Meteoric Resources’ Share Price Up on Gold Mine Restart (ASX:MEI)
The share price of small-cap iron, gold and base metal explorer, Meteoric Resources [ASX:MEI] are up a hefty 36.84%, or 0.7 cents this morning to trade at 2.6 cents per share.
Today’s rise marks the first day of trading in MEI shares in nearly three weeks as the explorer remained in a trading halt pending the announcement of its latest acquisition.
MEI announced it had signed a conditional legally binding term sheet to acquire the Palm Springs Gold Project located 30km southeast of Halls Creek in the Kimberley, WA.
With operations currently focused in Brazil, the recent acquisition could hedge the risk of operating in a country where MEI just resumed drilling after sites were closed due to COVID-19.
Historic gold prices renewing historic projects
With the price of gold looking like it could springboard its way back towards historic highs, thanks to renewed market volatility, old mines like Palm Springs in Australia are again becoming economically viable.
Gold price in USD (blue) and AUD (red) last 12 months, source: Tradingview
MEI’s acquisition of the Palm Springs Gold Project also includes the historic high-grade open-pit mine Butcher Creek.
Butcher Creek was active during the late 1990s, producing 52,000 ounces of gold at 2.1 grams per tonne (g/t).
Mining was later stopped due to unfavourably low gold prices at the time.
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Source: Meteoric Resources
Historic drilling below the open-pit mine at Butcher Creek has returned some shallow, high-grade areas of mineralisation.
- 68m at 2.5g/t from 44m
- 19m at 8.8 g/t from 56m
- 14m at 7.5 g/t from 82m
A few kilometres to the northeast lay the Golden Crown and Faugh‐a‐Ballagh Prospects (which lay within the Palm Springs Gold Project).
Northern Star Resources Ltd [ASX:NST] had previously completed drilling at these prospects, which also included numerous high-grade finds.
Could this be another speculative buy?
If you follow gold explorers closely, you’re no doubt accustomed to the sometimes sensationalist language these companies use in their ASX announcements.
That’s why it’s always best to cast a critical eye over the information presented to you.
Given the era when Butcher Creek was last explored and producing gold, data relating to the estimated resource size and other geological surveys has been lost.
Meaning that MEI must undergo additional evaluation work to report any remaining resources.
Ultimately, there is no guarantee there will be a mineral resource consistent with what has been previously reported.
At the Golden Crown and Faugh‐a‐Ballagh prospects NST reported an inferred resource of 28,000oz of gold.
MEI said it would be completing additional exploration of the areas over the 2020 and 2021 field seasons.
The acquisition of the Palm Springs Gold Project will be facilitated by a capital raising of $1.44 million.
The current holder of the Project, Pinnacle Nominees Pty Ltd, will receive $750,000 in cash and $250,000 in MEI shares at two cents per share.
The outstanding amount will be used for the first drilling program that will be undertaken shortly, according to MEI.
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For The Daily Reckoning Australia