Recently listed resource exploration company, Golden State Mining Ltd [ASX:GSM] have had a crazy spike in share price today.
The nano-cap explorer was up almost 85% by midday, adding 6.2 cents to its share price to sit at 13.5 cents.
The jump was triggered by the announcement of a ‘potentially major gold discovery’ by De Grey Mining Ltd [ASX:DEG].
De Grey’s discovery is located in the Pilbara Craton just 13km south-east of GSM’s 100%-owned Yule Project.
GSM’s Managing Director, Michael Moore, says the discovery ‘underpins our commitment to gold exploration and discovery in this very prospective and underexplored region’.
Clearly, investors seem to agree.
But will GSM prove to be a ‘winner’?
Find out whether this stock fits the criteria in Editor Greg Canavan’s free report, ‘How to Pick Winning Gold Stocks’.
To learn how he finds the winning gold stocks, download the free report here.
GSM ‘excited’ by discovery
De Grey’s discovery of ‘further impressive thick and high grade gold’ has led to GSM deciding to expand on their exploration programmes, as they are ‘especially relevant’ to GSM’s Yule plans.
The Yule Project has already identified 17 priority gold, base metal, and rare earth element target areas.
Their three exploration licences give them 656km2 of exploration, which covers a significant chunk of the Pilbara.
An additional exploration license has also been submitted to bring the total project area to 702km2.
This licence area provides ‘a similar geological setting’ to the recently discovered gold prospect.
This will be the core focus of their drilling in early Q2 2020.
Final statutory approvals are expected early next month.
Is it time to get excited about GSM?
As we know, mining stocks are a very high-risk part of the market.
It’s a constant struggle between cost, success, and resource pricing.
GSM are predicting cash outflows for the next quarter to be around $410,000, with more than half of that going towards exploration.
That’s almost 20% of their $2.21 million market cap.
The nano size of GSM makes every move they make a potentially extremely volatile one, and today is no exception.
An 85% share price jump on ‘nearology’ alone just goes to show how exciting investment can be in the smaller end of the market.
That said, these smaller stocks are notorious for swinging the other way just as quickly.
And lacklustre drilling will likely do the trick in this case.
But gold is a hot resource right now, with many flocking to the safe haven yellow metal amidst fears of the rapidly spreading coronavirus.
Still, it’s best to do your research before jumping into any gold stock.
And Greg Canavan’s free report is a great place to start.
Imogen van der Meer,
For The Rum Rebellion