Helio gets the numbers on SMP

Helio Resource (HRC-V) looks to have a promising project on its hands . . .  especially if it can prove up the integrity of a future pit wall.

The company released a preliminary economic assessment for its SMP gold project in Tanzania and the assessment includes two scenarios from SRK Consulting: a base-case and an upside.

SRK says for the upside case to come to fruition, Helio would have to prove that the enclosing rock around the deposit could support a 55 degree pit wall. The company says that since the country rock is competent massive granite, that is a very real possibility.

Both scenarios used a gold price of US$1,450 per oz. and an 8% discount rate, but while the base case generated a net present value of $85.7 million and an internal rate of return of 24% the upside case generated an NPV of $146.1 million and a slightly lower IRR Of 23%.

The difference between the two is attributable to scale. While the base case envisions a mine that produces 510,000 oz. gold over a 9-year mine life, the upside case considers a mine that would turn out 803,000 oz. gold over a 10-year mine live.

Total cash costs were estimated at US$807 per oz in the base case and US$799.00 per oz. in the upside.

The study said the smaller base case mine would cost $143 million build and operate while the larger upside would cost roughly $188 million.

The PEA ignores inferred resources and instead focuses only on measured and indicated resources from the Porcupine, Kenge and Mbenge targets. Those targets represent just thee of the 30 targets within the SMP gold project area.

SMP covers an area of 238 sq. km on which four of targets, Porcupine, Kenge, Konokono and Tumbili, have been advanced to the resource stage.

Currently measured and indicated resources stand at 24.1 million tonnes grading 1.32 grams gold for 1.02 million ounces and inferred resources come in at 7.2 million tonnes grading 1.05 grams gold for 240,000 oz.

Helio says mineralization at all 30 targets outcrops at surface, and varies from narrow, high-grade gold mineralization hosted in quartz veins and shear zones, to wide zones that can be over 110 metres in width of lower grade, open pittable mineralization.