The joint venture partners have begun a A$3 million exploration campaign comprising 8,000 metres of diamond and reverse circulation drilling designed to infill and extend the current Resource.
Tunkillia currently hosts a JORC Resource of 15.6 million tonnes at 1.6 grams per tonne for 803,000 ounces of contained gold.
This next phase of drilling will begin with a series of metallurgical and geotechnical holes to confirm pit design and recovery factors.
Previous testwork has indicated high recoveries of 92% in the oxide zone and 90% on the primary zone.
Importantly, the drilling campaign will progress the Feasibility Study on the project and begin the search for additional deposits within the region.
This presents the potential for Tunkillia to rapidly advance to a medium-scale project with strong financial returns.
An earlier Scoping Study has determined the project is likely to be a "robust, medium-scale project".
At prices of A$1,500 to $1,700 per ounce of gold, the project could produce a pre-tax operating surplus of between $115 and $210 million and internal rate of return of between 20.9% and 35.4%.
With average cash costs of $983 per ounce, this equates to a project with the potential for robust financial returns.
Pit optimisations run as part of the Scoping Study indicated that the open pit operation could be developed in stages to provide faster access to mill feed, expediting production and commercialisation.
Further improving the financial standing of the project is the relatively straightforward metallurgical processing requirements, keeping costs down.
Information to date indicates that metallurgical processing of ore from Tunkillia could follow a standard gold flow sheet, comprising crushing, grinding and carbon-in-leach gold and silver extraction.
Realising the value of the asset
With Mungana looking to increase its stake in Tunkillia from 55% to 65% by the end of the year, Helix has a number of options to realise the value of the asset.
Based on the quality of the project and the interest from the market, Helix can look to stay in as a joint venture partner as Tunkillia comes into production, or the company can realise the asset by selling to a third party at a suitable time.
The upside for Helix is as Mungana continues to spend money on advancing Tunkillia it increases the value to Helix.
The Tunkillia project is located in South Australia's Gawler Craton, about 600 kilometres northwest of Adelaide.
Helix holds a 45% stake in Tunkillia, with Mungana owning the remaining 55%. Based on its current exploration expenditure, Mungana looks to increase its earn in position to 65% by December 2012, and could increase it further in 2013 by spending an additional $11 million.
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