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Hammer Metals Limited (ASX:HMX) is a mining and exploration company which is working on its current project in Mount Isa mining district. The company has a tenement position of approximately 2500km2 within Mount Isa. It holds 100% interest in the Overlander North and Overlander South deposits, the Elaine deposit and Kalman deposit.
On 14th March 2019, the company shared some of the details regarding its new, Yandal Gold Project acquisition. The company has proposed an agreement for the acquisition of 100% interest in the Bronzewing South Gold Project situated in the Yandal Greenstone Belt in Western Australia.
The Bronzewing South Gold Project is situated in the heart of the 24 million-ounce Yandal Greenstone Belt in the Western Australian Goldfields, immediately along strike from both the Bronzewing gold mine (4 million ounces) and the Orelia deposit (1 million ounces), which is held by Echo Resources Limited.
All the tenements that are planned to be acquired by the company are found within a 20km radius of Echoâs 2.5mtpa Bronzewing Mill. This is currently the subject of a study which would be conducted to estimate the feasibility of its re-opening as part of a new mining operation.
The reasons for which this project would prove fruitful for the company are as follows;
- The consideration is only the ordinary shares in Hammer Metals, with no cash payments, aligning the Vendors with Hammer shareholders on potential exploration success.
- The company has created a well-developed exploration program for the project to target favourable structural orientations within the mineralised corridors that are still untested.
- Previous exploration drilling was mostly shallow and therefore did not consider the structural framework inherent in the Bronzewing area.
- This project is located very close to existing infrastructure and active exploration and development activities, hence considered to be a prime location.
- The management already has a successful track record in gold exploration in general and specifically in the Western Australian Goldfields.
Acquisition Terms
The company has signed a sale and purchase agreement with the four shareholders of Carnegie Exploration Pty Ltd. The consideration for the deal is fully paid ordinary shares in Hammer to the value of $550,000 based on a 60-day Volume Weighted average price (VWAP) calculated till the date of execution of the Agreement. Pursuant to the agreement, the company will own 100% of the issued shares in Carnegie. The proposed acquisition agreement is subject to the completion of final due diligence and receiving shareholder approval for the transaction for which meeting of shareholders to vote on the transaction will be held in due course.
On 7th February 2019, the companyâs share surged by 22% amid A$1 million placement update.
Today, the company has shared its interim financial report for the half year ending 31 December 2018. It also released half yearly results for 1H FY19 with a jump in Net Loss from $0.36 million in H1 FY18 to $1.19 million in H1 FY19. The company reports Total Assets of $12.6 million and Total Liabilities of $506K for the period. During the half yearly period, the company saw $0.48 million operating cash outflow, $0.80 million investing cash outflow and $0.98 million financing cash inflow. The Net cash and cash equivalents stood at ~$0.64 million at the end of December 2018.
The stock plunged by 3.7% and closed the dayâs trading at A$0.026 as of 15th March 2019 as compared to the previous closing of A$0.027. However, yesterday (on 14th March 2019) after the announcement, the stock rose by more than 50% in a single trading session, settling 35% up. Over the last month, the stock has given a rally of 22.7% with YTD return standing at 12.5%.
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