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Helix Resources Realises Value From South Australian Magnetite Assets

Helix Resources (ASX: HLX) will realise value from its Olary Magnetite Project in South Australia with the proposed staged acquisition of wholly owned subsidiary Olary Magnetite Pty Ltd by Lodestone Equities.

Lodestone is an investment company associated with Gordon Toll, who has 44 years experience in mining including as chairman of Fortescue Minerals Group (ASX: FMG) during the critical engineering and funding of the company's initial US$3.3billion development of its Pilbara iron ore interests.

Toll is also the founder and former chairman of Ferrous Resources, a Brazilian iron company; deputy chairman of Ivanhoe Mines, including responsibility for one of the largest copper discoveries of the past two decades; and has raised or helped to raise more than $5 billion for mining and associated infrastructure projects in the past decade.

Helix has entered into a memorandum of understanding under which Lodestone will acquire an initial 50% shareholding in Olary Magnetite Pty Ltd in exchange for a A$0.5 million cash payment and funding a $2 million work program to establish a JORC Resource.

Lodestone will then have one month after receipt of the independent JORC report to elect whether to acquire the remaining 50% shareholding in Olary.

Consideration for the remaining 50% interest will be via a cash payment calculated according to the JORC Resource defined, with a minimum floor of $5 million and a capped maximum of $9 million.

If the option to acquire the remaining 50% is not exercised by Lodestone, the parties will operate Olary as a corporate joint venture.

Greg Wheeler, chairman of Helix, commented on the strategic partnership: "We consider Olary has similar magnetite resource potential to the Hawsons (1.4Bt) and Mutooroo (1.5Bt) deposits and welcome Mr Toll's expertise to create value in this region.

"The Olary deal illustrates the current disconnect between our market capitalisation and our significant portfolio of mineral assets, and Helix will continue to monetize this unlocked value.

Helix and Lodestone are aiming for the deal to be completed by the end of August following due diligence.

Comment

Importantly, this deal monetises Helix's South Australian magnetite assets, providing the company with a cash injection to continue to focus on its portfolio of highly prospective copper-gold assets in Australia and Chile.

Even if Lodestone chooses not to acquire the remaining 50% of Olary Magnetite Pty Ltd, Helix has acquired substantial expertise and funding to advance the Olary Magnetite Pty Ltd and will retain exposure to a prospective asset while significantly reducing the associated risk.

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