HLX - Helix Resources

[YOUNG_TRADER]

Looks like a wee bit of interest, couple hundred thousand bought, looks to have confirmed 12c as support as we enter the new year,

Still I reckon will consolidate around 12/13c level for a bit until news starts to flow in 1st Qtr

 

[moses]

Yo Kennas,

on a 12 month chart...do you see a cup and handle?

and if so, would this qualify for the potential breakout thread?

 

[Sean K]

Yo Kennas,

on a 12 month chart...do you see a cup and handle?

and if so, would this qualify for the potential breakout thread?

It was a cup and handle although a little V shaped maybe. Not much of a handle either. I think we were right before with the last pattern being a small pennant which it dutifuly broke up from and almost out. As already id, previous resistance at $0.13 should now be support, next resistance at $0.15 ish. I think the 'breakout' from any trend was at about $0.09 or .10 after is was in a steady decline from April. Now, it's just trending up, and breaking through resistance points on the way, but not 'breaking out' of any trend perhaps. Unless you call the cup and handle or the pennant a 'trend'?? Seems to be going ok since Oct.

 

[YOUNG_TRADER]

I always thought that the support resistance line was 12c not 13c and 12c support being tested right now, 1m panic sell order,

You know there panic orders when they just do a sell at mkt and are happy to take 11% less than if they just left the order up there for a wee bit

Fundamentals say this stock is still cheap as chips

With Uranium and Iron Ore interests adding Spec Flavour

 

[Sean K]

I always thought that the support resistance line was 12c not 13c and 12c support being tested right now, 1m panic sell order,

I think it's at both 12 and 13 as per post 39, but after clearing 13 I considered that then to be the support. So maybe we should say 12/13 ish

 

[Sean K]

I always thought that the support resistance line was 12c not 13c and 12c support being tested right now, 1m panic sell order,

Looks like there might be more at 12 in retrospect though YT.

 

[moses]

thanks Kennas.

YT, I hope you're right; finger's crossed for some the good news to light the fire.

 

[YOUNG_TRADER]

12c providing a good bounce off support level

 

[toc_bat]

I ran about 25 spec stocks through the Neilson Smart Money Indicator today and HLX stood out as the *only* stock that was consistently being bought by smart money and ignored by speculators. Most significantly the recent price rise is purely driven by smart money. So...I'm tipping that this stock will rocket when the scumbag speculators like us discover it

moses how can you tell the difference between who is buying? what does smart money look like on charts or market depth? vs speculators?

 

[YOUNG_TRADER]

HLX
Share structure
100m shares + 25m 14c 31/3/07 opeis,

So at 13c Mkt Cap = $13m
14c = $17.5m
20c = $25m
25c = $32m


Projects

Tunkillia Gold, HLX is 49% Free Carried by MEP, OXR has taken an option to earn 25% as well, if the project stakes up OXR have expressed their desire to purchase it outright as with Prominent Hill

This is the jewel in the crown,

JORC stands at 10.5Mt@2.2g/t = 730k oz's Au
However this is a 18month old JORC that HLX outlined, MEP has been drilling away for the past 12-18months and a new JORC is due out soon, the new JORC will probably be 15Mt@2.5g/t = 1.34 Million oz's Gold

Cap Ex is estimated to be $30m - $50m for a 1Mtp.a. or 2Mtp.a. plant

Cash operating costs are estimated at $400 oz which at a current AUD spot of $800 oz provides some very nice cash flow figures

NPV of project
Assumptions:
Resource = 730k oz's
Margin = Estimated to be $400/oz but use $300/oz to be safe
Cap Ex = $50m

730k oz's @ margin of $300oz = $220m less Cap Ex -$50m = $170m

Net to HLX = $170m x 49% = $80m = 64c HLX

Clearly alot of potential here and the most important factor that seperates HLX from other speccies is that a Proven Development company MEP are doing all the hard work to get the project going, so its only a matter of time.


Glenburgh 100% Gold, W.A.
JORC 1.1Mt@3.1g/t = 110,000 Oz's Au, they're targeting a minimum 500k oz resource for a stand alone project

Lake Everard HLX 49% TOE (Toro) 51% Searching for uranium
S.A. part of Tunkillia area

Toro will be doing some drilling in Qtr 1 07 ie Jan - March

Yallen 30% Free Carried by API, Pilbara W.A.

This project is the main reason I'm updating my analysis,
I didn't realise who API were, API is 50% owned by the huge Aquila Resources and 50% Owned by some huge Multi Billion dollar US Steel firm Amci, they've been signing up Iron Ore deals in the Pilbara with the likes of Red Hill Iron (RHI) and Atlas Iron (AGO),

They recently did some drilling on HLX's tennements which revealed a significant CID, Avg grade was 55% Fe ie not ideal but thickness was at least 5m and was on avg only covered by 10m of top soil.

There is good potential here,


Summary
Tunkilia is a large gold project that will eventually be developed by MEP and may even be bought out by OXR, at worst its worth 25c to HLX at best 65c

Glenburgh is still early stages but the grades are interesting

Lake Everad Uranium exploration by Toro will provide Uranium Spec Interest

Yallen Iron Ore exploration will also add to the spec interest as Iron Ore is a very strong commodity, its interesting to note that RHI carries a mkt cap of $30m on its Iron Ore prospects, amny of which are JV's with the API group

In conclusion at 13c the company has a very undermanding Mkt Cap of $13m
The options represent extreme leverage because the EXERCISE PRICE IS 14c however are also risky given that there's only 2-3months left till expiry.

All in all I like HLX as it has 1 very good fundamental project being Tunkillia and exposure to 2 very spec projects being the Uranium and Iron Ore ones

Technically 12c should provide good support

Enjoy!

 

[gordon2007]

Newbie question again.

That post of yours YT...looks very good and impressive for someone like me who is really new to this. However one of the big trading rules I keep reading about is don't buy a share that has no volume because then you can be stuck with it.

Would that not be the case with HLX since there is zero volume today?

 

[gordon2007]

Haha..just as I wrote this there's some minimal volume now. Why would someone buy such small volumes though of a 13 cent share?

 

[YOUNG_TRADER]

Newbie question again.

That post of yours YT...looks very good and impressive for someone like me who is really new to this. However one of the big trading rules I keep reading about is don't buy a share that has no volume because then you can be stuck with it.

Would that not be the case with HLX since there is zero volume today?

Gordon,

all though I call myself "Young Trader" I'm really much more of a "Young short term investor"

I don't think this is a trading stock, but rather has excellent fundamentals as well as very good speculative appeal,

I would say it has support at 12c and there has been alot of accumulating going on as well, ie large 500k - 1M buy orders going up and gradually getting filled, ie see the 1M buyer at 12c, thats a $120k order,

If your looking for share price catalysts I'd watch for one of the following

1. Tunkillia Resource upgrade

2. Drilling commencing by Toro on Uranium areas

3. More drilling by API/AQA on Pilbara Iron Ore grounds

I also wouldn't be surprised to see HLX spin off its remaining U interests, ie the JV with TOE into a new entity as well as its Iron Ore Interests, considering that they spun out the Platnium interest into a new entity

Hope this helps,

p.s. I'll have to update my analysis as I forgot to add that they hold 1.5M shares in Scimitar (SIM) as well as 750k shares in Crusader (CAS)

 

[gordon2007]

Thanks YT...always a pleasure reading your posts.

Btw...hope I'm not being a pain in the **** with all my questions. I just like to view things from all different angles and get as much information as possible.

 

[toc_bat]

gordon dont worry if your a pain in **** cos there are others here more painful than you, in particular im a pain in the !@#$,

to get back on to the topic, I am keen on this one too, particularly HLXO but as YT said up there, they expire relatively soon, so if nothing noteworthy happens with HLX they will just be worthless in that time and one may loose all ones cash

 

[YOUNG_TRADER]

Its fine Gordon, I welcome it,

I'd also be very interested for some peeps to take a look at my figures for Tunkillia and give me there feed back, what I don't get is why oh why a gaint like OXR would take an option to buy a 25% stake in a project like this, I would have thought Tunkillia would need to be 10x as large to make it worth their while

I hope their current qtrly to be released gives as an update on the projects

 

[noirua]

HI EVERYONE, looking through the Helix purchase of Anglo Gold's 49% interest in Lake Everard, Tunkillia Project; I couldn't see any mention of Helix having to pay any royalties on production, perhaps thats mentioned somewhere and I missed it?

It's good to see Minotaur Exploration involved as a joint partner as they are held in high regard in the industry.

 

[YOUNG_TRADER]

Hey Noi,

HLX own 100% of Tunkillia, of which they have farmed out 51% to MEP who are free carrying them and OXR has an option to buy a 25% interest in it, which makes me very curious.

As part of the deal they also farmed out 51% of Uranium rights to OXR/MEP spin off TOE


HLX seems to have alot of support at 12c,

So if we use that, at 12c Mkt Cap = $12m, they have $2m cash so EV = $10m

Now they have 50% of Tunkillia JORC ie 730koz'sx0.5 = 365koz's Au + Glenburg's 110koz's Au
Total Attributable gold = 475koz's Au / EV of $10m = $20

ie HLX's EV is $20 per Oz Gold

The Tunkillia JORC as I have stated is 2 years old, MEP will upgrade it soon with 18months worth of drilling,

As I have stated I reckon they will easily double the JORC to 15Mt@2.5g/t=1.34Moz's

That would be an extra 600koz's Au gross, or an extra 300koz's Net to HLX, which if we only attribute the current Gold/EV of $20oz should add $6m to HLX

I must admit I am surprised/dissapointed at the lack of comments/analysis/feedback from others,

Sadly as with all my picks, most will ignore it until it runs up 50-100% on volume

 

[skegsi]

Hi YT
I follow most of your threads. I just don't have any cash available at the moment, and have watched from the sidelines as many of your stocks climb. Very new to trading so don't have any analysis/feedback.
My question to you is whether you think there is any upside to purchasing the options for this company (currently .021) as opposed to the normal shares (currently .135). I think the exercise date for the options is end of March.
Cheers
Anyones opinions appreciated

 

[dubiousinfo]

I must admit I am surprised/dissapointed at the lack of comments/analysis/feedback from others,

Sadly as with all my picks, most will ignore it until it runs up 50-100% on volume

Dont mistake silence for apathy, I have been with you on HLX since November.
Thx for the heads up on this one, i owe you a few now.

what I don't get is why oh why a gaint like OXR would take an option to buy a 25% stake in a project like this, I would have thought Tunkillia would need to be 10x as large to make it worth their while

In 2004, OXR negotiated full ownership of Prominent Hill by way of a scheme of arrangement to takeover the old Minotaur Exploration (MNR) for a combination of cash & script.

The scheme allowed for OXR to have full ownership of Prominent Hill, but the remaining assetts of MNR were used to form a new company, the new Minotaur Exploration (MEP), which was made up of the non Prominent Hill assets, listed in early 2005 with OXR taking up a 10% holding. In addition there was a strategic alliance agreed between OXR and the new Minotaur Exploration (MEP).

Around April 2005, the new Minotaur (MEP) entered into the joint venture with HLX on the Tunkillia tenements to earn 51% by spending $5 Mil over 4 years. In addition, there was a further entitlement to earn an extra 24% (75% total) by MEP introducing OXR to the project under their strategic alliance and completing a prefeasabilty study on a minumum of at least 1 Mil oz of gold, or gold equivalent, in an additional 2 years.

OXR's option is not just for 24%, the split of the 75% between MEP & OXR is still to be confirmed as are the terms.

At the time of the MEP/HLX deal, OXR was much smaller with a SP around 90c & a Mkt Cap of around $1Bil, (compared to its current SP of $2.90 & Mkt Cap of $4Bil) & was looking to expand. While the resouse at Tunkillia was only 750k oz, large areas of the tennement had never been drilled & I suspect that both MEP & OXR thought that it may hold much more with further drilling.

As MEP had only just listed and OXR already held 10%, it probably figured that if Tunkillia turned out to be big enough, it could fund the mine for a majority holding or just buy out MEP & HLX.

The strategic alliance between OXR & MEP is still in effect & OXR is currently funding MEP's drilling at Nonning (SA), Bulgunnia (SA) & Cormorant (QLD) & has an option to earn 75% at Cormorant. In addition, OXR now holds 11.2% of MEP after a share placement in June 2006.