Amani Gold Share Price Stuck in a Rut (ASX:ANL)

Amani Gold Share Price Stuck in a Rut (ASX:ANL)

Microcap gold explorer Amani Gold Ltd [ASX:ANL] emerged from a trading halt yesterday, pending a cap raise seeking new funding for its exploration program.

The company reached some lofty peaks in 2016 — the ANL share price went as high as six cents.

Shares are currently in a rut, trading at 0.1 cents per share.

In what has been a stellar period for some Aussie gold explorers, ANL has so far not been able to replicate these fortunes.

Four million ounces of gold not enough

Around the middle of March this year ANL announced it had upgraded the mineral estimate at its Giro Gold Project to 4Moz.

The upgrade represented a 28% increase to the estimate at the time.

The resource was again upgraded, with a total indicated and inferred mineral resource estimate of 132Mt at 1.04 grams of gold per tonne, for 4.4Moz gold.

These upgrades did little to move the ANL share price.

According to their latest cash flow report dated 31 March, they only had enough cash to see them through about 19 days.

To add to it all, a Hong Kong-based investment company, Neo Gold Limited, was due to chip in $3 million through the issue of one billion shares, as per a 29 January announcement.

But the placement was never completed.

So not an ideal circumstance for ANL.

Are there prospects if ANL gets funding?

If you think 0.1 cents is a good buy for a potential 4.4Moz gold resource, there are a couple of things to consider.

Last night, ANL shares emerged from their trading halt with an announcement it had secured $2.55 million to fund ongoing exploration activities.

The funding came in the way of a two-tranche placement to sophisticated and professional investors.

This includes the issue of up to 2,550 million fully paid ordinary shares, at an issue price of 0.1 cents per share.

ANL said the funding will help its complete 2,000m of drilling expected to commence in August 2020.

All in all, a large resource but the company appears to be treading a fine line.

Hence the lack of enthusiasm currently, and this also underlines the need to be discerning when looking at small explorers.

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Lachlann Tierney,
For The Daily Reckoning Australia