IPO Watch: Another spin off hits the boards of the ASX as Hamelin Gold hunts Tanami riches

Some are Mork & Mindy (good) and others are Joanie Loves Chachi (depressingly bad), but like the offspring of TV’s classic Happy Days, ASX companies have been giving birth to more spin offs than a warren of rabbits in 2021.

The latest to tap the hot risk capital market this year is Hamelin Gold (ASX:HMG), flush with $10 million in cash from an IPO to hunt for gold in the remote Tanami Desert.

It came out of Will Robinson’s Encounter Resources (ASX:ENR), and 60 million of the 110 million shares issued in the float came in the form of in-specie distributions to Encounter shareholders.

The other 50 million were covered in Hamelin’s 20c a share IPO raising.

That has brought some heavy hitters on board, with majors Gold Fields and Silver Lake Resources (ASX:SLR) jostling for position at the top of Hamelin’s register, each with a 10% stake on listing.

Hamelin Gold share price today:

What’s Hamelin got?

Hamelin is banging around the 25Moz Tanami gold province, on the WA side of the state’s border with the Northern Territory.

Its West Tanami project is on the inside of McGowan’s Wall. Immediately outside to the east is Newmont’s 14Moz Tanami gold mine, including its legendary Callie deposit.

Newmont, the world’s biggest gold miner by production, has owned Tanami since 2002, one of Australia’s largest gold mines churning out around 500,000oz a year at the lowest costs in its global portfolio.

Hamelin holds around 2200km2 in what it calls a “belt scale greenfields opportunity” with the same geology and key structures as Callie but minimal exploration.

It is not just Newmont in the district. Prodigy Gold (ASX:PGX) is there in partnership with IGO (ASX:IGO) while Northern Star Resources (ASX:NST) undeveloped Tanami project is also in the neighbourhood as well as PVW Resources (ASX:PVW).

The project was untouched for several years and suffered for funding during the downturn, acquired by Encounter in 2018 and subject to a limited $5m exploration program by gold giant Newcrest Mining (ASX:NCM) between 2018 and 2021 as part of a JV with the junior explorer.

Hamelin plans to undertake a target generation program to back a major drill drive in 2022.

It is aiming to run a detailed aeromag and radiometric survey over the easter portion of West Tanami including the recently granted Fremlins prospect in December, to add to magnetics completed by Newcrest (ASX:NCM) in 2019.

An orientation geochemical sampling program has also been completed to evaluate the effectiveness of previous shallow geochemical drilling Hamelin thinks has been largely ineffective. A diamond drilling program back with exploration incentive scheme co-funding from the WA Government is due early next year.

What happened today?

Not much.

While some spinout or demerger listings have taken off at memestock levels this year – cough, Kuniko (ASX:KNI) – Hamelin did not enjoy the market euphoria on its opening day.

After listing at 1pm AEDT, Hamelin was down 2c or 10% on its 20c issue price at 18c.

That likely won’t be too much of a concern for now. Managing director Peter Bewick et. al. have a clear exploration plan to unfold over the next year and a half.

Hamelin is planning to leverage the work completed under the Newcrest JV, which included around 8000m of RC drilling across three targets.

It has a number of prospects including Camel, where the last drilling in 2010 picked up 7.2m at 3.1g/t of gold from 95m, and Afghan, a 7.5km long gold anomaly with shallow rotary air blast drilling where 10m at 1.6g/t was struck from 4m.

At Hutch’s Find limited drilling was undertaken over a 5km long gold and arsenic anomaly, hitting 19m at 2.3g/t from 98m and 10m at 5.4g/t from 123m, while large gold anomalies with no or limited deep drilling exist at Mojave, Bandicoot and Quenda and Fremlins.