesia’s industrial consumers. If REM’s principals have ties to major nickel or cement companies (or influential government agencies), that could significantly smooth the path for Timor-Leste limestone to enter Indonesia.

Risks Related to REM Partnership: The offtake agreement is exclusive, meaning Estrella is essentially betting on REM to deliver access to the Indonesian market. If REM underperforms or if the partnership were to sour, Estrella might be constrained in finding alternative buyers at least until the agreement lapses or is terminated under any breach clauses. It’s crucial that Estrella maintain a good working relationship with REM and closely monitor REM’s progress in securing customers. That said, the incentives for REM are strong: they have 500 million reasons (options) to succeed. Those options have a strike price of A$0.05, meaning they only become valuable if Estrella’s share price goes above five cents – which in turn likely requires that REM actually facilitates meaningful limestone sales. In essence, REM’s profit is tied to making this project happen, which is reassuring for Estrella shareholders.

Financial Outlook and Conclusion:
Bringing together the above analysis, it’s clear that Estrella’s limestone project carries a high-risk, high-reward profile. On one hand, the upside scenario – establishing a massive, long-life limestone export business feeding Asia’s growth – could re-rate the stock dramatically if each milestone is met. On the other hand, the ambitious timeline, large infrastructure requirements, and execution risks (permitting, community relations, financing, construction) mean there is significant uncertainty that needs to be accounted for.

At present, Estrella’s valuation (~A$80–90M market cap, around A$0.04–0.05 per share) already reflects considerable optimism relative to a typical grass-roots explorer – a testament to the strategic nature of its asset and the REM partnership. Yet it is still only a fraction of where it could trade if the project ultimately succeeds. Peer comparisons show Estrella is valued higher per tonne than an unproven project like Cassius (due to its apparent pathway to market), but far below developed peers like Mayur (which has permits and is starting production). This gap underscores the opportunity: as Estrella moves the project up the value chain (resource -> reserve -> production), its market value per tonne could move closer to the likes of Mayur, implying a multi-bagger potential. Conversely, it also warns that just having a huge resource doesn’t guarantee a high valuation – Cassius with 400 Mt at $15M market cap is a cautionary example of how far an in-situ valuation can fall without development progress.

The geological and macro backdrop is supportive. Timor-Leste offers the raw material in abundance and quality, and the region offers growing demand and a market need for what Estrella can produce. However, turning that potential into shareholder value requires execution. Key catalysts to watch in the next 12–18 months include:

• JORC Resource Announcement (expected by Sep 2025) – Confirmation of limestone tonnage (≥500 Mt) and grade. This will be a major validation moment – achieving the targeted resource could quickly lift the share price (our scenarios suggest into the high single-digit cents) as in-situ value is recognized and the REM deal formally activates.

• Scoping Study Results (targeted late 2025) – The initial economic study will reveal preliminary project metrics, likely including estimates of capital cost, operating cost, and feasible production scale. Strong scoping study economics (e.g., indicating low cost-per-tonne production and manageable capex) would build confidence and could propel shares further, as it moves Estrella toward the feasibility stage.

• Permitting Milestones (late 2025 into 2026) – Any news of environmental permit approvals or the granting of a mining license will be crucial. These would significantly de-risk the project legally and can unlock financing options. Achieving permits on schedule by end-2025 would be almost unprecedented speed, so even minor delays should be viewed in context, but prolonged delays or regulatory hurdles could dampen sentiment.

• Initial Offtake/Market Developments – Actions by REM such as securing trial shipments, signing memorandums of understanding (MOUs) with end users in Indonesia (cement producers, HPAL operators, etc.), or otherwise demonstrating concrete buyer interest in Timor limestone will be important. Such developments would validate the demand side of Estrella’s story and could cause a positive re-rating (similar to how a junior miner securing a binding offtake can boost its valuation).

Each positive step along these lines should logically move Estrella into a higher valuation bracket (as modeled in our scenarios). Conversely, any disappointment – for example, if the resource comes in significantly below 500 Mt, if the community protests stall progress, or if no buyers materialize – would introduce downside risk and could send the stock back down.

Investors should also be mindful of financing needs: It is very likely that Estrella will have to raise additional equity in the coming years to fund drilling, studies, and especially the development itself. The company will aim to do this at higher share prices after de-risking events, but new shares (or even project-level dilution via a JV or royalty) are almost certain. Creative financing like debt tied to offtake or selling a royalty/stream on future limestone sales could reduce the equity burden, but until production, dilution is a key risk to manage.

From a management and governance perspective, Estrella’s team will need to maintain transparency and discipline. The market will only continue to ascribe value if milestones are hit in a timely fashion or if delays are communicated and justified. The timeline management has set is very ambitious; meeting those goals would greatly enhance their credibility. They should also continue leveraging partnerships (REM, and perhaps new strategic investors) to share the financial and technical burden, since a junior company attempting a project of this scale will benefit from every bit of external support it can muster.

In closing, Estrella Resources encapsulates a unique and potentially transformative story on the ASX. It offers exposure to a non-traditional commodity (limestone) with a strong ESG angle (helping to remediate environmental issues in mining) and ties into Southeast Asia’s infrastructure and EV supply chain boom. While not without significant risks, the stock represents a long-term option on the success of a pioneering mining venture in a new jurisdiction. The upside in a success case could be tremendous, but investors must be aware of the execution challenges and do their due diligence. As with any early-stage project, diversification and risk management are key, but Estrella’s limestone project is certainly one to watch as it attempts to carve out a new market path in Timor-Leste.