Comet Resources Charts Future in Mexico — Share Price Up (ASX:CRL)

Comet Resources Charts Future in Mexico — Share Price Up (ASX:CRL)

Demand for promising gold sites appears to be on the up.

Not that that should be a surprise. With the price of gold soaring so far this year, miners are doing all they can to get in on the action.

The latest of which is Comet Resources Ltd [ASX:CRL]. A junior miner whose share price is up 20% at time of writing.

Rolling the dice

With a market cap of just under $7 million, Comet has announced a bold plan today. They’ve managed to acquire a gold project in Mexico.

There is catch though.

In order to get this deal done, Comet has also had to procure a $20 million loan. Turning to a private creditor to help fund the purchase and development of the site.

As you can tell from their market cap, that’s a sizeable sum of cash. That’s why they’ve had to use a royalty and gold streaming plan. One that will see their creditor (Raptor Capital International) paid via proceeds from the mine itself.

At least, that’s the plan.

As of right now this site — known as Santa Teresa — is far from ready to be mined.

The only work done on it to date is initial drilling tests. Work that is certainly showing some promising gold deposits, but will need further testing.

Still, that hasn’t deterred Comet’s Managing Director, Matthew O’Kane:

Santa Teresa contains attractive near-surface high-grade gold mineralisation that is open along strike and at depth. Along with the non-dilutive development funding from Raptor, I believe subject to completion of due diligence, the Project has potential to add significant value to Comet.

Clearly the market was thinking along the same lines today. Sending the share price higher as trading picked up.

Time will tell what comes from this project though. It is risky, but if it pays off Comet could be laughing all the way to the bank.

Buzzing with activity

The big takeaway from this deal though (in our view) is the location.

Up until now, Comet’s core focus was on two projects in Australia: One in NSW and the other in WA.

The fact that they’re now looking to expand internationally is a big step. One that we will have to wait and see if it was worth the risk.

And speaking of risk…gold may be your best bet to curb it.

Jim Rickards, one of our in-house experts, is seriously bullish on gold. Even with the markets looking shaky in recent days.

He firmly believes that as an investor, gold should be a part of your portfolio. A tried and true way to protect yourself from a potential financial storm.

You can read all about in his latest report. Get your free copy, right here.


Ryan Clarkson-Ledward,
For The Daily Reckoning Australia