Breaker Resources Share Price Sinks on High-Grade Gold Find

Breaker Resources Share Price Sinks on High-Grade Gold Find

Why has the share price of Breaker Resources [ASX:BRB] sunk on its announcement of high-grade gold finds?

BRB announced this morning that step-out drilling, aimed at expanding the one-million-ounce gold resource, has intersected gold mineralisation of up to 67 grams of gold per tonne.

Shares in BRB are trading lower at time of writing.

The share price has sunk 1.92% or 0.5 cents to 25.5 cents per share. BRB’s share price return over the past 12 months is -17.74%.

ASX BRB Share Price Chart - Breaker Resources

Source: Tradingview

Bad news for Breaker?

Breaker Resources is currently conducting Phase 2 of its drilling program at the Lake Roe Project located 100km east of Kalgoorlie.

BRB identified a significant gold system at Lake Roe back in 2015.

What was thought to be three separate gold discoveries actually turned out to be one continuous 3.2km-long discovery, which they named Bombora.

Bombora is now thought to host about one million ounces of gold.

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Until Phase 2 of the drilling program started, Bombora had been limited to shallow drilling to a vertical depth of 180–300m below surface and remained open in all directions.

The objective of the second phase is to scope out the potential for future underground mining below the intended open pit resource.

All four of the new drill holes encountered significant gold mineralisation with visible gold present in several intersections, including:

  • 6m at 12.5 grams of gold per tonne (g/t)
  • 47m at 12.1g/t
  • 65m at 10.6g/t
  • 85m at 4.8g/t

BRB said that the results indicate scope for a material increase in the Bombora Resource and significantly increase the potential for future underground mining.

So why has the share price gone down, isn’t this good news?

The answer: It is not good or bad news.

Think like an investor

If you’re new to investing in gold explorers or still perplexed by the share price action, think about today’s news like this:

The fact that BRB are sitting on a potential one-million-ounce-plus resource is already built into the share price.

BRB announced Phase 2 of drilling December 2019 in order to expand the known resource of Bombora.

So far, the resource has not been upgraded.

That’s not to say it won’t happen — it could.

But that’s the news investors could be waiting for.

Today’s announcement, while it seems positive (i.e. they found more high-grade gold), probably hasn’t had much impact on the share price.

If we take a look around the market, gold miners like Northern Star Resources Ltd [ASX:NST], South32 Ltd [ASX:S32], Newcrest Mining Ltd [ASX:NCM], or even smaller companies like Chalice Gold Mines [ASX:CHN] are all down today.

This could be due to some larger, macroeconomic factor like the gold price.

If you liked the analysis you read today, or you just want to stay up to date with Aussie miners and explorers, make sure to subscribe to The Daily Reckoning Australia, it’s a great way to stay ahead of the curve when it comes to Australian miners. It’s free too. Subscribe here.

Kind regards,

Lachlan Tierney,

For The Daily Reckoning Australia