High-grade deep drilling results at Syama could push share price higher

//High-grade deep drilling results at Syama could push share price higher
Gold 1

It was just over a month ago that Market Wire highlighted the strong underlying metrics of Resolute Group’s Definitive Feasibility Study (DFS) reported towards the end of June. Of significance was the fact that the study showed all in sustaining costs for the total Syama gold mine would be US$881 per ounce.

The project is expected to produce 250,000 ounces per annum once the underground development is completed with an initial operating mine life of more than 12 years. Nominal upfront capital investment was required to develop the project resulting in the company not needing to undertake an earnings per share dilutive capital raising.

Subsequent to Market Wire highlighting these issues, the company’s share price has increased more than 25% from $1.31 to hit a high of $1.68 on Friday. This compares with the group’s 12 month consensus price target of $2.00.

Following this morning’s encouraging news regarding the delineation of further high-grade intercepts at Syama, Resolute could push up towards this level sooner rather than later.

High-grade intercepts from deep drilling included 62 metres grading 6.7 grams per tonne, 46 metres grading 3.1 grams per tonne and 23 metres grading 3.6 grams per tonne.

As highlighted by management, the results confirm the consistency and continuity of mineralisation below the current Syama underground Reserve and emphasise the possibility of future expansion and extension to the Syama gold mine.

Managing Director John Welborn said, ‘The DFS is based on the current underground reserve which has not yet been updated with results from the deep drilling program and we expect to materially increase the resource in due course’.

Wellborn said he is also considering the potential to expand future production. Should the current drilling program which extends through to the end of 2016 indicate there is the potential to extract significantly more gold from an underground project there is the possibility that Resolute could consider the construction of a larger plant capable of delivering higher annual production than has currently been modelled.

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