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Alto Metals Ltd: DEEP DIVE
OVERVIEW

Alto Metals targets 500,000 gold ounces at Sandstone in 2019 enroute to 1+ million

Alto is chaired by its largest shareholder, businessman and minerals chemist Terry Wheeler.
Sandstone project map
OVERVIEW: AME The Big Picture
Sandstone is about 630 kilometres northeast of Perth

Alto Metals Limited (ASX:AME) expects to add ounces to the 261,000-ounce resource at the Sandstone project in WA's Mid-West this quarter, as it raises funds from shareholders with an entitlement issue.

Carras Mining Pty Ltd’s Dr Spero Carras is hard at work on a gold resource estimate for the Havilah deposit which the company expects to share by the end of January after launching its $2.38 million 1 for 3 entitlement offer earlier today.

READ: Alto Metals to raise up to $2.38 million for exploration at Sandstone Gold Project

Explorer Alto is also planning Ladybird and Sandstone North JORC-compliant resource statements after defining maiden gold resources at the Indomitable and Vanguard Camp deposits last year.

Sandstone project on the East Murchison Mineral Field has a defined gold resource at 4.9 million tonnes grading 1.7 g/t for 261,000 ounces of contained gold.

Sandstone Gold Project gold resources

Sandstone Gold Project gold resources

Alto hopes to define at least 500,000 ounces at Sandstone in 2019 as part of a strategy to delineate more than 1 million ounces and re-establish standalone oxide and primary gold mining and milling operations at its flagship project.

A forward plan to 500,000 ounces

A forward plan to 500,000 ounces

By reviewing past explorers’ data, Carras has already determined the historical mine deposit at Havilah is similar to the Vanguard deposit 6 kilometres to the northwest, which hosts a 50,000-ounce resource.

Both Havilah and Vanguard are in the high-priority Alpha Domain, backing Alto’s view the domain could host a substantial gold deposit.

The geology at Havilah

The geology at Havilah

READ: Alto Metals intersects high-grade gold up to 19.2 g/t at Vanguard prospect in WA

Alto has intersected up to 19.2 g/t at Vanguard prospect with the standout grading found in a 1-metre individual assay from 63 metres.

Highlighted intervals from Vanguard include: 40 metres at 3.6 g/t from 61 metres, including 5 metres at 8.7 g/t from 61 metres; 19 metres at 4 g/t from 69 metres; and 7 metres at 3 g/t from 94 metres.

Geological modelling on Vanguard

Geological modelling on Vanguard

Alto plans to build on its work of the past two years through RC and diamond drilling at the Vanguard and Indomitable prospects to define the extent of their mineralised structures.

Alto managing director Dermot Ryan spoke to Proactive Investors’ Stocktube video channel about the company’s progress over the past 24 months, in a video interview in December 2018.

The MD indicated the company was talking to parties about funding options as it ramped up exploration efforts.

Ryan said: “We’re in discussions with a number of parties.

“From the first two years that we’ve been on the ground we’ve raised money from shareholders, we’ve done placements to our existing shareholders and we’ve done shareholder purchase plans.

“Going into 2019, we’re going to have to raise money … because we’re going to be ramping up the drilling and ramping up the ounces.

“The results that we’ve achieved in a relatively short time of 24 months are very encouraging and certainly parties that we’re talking to certainly believe that the quality of the work and the cost per ounce that we’re discovering is very good.”

 

Earlier this month, Sandstone Exploration Pty Ltd agreed to sell surface prospecting rights at Sandstone project to Alto in exchange for 3 million ordinary shares.

Using the rights, Alto could prospect and fossick for gold to a 2-metre depth from surface.

READ: Alto Metals Ltd acquiring rights to shallow gold at Sandstone project

Alto holds about 800 square kilometres of prospective ground in the Archaean Sandstone Goldfield on the East Murchison Mineral Field in the area once known as the Murchison region.

Sandstone covers about 80% of the historic Archaean goldfield, 600 kilometres north of Perth.

Sandstone is on a historic goldfield in Western Australia

Sandstone is on a historic goldfield in Western Australia

Shareholder entitlement offer

Shares in Alto’s non-renounceable entitlement offer are priced at 3.6 cents each, representing a 10% discount to the last closing price of 4 cents, on Tuesday, January 22, 2019, and a 15% discount to the 15-trading-day volume-weighted average price on Wednesday.

Each share comes with an unquoted free-attaching option that has an exercise price of 7 cents and expires 18 months later.

The offer could introduce another 66 million new shares and 33 million options to those in circulation.

About 195 million shares were on issue on November 28, 2018.

The closing time for the entitlement offer is 8pm EST on February 14.

Any shortfall shares can be issued at the directors’ discretion up to February 19 before the securities are added to quotation on February 21 and begin to be traded normally from February 25.

Alto expects to direct up to $1.967 million of the funds towards exploration, keeping $369,000 for working capital requirements and directing $40,000 to offer costs.

An exploration development pipeline for Sandstone

An exploration development pipeline for Sandstone

Quarterly reporting

Alto is at work on its quarterly reports for December quarter 2018.

The company’s September quarterly cashflow report revealed the company spend $810,000 on operating activities, including $610,000 on exploration, and used $439,000 for financing in September quarter 2018.

Alto ended the September quarter with $486,000 cash.

It later accepted a $300,000 convertible loan facility from chairman Wheeler’s private vehicle Windsong Valley Pty Ltd, in December 2018.

Shareholders will consider a motion to accept the funding option at a general meeting on February 26, 2018, to be held in West Perth.

The unsecured loan attracts an interest rate of 8% and is repayable by December 31, 2019.

On October 16, 2018, the company had predicted it would have $390,000 of cash outflows in the December quarter.

Capital matters

Alto is a tightly held company.

Its top 10 shareholders had 48.9% of the company on November 28, 2018.

Wheeler’s outfit held a 16% stake on the day of the company’s annual general meeting, as the number-one shareholder.

Sinotech (Hong Kong) was the second-largest shareholder with 8%, followed by Enterprise Metals (6$), Mr Stone (5%), Crownluxe (4%), and managing director Ryan and his partner Mrs Ryan (a collective 3%).

Four other shareholders represented the top 10.

West Perth-based Alto Metals will hold a general meeting at its offices on Thelma Street at 2pm local time (5pm EST) on February 26. It is expected to submit its quarterly cashflow and activities by the end of the month.

— with John Miller, Danielle Doporto, Tharun George

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