Golden Rim Resources Share Price Rises with African Expansion
West Africa-focused explorer Golden Rim Resources Ltd [ASX:GMR] has watched its share price push higher today, thanks to new digs in Guinea.
Exploration activity seems to be returning as the price of gold sets a new historic level.
Earlier this month we took a look at the West African Resources Ltd [ASX:WAF] share price and what affects COVID-19 will have on the continent.
With cases now mounting, what risks will this pose for companies like GMR?
At time of writing the GMR share price is up 0.3 cents or 20% to trade at 1.8 cent per share.
Shares are trading 50% higher over the past 12 months.
Newmont hands Golden Rim the Kada gold project
GMR announced this morning it had entered into a binding head of agreement to acquire up to a 75% interest in the Kada gold project.
Newmont Corporation [NYSE:NEM] currently own the Kada project.
Kada is an advanced gold project previously explored by NEM.
According to GMR Kada has the potential for near-term maiden JORC mineral resource.
The tenements are also situated on the same gold trend as AngloGold Ashanti Ltd’s [ASX:AGG] 10 million-ounce Siguiri gold mine.
Source: Gold Rim Resources
As part of the acquisition agreement GMR will conduct due diligence on the tenements and seek the approval of shareholders to issue consideration shares to NEM.
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A good deal for GMR shareholders?
Maybe you’re thinking, why would NEM sell Kada if there’s gold there?
There are a couple of reasons.
But they don’t necessarily mean there’s no gold to be found — there is.
NEM is the world’s largest gold miner and owns mines across the globe.
Meaning it might buy tenements with a different purpose in mind than GMR, for example.
This could be the case with the Kada gold project.
Newmont’s strategy for Kada was to assess the potential for a low-grade, bulk tonnage, heap-leach operation.
Which is typically an easier and cheaper operation compared to other methods.
However, NEM determined that both the resource grade and the heap leach recoveries were not feasible for them to proceed.
This was back in 2012.
And no more exploration has occurred since.
GMR believes there’s more gold to be found.
They are of the belief Kada has a similar gold system to their 1.4Moz Kouri gold project in Burkina Faso.
GMR also believe a more conventional processing method would be better suited to Kada.
This is the roll of the dice investors of speculative gold stocks must take.
GMR say they have the expertise in the area to get it done.
Maybe more so than NEM, who could be more inclined to focus on less speculative projects.
However, maintaining at least a 15% interest in the project may give investors some optimism as to what NEM really believes is below the ground at Kada.
With the gold price tipped to hit US$2,000 by the end of the year, there may be more potential at Kada than originally thought.
Back home, however, Australia is fast becoming the new global ‘gold epicentre’. Our resident gold expert Shae Russell is predicting this could mean huge spikes in Aussie gold stock prices. Find out more in our free report. Get you copy here.
For The Daily Reckoning Australia