Has Expectation got the Middle Island Resources Share Price Down?

Has Expectation got the Middle Island Resources Share Price Down?

The Middle Island Resources Ltd [ASX:MDI] share price has reversed the gains it made yesterday.

Its latest gold resources upgrade at the Shillington deposit could be to blame.

MDI tacked on 4% yesterday thanks to some solid quarterly results.

However, disappointment appears to have set in this morning.

At time of writing MDI shares were trading down 8% or 0.2 cents to 2.3 cents per share.

Though, the gold explorer is still trading close to its 52-week high.

ASX MDI Share Price Chart - Middle Island Resources

Source: Tradingview

Is a resource upgrade that disappointing?

There are a couple things to note in regard to MDI’s latest share price action.

Firstly, gold miners and explorers across the ASX are trading lower today.

This could be thanks to a drop in the gold price overnight, which shed around 0.25%.

A possible contributing factor.

Secondly, the upgraded gold resource isn’t a tremendous amount.

The Shillington deposit at MDI’s Sandstone gold project had its resource upgraded by 52% and now totals 80,700 ounces of gold.

Certainly not bad news.

But it could be the pieces of information missing that has investors a little disappointed.

Of the 27,800oz added to Shillington, only 7,200oz are an indicated resource.

Meaning the other 20,600oz are implied but not verified.

That is, there is a lower level of confidence surrounding this resource estimate.

Re-estimation of the Wirraminna deposit, also at Sandstone, resulted in minimal change.

The estimate stands at 21,800oz gold.

The latest results bring Sandstone’s total project mineral resources to 650,500oz gold.

Having a total indicated resource of 106,300oz and a total inferred resource of 544,300oz.

What might have some investors a little concerned is with MDI’s feasibility study just around the corner.

A smaller upgrade could be impacting views around feasibility.

Although, any addition to the resource is likely to be of benefit.

Where is the MDI share price headed?

The downward movement in the share price today might be chalked up to profit taking before the feasibility study is released.

Which we could get by the end of the September quarter.

The gold resource upgrade may have had little bearing on the price.

MDI says to expect further resource estimates from the satellite sites surrounding Sandstone.

Which will also play a part in strengthening the project.

Here at The Daily Reckoning Australia we closely follow the happenings of Aussie gold miners and explorers. Our resident gold expert Shae Russell has tipped Australia to become the next ‘gold epicentre’, meaning there could be big spikes in Aussie gold stock prices. If you want to learn more, download your free report here.

 

Kind regards,

 

Lachlann Tierney,

For The Daily Reckoning Australia