Helix and Alchemy consolidate nickel-cobalt assets for Ionick IPO

Helix Resources (ASX:HLX) subsidiary Ionick Metals has executed an option agreement with Alchemy Resources (ASX:ALY) to acquire Alchemy’s 80% joint venture (JV) interest in the West Lynn Project in New South Wales. 

Helix says the nickel laterite project holds an inferred mineral resource of 21.3 million tonnes (Mt) @ 0.84% nickel and 0.05% cobalt at a 0.06% nickel cutoff. 

This means when considering Ionick’s Homeville mineral resource of 18 million tonnes (Mt) @ 0.9% nickel and 0.06% cobalt, the agreement increases Ionick’s total nickel resource inventory to nearly 40Mt containing 340,000 tonnes of nickel and 21,000 tonnes of cobalt.

The option deal comes ahead of Ionick’s proposed initial public offering (IPO).

As part of the arrangement, Alchemy will receive 6 million Ionick shares for its 80% of the mineral rights alongside up to 20 million performance rights. 

Helix, which has a $9.29 million market capitalisation, says the agreement with Alchemy supports its strategy of achieving a Mineral Resource Estimate (MRE) greater than 80Mt.

Helix reports that the growth outlook for Ionick’s existing mineral resources is supported by numerous ‘high-grade’ nickel-cobalt prospects and early-stage targets outside of the existing resources. 

These targets are home to results such as 24m @ 1.01% nickel (Ni) and 0.06% cobalt (Co) from the Sykes prospect; and 25m @ 0.82% Ni and 0.05% Co, including 8m @ 1.12% Ni and 0.09% Co, from the Browder prospect.  

As of midday AEDT, Helix Resources shares have spiked 14.285% to $0.004.  

The West Lynn Nickel-Cobalt Project covers the nickel-cobalt rights on exploration licences EL8318 and EL8631, which are currently held in the ‘Ochre Resources’ JV between Alchemy (80%) and Develop Global (ASX:DVP) (20%). 

Under today’s agreement, Ionick has the option to acquire Alchemy’s 80% interest in the JV, with Develop retaining its 20% interest. The Ochre JV retains 100% ownership of all the non-nickel-cobalt minerals. 

It all comes as part of Helix’s planned spin-out of Ionick into a separate listed entity. As part of this spin-out, the nickel-cobalt assets in the West Lynn region are being vended into Ionick by Alchemy, Helix, and private explorer Jodama, which holds mineral rights over the tenements. 

The venders will receive a notional consideration of about $3 million to be paid via the issue of about 15 million Ionick shares. Alongside Alchemy’s 6 million shares, Helix and Jodama will receive 7.5 and 1.5 million shares, respectively.

Helix reports that a spin-out of Ionick Metals presents a ‘compelling’ opportunity to unlock the hidden value from its suite of nickel, cobalt, and platinum group metal (PGM) assets. 

Helix notes an IPO is the ‘ideal’ pathway to appropriately fund and resource its development activity, with a business plan being finalised ahead of the proposed IPO. Delivery of the IPO is scheduled for the 2024 June quarter and is hoped to provide Ionick with $10 million.

Helix Chair and Ionick Director Mike Rosenstreich says the option with Alchemy completes a ‘significant local consolidation’ of nickel-cobalt assets and underpins the planned spin-out of Ionick Metals from Helix. 

“A key objective for Ionick will be to define a large-scale, high-grade Mineral Resource Estimate greater than roughly 80Mt. We think this is a threshold for a ‘meaningful’ scale nickel project in terms of production output and mine life to initiate the appropriate feasibility work. 

“This sizable bump in resources, plus the addition of numerous high-grade prospects, provides Ionick with strong momentum towards achieving its critical resource threshold”

This sizable bump in resources, plus the addition of numerous high-grade prospects, provides Ionick with strong momentum towards achieving its critical resource threshold. 

Ionick’s development strategy, which currently emphasises consolidation and development of high nickel-grade and large-scale tonnage, highlights how alert we are to the challenges faced by other laterite projects which have become stranded in terms of interest and financing.“

Meanwhile, Alchemy Resources, which has a $12.95 million market capitalisation, notes the agreement with Ionick provides its shareholders with a potential value accretive opportunity via the spin-out of its non-core nickel-laterite and alumina assets.  

Alchemy Resources Chief Executive Officer (CEO) James Wilson says: “When the opportunity arose to join with Ionick into what we consider to be a potentially significant critical metals exploration company in Australia, the rationale was compelling. 

We are delighted to have reached an agreement with Ionick that may see our nickel-cobalt minerals and Alumina portfolio combined with their highly prospective tenement package located in a tier-one mining jurisdiction. 

“The potential spin-out will result in the establishment of Ionick as a well-funded base metals explorer and will provide our shareholders with ongoing exposure to these expanded assets and strategy”

The potential spin-out will result in the establishment of Ionick as a well-funded base metals explorer and will provide our shareholders with ongoing exposure to these expanded assets and strategy. Additionally, the potential spin-out will allow Alchemy to focus on the ongoing development of its high-grade gold and base metals assets at Overflow and Yellow Mountain to the south.”

Helix Resources is ‘all-in’ on copper exploration and focused on making discoveries in the producing region of Cobar, New South Wales. 

Alchemy Resources is focused on the discovery and development of gold, base metal, and nickel-cobalt resources within Australia. 

Helix Resources had $4.2 million cash at hand as of 30 September 2023, according to its latest quarterly report. 

At the same time, Alchemy Resources had $4.369 million cash and cash equivalents at hand as of 30 September 2023.

Write to Adam Drought at Mining.com.au

Images: Helix Resources
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Written By Adam Drought
Born and raised in the UK, Adam is a sports fanatic with an interest in Rugby League and UFC/MMA. When not training in Muay Thai and Brazilian Jiu Jitsu, Adam attends Griffith University where he is completing his final year of a Communication & Journalism degree.