Positive news on costs, financing and permitting triggers an end-of-year rally in Tri-Star Resources (TSTR:AIM), up 31.8% to 0.14p. Most importantly, the aspiring antimony producer says its proposed roaster will cost less than expected to run thanks to engineering changes, and there could be a chance of early cash flow.
Tri-Star has been trying to develop an integrated antimony business for several years but slow progress has seen investors lose patience and exit the stock. Today's announcement contains several nuggets of news to help win back market support although there remains significant financial and execution risk. It has received a 'no objection' vote on its environment plans from the body responsible for Oman's solid waste management but there's still some way to go to secure final permits.
The £10 million cap owns antimony deposits in Turkey and Canada. It wants to take material from these sites as raw material for processing in a $65 million roaster, to be built in Oman. Tri-Star says required gas handling volumes have been lowered, thereby reducing the equipment size and cost for the facility. It will also lead to lower fuel consumption and reduced operating costs.
A pilot plant is being planned so Tri-Star can generate a small but welcome income stream while the main plant is constructed.
The small cap is now reviewing financing terms from local banks. It expects to secure $70 million, split between $10 million mezzanine loan and $20 million equity from joint venture partners, and up to $40 million senior bank facility.
Tri-Star also proposes to build a second roaster to handle refractory gold that is that is difficult to process through conventional methods. It says this plan has moved from being 'a conceptual technology plan to a developing business strategy'.
Much of the world’s known, unexploited gold ore is refractory so reviving the historical roasting method in a more environmentally-friendly manner could give gold miners a new growth angle, assuming the projects are still economically viable to develop. It could spur miners to revisit previously ignored refractory deposits, of which there are plenty around the world. Cheap shipping rates mean miners could transport concentrate to hubs like the one proposed by Tri-Star rather than build processing facilities at the mine site.