MHM have just announced the results from the Hill 99 Project in Western Australia. To provide a bit of background information to this announcement MHM Metals originally listed on the ASX as an explorer of Gold, Copper and Silica in Tasmania. The Global Financial Crisis however forced them to look to near term revenue opportunities which led them to the salt slag recycling business.
This salt slag recycling business is now the primary focus of the company and has the greatest potential to deliver significant increases in revenue and profitability in my opinion. However, the company has continued to prospect in Western Tasmania and today’s announcement is a result of that.
The announcement covers two diamond drill holes completed at Hill 99 (100% owned by MHM). The results of the drilling program include:
Hole H99-4: 0.3m @ 10.55% copper, 15 g/t Ag, 0.244% zinc from 177.6m
Hole H99-5:1m @0.165% copper from 169.5m
The announcement then goes on to draw comparisons between the geology of Hill 99 and surrounding gold/copper mines.
As far as the results go there is not much that can be gained from the announcement with only two holes drilled. The most encouraging find is Hole H99-4 with 0.3m @10.55% copper which can hopefully be further defined with future drilling programs. A reference was made to a future drilling campaign:
“The results are sufficiently encouraging that a second stage drilling program of three diamond drill holes totalling 1,200m has been recommended, to test along strike and deeper than the existing drilling. The timeframe for the second stage program has not yet been determined.”
The most significant part of this paragraph is that the drilling program has been recommended but the timeframe not yet determined. Given the capital costs associated with expanding the salt slag operations into the US it appears as though the company will be conserving capital in the near term. Once the cost of expansion has been covered any additional free cash flow can then be funnelled into the minerals projects to fund additional drilling.
In summary the announcement was nothing to get excited about in its own right however the hint towards conserving capital could indicate that a decision on the US expansion is just around the corner.
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