VANCOUVER — International Finance Corp. (IFC), the private-sector investment arm of the World Bank, plans to take a 15% stake in Tanzania-focused Helio Resource (HRC-V), making it the junior’s second-largest shareholder.
Helio says the IFC financing will be based on a 15-day volume-weighted share price. Worth up to $7.8 million dollars, Helio says it will issue one share and half a warrant to IFC.
The warrant will be subject to an exercise price 50% higher than the ultimate price given to the common shares.
The funds are earmarked for Helio’s flagshhip exploration project in Tanzania, the SMP project.
Helio, which expects to close the financing on Jan 20, says one of the upsides to bringing the IFC on board is that it has a “track record of providing ongoing financial support to its clients throughout the project cycle.”
That expectation does, in part, match with the IFC’s stated goals. On its website, it says that in terms of equity financing it is a long-term investor and typically invests for periods of eight to 15 years. In any junior’s case, that suggests the IFC is in for the long haul.
However, the IFC also says it is “never the largest shareholder in a project” suggesting that, while it might invest more in Helio, there is a ceiling to its future commitments.
Related to that stipulation, the IFC does not take active role in company management.
Another interesting aspect of the investment is that the IFC notes its shareholding “can be treated as domestic capital or local shares” when a country has a national ownership quota.
Helio also says the investment is a positive development as it ushers in a partnership with a venerable international institution with responsible socioeconomic goals.
The IFC’s mandate is to foster opportunities for people to escape poverty.
That suggests it sees in its investment in Helio a mechanism to employ Tanzanians both through exploration and possible mine development.
Indeed, Helio says the IFC financing brings with it “recognition of the potential” that Helio’s SMP project may one day lead to a gold mine.
Helio has either earned in, or is in the process of earning in, on five contiguous properties that cover 35 km of the Saza shear zone, where it has drilled 12 gold mineralized targets.
The current focus of the 12 targets is Porcupine, where Helio has drilled gold mineralization starting from surface.
Helio has consistently drilled mineralization at Porcupine over widths of 30 to 50 metres in the 1- to 2-gram-gold-per-tonne range.
Helio has outlined Porcupine’s main gold zone over a 450-metre strike length from surface to a depth of about 250 metres. Mineralization is still open along strike to the east and west and at depth.
Helio shares recently traded at 61¢ in a 52-week range of 20-91¢.
It has about 65 million shares outstanding.
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