Helix and Artemis: early stage de-risking packs a punch
Good Monday MINING AIM and welcome to your thought of the day.
On this site, we like to split stocks into three categories; core portfolio companies, growth stocks, and moonshots.
Moonshots are higher risk, higher reward businesses which have a decent chance of delivering 1000%+ returns over a relatively short period of time. These are not companies at which you are going to throw your entire life savings - while not advice, our view is that you should be exposed enough that you will notice the return in your overall portfolio, but not enough that failure will be a personal financial disaster.
Our litmus test for this is the alarm clock; if you're waking up at 7am Monday-Friday specifically to check the RNS feed of two or three companies, then you are probably overexposed. If you haven't checked by 9am, you're probably underexposed and perhaps should either buy more or close out the position because you lack conviction in the prospects.
Not advice, as always.
Anyway, one of the key things you want to see with a moonshot is an early-stage de-risking event. Helix with its helium shows, and Artemis with its gold in rock samples - neither are conclusive proof of economic viability. What they do evidence is that an economically lucrative asset may be at the table, and this builds a baseline for future expectations.
As a writer, it's like having a first draft of an article ready to go; you still have tons of editing to get around to before it can be published, but you have something to work with instead of a blank piece of paper. It's always better to just have something to work from and improve - and similarly, the jump from 'we think we have something potentially lucrative' to 'we have strong objective evidence that we may have something lucrative' tends to be rewarded by the markets.
A significant component of this is that many perhaps more risk-averse investors buying Artemis last week or Helix today already had the stocks on their watchlists, and are prepared to pay a premium for the reduced risk now, judging that there are still many multiples of potential upside (rather than buy at a lower valuation with a higher risk profile).
Let's consider Helix first - what I consider to be the best small cap helium play currently on the market.
Please read my coverage if you are unfamiliar with the story.
The company has identified elevated helium in mud (a gas show) within the Amsden and Charles formations.
Amsden formation: depth of 3,885ft (1,185m), reaching peak readings at 50x over background level. Low gamma at bit readings over this same interval demonstrated a clean reservoir.
Charles Formation: depth of 5,150ft (1,570m). Significant elevated helium was identified in multiple gas-shows from 4,860ft (1,480m) reaching peak values at 130x over background level.
We know that there were gas systems in these formations already, but the detection of helium gas confirms what was previously only suspicions. The Company is drilling on to the primary target in the Flathead formation at approximately 7,410ft (2,260m) and there is a planned total depth at approximately 8,000ft (2,440m).
Let's consider the caveats first. Unlike many companies, Helix has explained them with surprising honesty:
'The presence of a helium gas-show alone does not confirm that the helium can be economically extracted. Further testing and analysis are required to determine the commercial viability of the helium system, including wireline logging to determine formations with free-gas potential and flow testing to determine grade, flow rate, and production profile.
Gas-shows are reported as multiples over background level, however the intensity of a gas-show is dependent on several factors including the diameter of the bit, rate of penetration, mud weight, mud flow, and reservoir characteristics of the formation being drilled. Therefore, there is no correlation between the reported scale of the anomaly and the grade of helium present within the formation.
There is no correlation between the intensity of a helium gas-show and the grade of helium within the formation. Nor is there a way to determine from a gas-show if the helium anomaly is associated with free-gas or a gas-saturated-brine. Wireline logging will be conducted on completion of the Clink #1 well to identify reservoirs with free gas for extended flow testing. A discovery may be declared only after samples of gas have been recovered to surface and analysed for helium.'
I spend so much of my time interpreting RNSs that it's great to see a company be upfront about the first bit of good news not being the best thing since sliced bread. However, we can be sure that the gas show does mean there is helium, and that further exploration is warranted.
And it's a bit better than your average drill, as Helix is drilling through four separate formations with the same bit. If there are gas shows in all four formations, then you will have four chances at a helium reservoir - and potentially all four could yield the gas.
As others have already spent the morning Tweeting, Helium One rocketed from 0.19p to 2.85p on the back of 20x background levels; and Helix is showing 130x background levels in Charles.
130x is just ridiculous.
Yes there is a ways to go before you have something commercially viable, but if you want to be in a helium exploration play, I defy you to find anything better right now.
Helium One also had some issues getting gas to flow to surface, but Ingomar has already done this. And by any measure, Helix is in a far better part of the world to be developing a helium operation.
Flathead (the big target) and Precambrian will hopefully also deliver some gas shows, and then we're off the the races (or in the Cardwell Rig's case, Rudyard!).
Two more things: first, rumours are swirling that Helix is considering buying one more asset; as it will likely pay for it in shares, a higher share price on the back of these results means the next acquisition will be 'cheaper.' And if all goes well, the ones after that.
Second, when it became clear last week that the recent selling was on behalf of a single Oberon client who was exiting all positions (not just Helix), there was a clear opportunity to buy the dip. Well done to those who took the chance, especially as both drills remain fully funded. Just be aware that while the helium is there, share prices do not move up in a straight line.
The biggest takeaway is that today is a huge de-risking event - Helix has gone from a blank page to a first draft. And it's reading very, very well.
0.5% Helium will be commercial, and I think we're all expecting higher than that.
Artemis should have risen much higher.
Last week, Artemis Resources shares shot up from 0.48p to 0.86p - they have since fallen very slightly but have retained the majority of the increase so far. For context, the stock remains down by about a third year-to-date and circa 80% over five years.
But long-time readers will know that I love a downtrodden stock, and this particular company has reported something special.
And like Helix, it's special but not conclusive yet.
Just a little background info: Artemis has a variety of assets but here we're talking about 100% owned Carlow Project - a gold, copper, and cobalt mineral play situated in Western Australia’s West Pilbara, 25km from Karratha.
Power, roads and port access are all in situ. It has a starting mineral resource of 704k oz AuEq, and an exploration target of 2.5Mt to 5.0Mt @ 2.5g/t Au Eq to 3.1g/t AuEq (based on ASX announcement 9 May 2023). The asset is just 35km from the company's owned Radio Hill Processing Plant.
The Carlow deposit is hosted within the mafic rocks of the Roebourne complex along the highly prospective Regal Thrust. Mineralisation is hosted within chloritic shear zones in basalts and is focused along contacts between the host basalt and footwall and hangingwall gabbro units.
Last week's RNS concerned the Titan Prospect (one of six exploration targets), located within the Company's Carlow tenement and approximately 2km from the Carlow project. This is effectively a greenfield discovery as previous work was limited to broad spaced soil sampling and a constrained moving loop transient electromagnetic survey program only.
Artemis reported high grade gold in veins at Titan with 'abundant visible gold at surface.' Not only did the ground team identify and trace several large-scale vein trends, they were also successful in identifying a vein zone with abundant coarse visible gold.
Visible mineralisation is the dream (I said the same of ARCM's visible chalcocite in the Botswana cores) and Titan is tracked for 700 metres and remains open under shallow cover. Field observations also suggest that it occurs on a much larger and strike extensive structural zone that merits further exploration.
Let's look at some of the rock chip samples reported back:
24AR07-004, 005, 008 - > 10,000 g/t Au*
24AR11-002 - 6,520 g/t Au
24AR07-169 - 10.2 g/t Au
24AR07-184 - 23.8% Cu
24AR07-183 - 14.55% Cu
*More than 10,000 g/t of gold? There was so much gold that the lab couldn't accurately report it.
And this wasn't just some company lab, this was the ALS lab in Perth (ALS is like the word of Prince Edward in 'A Knight's Tale'. It's the Marks & Spencer of the assaying world).
And the lab reported that 'Rock chip sample processing exceeded the capacity of the lab assay capabilities and resulted in over-limits which are reached when a gold sample records an assay higher than 1% or 10,000ppm Au.'
Would have loved to be a fly on the wall when they analysed it. This is exceptionally rare.
A 10.4oz gold bar has been produced from material extracted at Titan, and there is very possibly a larger scale regional discovery on the cards. For perspective, this single bar (assuming the typical 22K standard, 91.7% purity) is worth circa $24,000 at today's prices, produced from circa 300kg of sampling material.
No sane investor expects to make gold bars from rock chip samples.
Yet here we are.
Executive Director George Ventouras enthused that:
'We remain excited by the gold prospectivity that our tenements continue to deliver. The re-focus of exploration efforts and strategy on a tenement wide scale is continuing to deliver evidence of multiple new zones for gold mineralisation, which we believe could contain the potential for large scale deposits. The next steps will allow us to refine these zones, delineate bona-fide prospects and work towards more targeted exploration efforts.'
These rock chips came from a highly mineralised sub vertical quartz-iron vein zone with abundant visible gold below very shallow cover. Many hard rock gold samples were extracted from this veining, with the largest being circa 10x4cm.
These gold samples are not similar to the conglomerate hosted mineralisation, Witwatersrand style of watermelon seed gold nuggets seen elsewhere.
Instead, this gold originates from a hard rock source which indicates Artemis is potentially looking at large gold structures, at surface with potential to extend along strike and at depth.
Interestingly, if the trend persists across the Silica Hills and Osborne tenements, it may even reach the Lulu Creek prospect which was recently the recipient of a government grant for co-funded drilling. You know how much I love grant funding.
Yes, these are rock chip samples.
But like Anakin Skywalker's Midi-chlorian count, they broke the computer.
If that's not worth a moonshot investment, what is?
- Charles Archer,19/8/2024