significant price rerating coming

now a speculative buy with a significant rerating predicted
Horseshoe Metals (ASX: HOR) is currently conducting an extensive drilling program over its two projects, Horseshoe Lights and Kumarina, in order to further define and expand its copper-gold resources. With a growing resource base and an experienced management team, this well-funded exploration company is looking to rapidly transition to production over the next few years.
Company Overview:
Horseshoe Metals (ASX: HOR) is a copper-gold explorer primarily focused on developing its highly-prospective Horseshoe Lights and Kumarina Projects, located in the Peak Hill Mineral Fields, north of Meekatharra in Western Australia (WA). Both projects host historic copper or copper-gold mines. The geological unit hosting the Horseshoe Lights mineralisation also hosts the DeGrussa (Doolgunna) copper-gold operation owned and operated by Sandfire Resources (ASX: SFR), located 60km east of the historic Horseshoe Lights mine.
Extensive drilling has been conducted at both sites during 2012, with numerous ‘ore grade’ copper-gold intercepts being achieved. Further drilling is planned and steady growth in resources is anticipated. Horseshoe Lights already hosts a JORC-compliant resource of 8.6Mt at 1.06% copper and 0.13 g/t gold (91,000t Cu and 37,400oz Au) with a resource upgrade in the pipeline, plus expectations of a maiden resource to be released for the Kumarina Project in early 2013.
The Company is well funded to maintain momentum in the assessment of both projects and has identified a viable pathway for a timely, cost effective transition to becoming a producer
HOR has already established a
significant resource
The Company is systematically
testing a series of mineralised
structures
Expected to release a maiden
resource for Rinaldi in early 2013.
Growth Potential, Horseshoe Lights
Horseshoe Metals has established a JORC-compliant resource of 91kt copper and
37koz gold at Horseshoe Lights, which could potentially support a low cost transition to
producer status for the Company by utilising third party treatment facilities. In addition
management has identified potential extensions to the mineralisation system (down
dip, down plunge and along strike) that continue to be tested in ongoing drilling
campaigns.
Immediate Targets, Horseshoe Lights
Source: Horseshoe Metals
Mineralisation at Horseshoe Lights is interpreted to be a deformed volcanic-hosted
massive sulphide (VMS) deposit, with supergene alteration forming a gold enrichedcopper
depleted cap that was the focus of past mining. Subsequent mining focussed on
high grade copper zones at depth, with several fertile structures identified – the Main
Zone, Northwest Stringer Zone and Motters Zone. Enhanced understanding of the
controls associated with these structures is driving ongoing exploration efforts.
Expected Maiden Resource, Kumarina
Horseshoe Metals has undertaken several drilling programs at the Kumarina Project
during 2012. A 39 hole drill campaign completed at the Rinaldi prospect in October
recorded strong results with further assays still pending from a November drill
campaign. These results are expected to support a maiden resource, due in Q1 2013.
Regional Exploration Potential
Horseshoe Metal’s tenements cover 300km2 in the prospective Peak Hill Mineral Field.
The Company recently acquired multispectral imagery data over both of its projects, as
well as high resolution magnetic data over the Kumarina Project and gravity survey
imagery over the Horseshoe Lights Project. This data is being integrated with existing
geological and geophysical data, and will be reinterpreted to generate additional
regional exploration targets.
The Breakaway Investment Group
Page | 3
Investment Review con’t
As at 31 Oct 2012, HOR had A$2.3m cash, with an additional A$15m in potential funding available
HOR’s directors have considerable expertise in the junior mining sector
Strong Funding Options and Cornerstone Investor
The Company has strong funding support, as illustrated by the recent completion of a $1.375 million capital raising which was backed by Horseshoe Metal’s cornerstone investor, Investmet, which currently has a 19.8% stake in the Company. Investmet is a private equity firm, made up of high net worth individuals investing in resource opportunities, and has a successful track record. Investmet has indicated that it will continue to provide financial support of the Company’s plans through to production.
As at 31 October 2012, Horseshoe Metals had cash at bank of A$2.3m.
Experienced Management Team
Horseshoe Metal’s directors have a wealth of expertise in the junior mining industry. MD Neil Marston provides considerable financial and project management skills to the team, while Chairman Jeremy Shervington has served as a director of various ASX listed companies and operates a legal practice in WA. Michael Fotios, also a director of Investmet, is a well-known geologist with extensive experience in junior and mid-tier resource companies. Stuart Hall is also a geologist and has extensive exploration and mining experience throughout Australia and Africa.
The Historic Open Pit, Horseshoe Lights
Source: Horseshoe Metals
The Breakaway Investment Group
Page | 4
Project Summary
Meaningful scale resource base already established
Resource upgrade in progress based on extensions of known mineralisation
Exploration focus shifting to new targets
Maiden resource expected at Kuminara
Recent Developments
Horseshoe Lights
Horseshoe Metals has already defined a JORC-compliant resource of 8.6Mt at 1.06% Cu and 0.13g/t Au for 91kt of contained copper and 37.4koz gold. These resources occur as depth and strike extensions of the historic open cut mine.
Horseshoe Lights JORC-Compliant Resources
Category
Tonnes (Mt)
Au Grade (g/t)
Cu Grade (%) Measured 0.29 0.017 0.939
Indicated
0.32
0.027
0.88 Inferred 8.02 0.143 1.067
Total
8.63
0.13
1.06
During 2012 the Company has continued to test possible extensions to these resources, most recently drilling low angle holes to test for shallow copper mineralisation located under the North Waste Dump, as well as testing targets north along strike of the historic open pit in three zones from west to east comprising the North West Stringer, Main and Motters zones.
Encouraging results have been achieved in the 51 holes completed during this phase of drilling with numerous ‘ore grade’ intercepts recorded in both shallow and deeper positions. A resource upgrade is currently in progress.
During the next phase of drilling the focus is shifting to the testing for deeper, high grade copper-gold zones, potentially located down dip and down plunge of the Main Zone. In addition, follow-up drilling will be undertaken on exploration targets outside of the immediate pit area which have not been adequately tested in past exploration programs.
Advancing Towards Production
In parallel with its exploration efforts the Company is assessing the opportunity to transition into production. With the Horseshoe Lights Project located just 75km from Sandfires Degrussa copper mine, an option to process ore through the DeGrussa plant potentially represents a low cost, low risk opportunity to achieve a fast-track to production.
Kumarina
Recent exploration at the Kumarina Project has identified shallow, high grade copper mineralisation at the Rinaldi prospect, during a 39 hole RC program completed in October – with a best result of 24m at 3.1% copper. This program was testing possible extensions to mineralisation encountered at several prospects during the Company’s 2011 drilling campaign.
Follow-up drilling is being completed at Rinaldi, ahead of a planned maiden JORC-compliant resource estimate to be completed early in 2013.
As the company achieves its assessment milestones, there is the opportunity for a significant share price re-rating.