Dreadnought Resources Shares Down, The Gold Price or Bad Results?

Dreadnought Resources Shares Down, The Gold Price or Bad Results?

The share price of Dreadnought Resources Ltd [ASX:DRE] has fallen sharply today.

Gold stocks across the ASX appear to have taken a beating today as the price of gold fell overnight.

The price of gold collapsed overnight and has continued that trend today.

An ounce of gold is currently worth about US$1,897, after dropping below the coveted US$2,000 level yesterday.

At the time of writing DRE shares are down 25% to trade at 1.2 cents per share.

With fresh drilling results out this morning, it begs the question: what hurt the share price the most?

Extension at Rocky Dam

DRE released its latest round of drilling results from its Rocky Dam gold project this morning.

The 10-hole drill program was designed to follow up on previous gold intercepts.

Highlights include:

  • 20m at 1.1 grams of gold per tonne (g/t) from 40m, including 5m at 3.3 g/t from 52m
  • 15m at 0.4 g/t from 13m, including 4m at 1.3 g/t Au from 17m

According to DRE this extends the thick, shallow zones of gold mineralisation at the CRA-North prospect on the project.

Below is a cross-section illustrating how the mineralisation is taking shape.

ASX DRE Illaara Gold Project Section - DRE Shares

Source: Deadnought Resources Ltd

If the gold grades seem a little low to you, that’s because they are.

Though this has been the case from the outset at Rocky Dam.

Rocky Dam sits on what is called a volcanogenic massive sulphide (VMS), a type of metal sulphide ore deposit.

Gold and copper generally occur in the upper portions of this kind of system.

Meaning they are closer to the surface.

Though these are typically low in gold grading.

So, I suspect the grading of the drill results have little to do with the share price action today.

Rather, it is whether the drilling struck the mineralisation.

On the left-hand side of the cross-section a large portion of the mineralisation appears to be closed off.

Meaning the resource may not extend any further west.

However, the right-hand side appears to show the mineralisation is open towards the east.

What does this mean for the DRE share price?

Like I said, it’s difficult to tell what exactly is responsible for today’s drop in share price.

Currently, the CRA-North prospect still looks like a potentially attractive target.

However, VMSs by nature can be tricky geology.

And it seems DRE are now discovering this:

The orientation of the bed rock lode remains elusive and requires greater structural understanding. Accordingly, a review of the work completed to date, including relogging and detailed structural mapping, will be undertaken in the September 2020 quarter.’

Meaning further news out of Rocky Dam may be stalled.

With the gold price looking a bit depressed currently, now could be a good time to reconsider the shiny metal. Our resident gold expert Shae Russell has tipped Australia to become the next ‘gold epicentre’, meaning there could be further big spikes in Aussie gold stock prices to come. If you want to learn more, download your free report here.


Lachlann Tierney,
For The Daily Reckoning Australia