Helio Resource Corp (HRC.V)

[klogger]

I came across Helio Resource Corp (HRC.V) while looking at the bullion bulls Canada website, and I was wondering if anyone had an opinion on them. My additional notes are below:

 

General overview

They are based in Tanzania with the head office in Canada (Vancouver), and are an exploration company listed on the Ventures exchange. Land so far explored is suitable for open-pit mining.

 

Share structure

Ordinary shares: 104, 977, 959

Fully diluted: 132, 060, 459

 

Outstanding warrants: 20, 822, 000 - expiring in February 2014 @CA$ 0.4–0.5

Management hold 9.4% of issued and outstanding shares.

Institutional holders have 45% of issued and outstanding.

 

Financial

• CA$ 8.2 million (as of 1st June 2011);

• Burn rate of CA$ 1.2 in 2011 and CA$2 million in 2009;

• Quarterly loss 0f CA$ 0.2 million;

• No debt;

 

Projects

 

SNP project

• Is in Tanzania;

• NI 43-101 compliant resource of 497,000 measured ounces in 10.8 million tonnes at grading 1.43 grams per tonnes using a 0.5 grams per tonne cut off. Inferred resources are an additional 352,354 ounces (9.9 million tonnes at 1.10 g/t Au) using a 0.3 g/t Au cut off;

• Inferred resource of 321,000 ounces grading 1.1 g/t Au with a cut off of 0.3 g/t Au ;

• Drilling was in the Porcupine and Kenge targets, but there are at least 28 other unmapped targets;

• 52 drill holes totalling 14,025 meters have all shown gold mineralisation;

• Porcupine target has mineralisation down to 300m;

• Kenge target seems slightly richer than the Porcupine target;

• Metallurgical tests at kenge suggest a 96% ore recovery rate using cyanidation;

• It is a 35km zone and so the structure would be open pit with processing at the centre;

 

Damara Gold Project

• 100% owned in Nambia;

• Damara Gold Project (Highlights include 2.1 g/t gold, 0.8% copper and 14 g/t silver over 50 metres (including 9 g/t gold, 4.4% copper and 73 g/t silver over 7 metres), 0.7 g/t gold and 1.9 g/t silver over 17 metres and 0.25 g/t gold over 20.8 metres);

• This project is adjacent to the AngloGold Ashanti companies mine. AngloGold Ashanti has a market cap of 18.36 billion;

• An access road has been built into the Wilhenstal licence area;

• Project is open to the north and south and to depth;

• Non-NI 43-101 compliant resource of 5.1 million ounces grading at 1.15 g/t Au;

• The Leatherman target has shown soil samples of 3,700ppb Au. This is over 3 grams per tonne in the soil. Anything between 50-100ppb Au is considered an anomaly. This target has had a drilling rig dispatched to it. This region has never been drilled but samples show up to 5m grading at 11.3 g/t Au;

 

Positives

• Their SMP Gold Project has measured resources of 589,000 ounces at 1.54 grams per tonnes, and 352,000 ounces at 1.10 grams per tonnes at a cut off of 0.3 grams per tonnes;

• The resources come from only 2 of 30 identified mineralised targets;

• Metallurgical tests show a recovery rate of up to 96%;

• The board contains 2 geologists, a metallurgist, 2 accountants and a businessman;

• Chris Mackenzie is the Chief Operating Officer and Director. He is a qualified person under the NI 43-101 prospectus requirements;

• They have drilled 25 test bores since 2006;

• They have a whistle blower policy that prevents any person from being fired, demoted or punished in any way for raising a legal concern about the company. This tends to suggest that management are serious about running an above-board company. The policy is downloadable from their website;

• Project next to a mine owned by AngloGold Ashanti (who are 50km south west) who have a market cap of 18.36 billion. Other targets are also alongside other companies mines (Auryx’s Otijikoto project is 150km northeast – Auryx market cap is 92 million; small) ;

• Power lines run right overhead;

• They will sell the property if someone offers to buy it, but they also want to ‘move along to construction’ and make the most of the upwards movement in gold;

 

Negatives

• Their SMP Gold Project has large amounts of gold mineralisation, but it is at a low yield when measured in grams per tonne. (1.54 and 1.10 grams per tonne for measured and inferred respectively);

• Public-private partnerships in Nambia suggest that the government acknowledges that the stripping of their resources by foreign companies cannot continue. This could suggest change in the future that may severely affect the Company. However, currently government policy is that existing mine owners will not be affected. Land that is owned by outside corporations must be developed or (government will do what???) with the first partnership offering being to the government by law. The policy is designed to engage in mining for the mutual benefit of the companies and the people of Namibia. Changes are covered in The Minerals (prospecting and Mining) Act, 33 of 1992. In reality this seems to pose little danger and is designed to ensure that Namibia gets its fair share of the resources. It also indicates a potential source of fund raising for the company if they can get the government interested in the resource;

• Financing in 2011 was raised via stock dilution which raised CA$ 10, 000, 000;

• To complete the earn-in requirement the Company must issue 125, 000 shares by January 1st 2012, and a further 500,000 shares by January 1st 2013;

• Has no income as it does not currently own any mineral producing properties, they do however hope to develop some if they can’t sell any explored properties. It appears they intend to set up a mine here;

• They lost CA$ 6 million this year;

 

Additional information

• http://www.helioresource.com/

• http://bullionbullscanada.com/index.php?option=com_content&view=article&id=17768:helio-resource-corp&catid=71:gold&Itemid=145

• http://www.prnewswire.com/news-releases/helio-reports-first-rc-drill-results-from-the-gold-kop-target-damara-gold-project-namibia-128324388.html'>http://www.prnewswire.com/news-releases/helio-reports-first-rc-drill-results-from-the-gold-kop-target-damara-gold-project-namibia-128324388.html

• http://www.prnewswire.com/news-releases/helio-reports-first-rc-drill-results-from-the-gold-kop-target-damara-gold-project-namibia-128324388.html (News report)

• http://www.viddler.com/explore/objectivecapita/videos/10/ (Video interview from 2009 – Richard Williams who is the current Chief Investment Officer and Director)