stellar 34c to 51c share price

Well Stellar and Heemskirk are still be undervalued in my view but at least this looks a bit more realistic.

http://www.stellarresources.com.au/images/ASX_Announcements/2012/20121005-octa-phillip.pdf
Extracts

Investment View
Octa Phillip expects that SRZ will announce a revised resource estimate in April or May 2013, at about the same grade, but at least 10Mt, which could support a higher mine throughput.

Our base case valuation of 34c/share assumes 10Mt is
processed at 600kt/yr. The valuation is highly leveraged to the tin price which we assume is $25,000/t.
The major risk to our valuation is our estimate of the value of the stake in the project sold to an off-take partner and project investor, but our conclusions are robust to our estimate.

Valuation of SRZ
SRZ currently has a market capitalisation of about $19m. Octa Phillip expects that the development of
the Heemskirk project will be financed by a combination of
• An equity partner who will invest in the project in return for off-take
_ ITRI points out the mined tin supply will struggle to be maintained; on our reckoning mine
supply is likely to be at today’s level or lower when the San Rafeal mine closes in 2017,

As shown in Figure 8, SRZ will be fully funded to develop the Heemskirk project if it sells a stake of about 25% in the project.
SRZ is able to achieve good value as it currently still owns
100% of its project.


Figure 9 shows that Octa Phillip’s base case valuation is
37.5¢/share; after significant risk weighting to reflect the
degree of uncertainty in our valuation, which will be reduced over time as SRZ progresses the required studies.
Successful delivery (ie. un-risked) increases our valuation
from 34c to 51c/share.
--
Have to ask what is the risk that the world will run short of tin? (see diagram with estimates price between thirty and forty thousand page 2/3)

That more silver will be found at depth? page 6/7?

That more tin will be found? (All the known tin deposits remain open at depth. page 6/7)

Only real problem seems which partner to choose to do a equity off take deal with to finance Heemskirk.