Worth checking out HLX 95c target -buying at 15c undervalued
Helix Resources Ltd (ASX:HLX) is another small copper-gold-iron ore explorer that has exploded in the market over the last two months.
In August, the shares stood at 6c and reached 16.5c on October 11 only to fall back to 14c on Friday.
Helix Resources has also been exploring a lot harder over the past 12 months, indicated by the chairman's address from Greg Wheeler to shareholders in the annual report.
Mr Wheeler said that during the period, Helix has focused on three concurrent strategies:
* Monetise and/or progress development scenarios for our mineral resource assets, including divestment of non-core assets;
* Identify and secure new ground in regions where operating mines and infrastructure are present and where drill targets have been identified; and
* Review potential merger or project acquisition opportunities to create 'size' and/or synergy benefits.
The scoping study completed for the Yalleen iron ore project reports technical and financial viability based on a 5Mtpa road haulage option to access the proposed API WPIOP rail infrastructure 70 kms to the west.
The financial evaluation indicates significant operating margins can be achieved and detailed studies regarding development aspects have commenced.
"We monetised our Glenburgh gold asset by vending it into the successful listing of Gascoyne Resources Ltd [ASX:GCY] in December 2009 and distributed in-specie to shareholders +80 per cent of the shares held valued at $3.2 million," Mr Wheeler said.
"The Tunkillia Gold JV continues to be funded by Minotaur, with Helix continuing to dilute until value is seen in the Minotaur exploration and development initiatives regarding the asset.
"We have secured significant ground holdings in NSW targeting copper and gold, with initial drilling programs increasing our confidence that mineralised copper zones will be delineated of sufficient size and grade to consider hauling and processing at nearby operating mills with excess capacity.
"We expect to have continuing news flow throughout 2010 from drilling programs on our NSW copper & gold targets," the chairman said.
At the beginning of the month, Helix Resources gave a resource update on its Canbelego JV (HLX 51 per cent - and earning 70 per cent; Straits Resources 49 per cent), located 40 kms southeast of Cobar in central New South Wales.
An inferred resource (estimated internally by the joint venture partners) confirms at a 0.3pc Cu cut-off -1.5Mt @ 1.2pc Cu, or at a 0.8pc Cu cut off - 1Mt @ 1.5 per cent Cu from the resource model at the Canbelego mine prospect.
This initial resource provides a solid foundation for the project and reaffirms Helix's strategy to identify mineral resources near existing processing infrastructure with potential for access to excess capacity.
The company is confident it can continue to build on this initial resource base with copper mineralisation open along strike and down dip at the Canbelego mine prospect, and by following up encouraging early stage results from numerous regional targets on the tenement.
Additional RC drilling is commencing this week at Canbelego to test the Priority 1 regional targets and near-resource extensions.
Helix expects assay results to be available mid 4Q2010.
At the Restdown JV (HLX earning 70 per cent from Glencore International AG) RC drilling will commence (directly after the Canbelego drill program) on two greenfields gold targets - the Good Friday and Sunrise prospects.
The +1,200m RC drilling program is targeting primary gold mineralisation associated with robust (+10ppb Au) gold in soil anomalies surrounding, and nearby to, minor historic workings (goldfield produced high-grade gold from quartz veins in the early 1900s).
Helix expects assay results to be available in 4Q2010
SHARE PRICE MOVEMENTS
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Shares of Helix Resources finished steady at 14c. Rolling high of the year is 19c and low 5.6c. The company has 131.9 million shares on issue with a market cap of $18.4 million.
Helix Resources is pushing ahead on advancing the Yalleen iron ore JV project located in WA. along with drill testing its NSW copper and gold targets.
The Yalleen iron ore project is joint ventured with API Management Pty Ltd (50 per cent Aquila Resources, 50 per cent AMCI) and forms part of their West Pilbara iron ore project which comprises multiple JVs.
The company also has several other mining projects including its NSW Canbelego copper JV and Restdown & Muriel Tank gold JV.
It also has the Tunkillia Project, Gawler Craton uranium project and Olary project in SA and Booyeema nickel project in WA.
One broker has given the company, which is in exploration stage, a discount rate of 18.7 per cent to arrive at a fair value of 95c for the stock.
It also says the company has good potential for its most advanced Yalleen iron ore project and Tunkillia gold project.
The company has broad expertise in bringing interested companies on board to further assist in achieving its desired goals through potential operational synergies.
BACKGROUND
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Helix Resources Ltd was listed on the Australian Stock Exchange in 1986 and is focused on acquiring and developing assets within the bulk commodities, base metals and precious metals sectors.
The Helix strategy is to acquire large tenement holdings in the prospective exploration regions of Australia, use of leading-edge exploration methodologies and techniques under the guidance of a skilled Board and management team, and create shareholder wealth whilst managing risks.
Helix's most significant development asset is the Yalleen iron ore project situated in the Robe Valley in the West Pilbara region of Western Australia.
The project has an inferred and indicated resource estimate of 84.3Mt channel iron ore with exploration upside.
Helix released a scoping study on Yalleen development in August which was positive.
The preliminary economic evaluation indicated post-tax NPV range of $900 million to $1.1 billion with two potential infrastructure solutions for transporting ore to customers.
Helix is contributing 30 per cent of funding and recognises the benefits of a partnership with a focused, well-funded project manager and JV partner to advance this project.
During 2009/10 the company accumulated significant landholdings in the Cobar/Girilambone region of NSW prospective for gold and copper with operating mines with excess capacity and excellent infrastructure.
Drilling copper and gold targets will be the company's main exploration focus during 2010.
This year Helix has gained exposure to Chile with a dedicated in-country general manager and geologist targeting prospective gold and copper regions.
The company is accumulating tenements in its own right as well as joint ventures.
Helix also has exposure to 800,000 oz of gold at the Tunkillia JV in South Australia, exposure to magnetite via the Bonython Metals Group Olary JV and has acquired significant landholdings in the eastern succession of the Mt Isa region in Queensland.
It has sufficient funds to carry out its exploration and development programs, whilst maintaining a watching brief on acquisition opportunities that may arise in 2010/2011.
some buying of late looking good going forward On the buy more list
HELIX EXECUTE MOU COVERING THE ‘SHERPA PROJECT’ LOCATED IN MARICUNGA BELT - CHILE
SUMMARY Memorandum of Understanding [MOU] signed with Sherpa project Vendors whereby Helix, through its Chilean subsidiary, has a right to explore and acquire 90% of the Project for US$2.7M in staged payments over 4 years
The Sherpa target is gold associated with the porphyry systems of the Maricunga Belt, located in the shadow of the Barrick/Kinross Cerro Casale JV 23Moz Au deposit and the same belt as Exeter’s Caspiche Project (26 Moz Au).
Helix is currently undertaking Due Diligence procedures and the 1st Option payment of US$60,000 is due and payable 15th January 2011