STELLAR RESOURCES LTD (ASX:SRZ) company history: the story so far

History

Stellar Resources lost a Texada Island mining deal for lack of funds, then turned to Montana heavy oil, ending the record with a related-party technology purchase.

2009: The mining deal that failed

Stellar Resources began the period looking at mining. On June 15, 2009 it signed a non-binding letter of intent with Zyrox Mining Company to explore and develop the Texada Island Project, with the right to take a 70% working interest by June 15, 2010. Stellar agreed to provide $1 million in working capital, commission a geological report and pay $4,000 a month rent on the processing plant.

The deal did not last. On November 10, 2009 the two sides agreed to end it because Stellar could not raise enough working capital in time. The 70% option was lost, though no fees or compensation were owed.

2010: A turn to Montana oil

Stellar then moved into oil and gas. In March 2010 Elk Hills Petroleum Canada agreed to invest $3,000,000 for half of Elk Hills Heavy Oil, LLC, a Stellar subsidiary holding over 20,000 acres of leases in Carbon County, Montana. In June Stellar announced it had acquired 100% of Elk Hills Heavy Oil and Four Bear Heavy Oil, LLC from Ray Jefferd and Glen Landry. Jefferd signed as President and CEO, so a company officer was among the sellers. No price was given.

In July the March terms were replaced. Stellar raised net $875,000 by placing 5,000,000 shares at $0.175, and sold the Canadian company 50% of Elk Hills Heavy Oil. Each side put $375,000 into an exploration drilling program, and the partner agreed to lend $1,750,000, repayable only from future oil revenue and dependent on successful drilling.

2011: Farm-out and a related-party purchase

The record for the first half of 2011 is thin. In May Stellar announced that Deloro Resources could acquire up to a one-third interest in the roughly 20,000 acre project; no price or conditions were given.

On July 15, 2011 Stellar bought the ZeroGap technology and intellectual property from Jefferd, now its President, for $3,000,000, paid with 30,000,000 restricted shares. An independent fairness opinion dated July 11 supported the deal. The issue was large next to the 5,000,000 shares placed in 2010, and diluted other holders. At that date, the drilling results, the loan and the Deloro deal were all unresolved.

Written from the 7 story beats below (2009 to 15 July 2011), which come from the company's own announcements and filings.

Beat by beat

The events that changed the company's story, in plain English, each written against everything known about the company at the time. The dot shows whether it was good, bad or neutral for shareholders.

2011

15 July
Stellar bought the ZeroGap technology and intellectual property from its President, Ray Jefferd, for $3,000,000, paid by issuing him 30,000,000 restricted common shares. This is a related-party deal supported by an independent fairness opinion dated July 11, 2011, and it significantly increases the share count, diluting other holders (the 30 million shares compare with the 5 million issued in the 2010 placement).
asset acquisition disposition
12 May
Stellar announced an agreement with Deloro Resources Ltd. and Elk Hills Petroleum Canada Ltd. under which Deloro can acquire up to a 1/3 interest in the roughly 20,000 acre Elk Hills Heavy Oil Project in Montana. No price or conditions are given in the filing, so the effect on Stellar's own share is not stated.
material agreement

2010

14 July
Stellar completed a private placement of 5,000,000 shares at $0.175 for net proceeds of $875,000, and sold a 50% interest in Elk Hills Heavy Oil to Elk Hills Petroleum Canada, replacing the earlier March 2010 agreement. Each side put $375,000 into the subsidiary for an exploration drilling program in Carbon County, Montana, and the Canadian partner agreed to lend $1,750,000, repayable only from future hydrocarbon revenue and conditional on successful drilling results.
material agreement
16 June
Stellar announced completing its acquisition of 100% of Elk Hills Heavy Oil LLC and 100% of Four Bear Heavy Oil, LLC from Ray Jefferd and Glen Landry. The filing states this is part of a plan to enter oil and gas production, development and exploration; it gives no price. Jefferd signs the filing as President and CEO, so the sellers include a company officer (the filing does not say this is a related-party deal beyond naming him).
material agreement
10 Mar
Stellar announced that Elk Hills Petroleum Canada Ltd. agreed to invest $3,000,000 for a 50% interest in Elk Hills Heavy Oil, LLC, then a wholly owned Stellar subsidiary holding over 20,000 acres of oil and gas leases in Carbon County, Montana. This is the company's first oil and gas asset in the record, following the failed Texada Island deal; the terms were later replaced (see July 2010).
material agreement

2009

13 Nov
Stellar and Zyrox mutually agreed on November 10, 2009 to end the Texada Island Letter of Intent, because Stellar could not raise enough working capital in the allotted time. The 70% interest option is gone, and the filing says no fees or compensation are owed on termination.
material agreement termination
19 June
Stellar signed a non-binding Letter of Intent with Zyrox Mining Company on June 15, 2009 to explore and develop Zyrox's Texada Island Project, with the right to acquire a 70% working interest on or before June 15, 2010. Stellar agreed to provide $1 million in working capital, commission a geological report, and pay $4,000 a month rent on the processing plant (first month paid); definitive agreements are still required.
material agreement