Shares of Azumah Resources Ltd [ASX:AZM] are up 100% since Tuesday this week.
Azumah is a gold explorer, focused on exploring and developing its Wa Gold Project in the Upper West Region of Ghana in West Africa.
Shares for Azumah Resources are today trading at $0.028 at time of writing, up from $0.014 on 17 September.
Why did the share price jump?
Shares doubled after IGIC Pte Ltd (Ibaera) made an unconditional all cash bid to acquire Azumah Resources for $0.028 a share.
Founded in 2012, Ibaera provides equity funding to help advance new mines to construction.
Ibaera currently holds a 42.5% interest in the Wa Gold Project and 9.21% in Azumah.
Azumah Resources labelled the takeover offer as ‘highly opportunistic’. As they said in an announcement:
‘The board considers the offer to be highly opportunistic, particularly given recent strength in the gold price, the pending feasibility study on the project and the upside potential from the underground discovery at Bepkong identified this year.’
Azumah Resources advised shareholders to do nothing until the board has had an opportunity to make a formal recommendation on the offer.
What could happen next?
Truth is that gold prices have been rising all year. Year to date, gold has had a 16.36% return.
It has been appreciating on the prospects of negative interest rates and on the escalating trade war between the US and China.
Yet also because central banks have gone on a gold shopping spree to increase their reserves. In the first six months of 2019 central banks bought a record US$15.7 billion of gold. Some of the big buyers include central banks from Poland, China and Russia.
The best bit for Australian investors is that they have seen some extra gains because of the exchange rate, as the Australian dollar has depreciated against the US dollar at the same time.
It’s good news for companies exposed to the gold industry, like Azumah Resources.
If you are thinking about investing gold stocks, check out our How to Pick Winning Gold Stocks report here.
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