Pacific American Share Price is up 30% after Diving into Gold (ASX:PAK)

Shares for Pacific American Holdings Ltd [ASX:PAK] are up 30% today after the company said they’ll be trying their hand at gold exploring. At time of writing, the PAK share price was trading at 2.6 cents.

The ASX-listed company has already quite a diverse set of projects. They have full ownership of the Elko Coking Coal project, which is located in British Columbia with a 303 million tonne JORC resource. They also have investments in renewable energy, including hydro power generation.

Pacific American turns gold explorer

The company said they’ve entered into an exclusive binding agreement with Salazar Gold to acquire a stake Salazar’s gold projects.

It’s not surprising companies are moving into gold. Gold is having a great year with prices currently close to US$2,000 an ounce — a 29% increase year-to-date.

Salazar is a privately-owned company with exploration licences in Western Australia, 150 km northeast of Kalgoorlie. The deal includes the 113km square Porphyry North Gold Project, which is located in the Yilgarn area and includes several other gold projects.

Pacific American Gold Project - ASX PAK

Source: Pacific American Holdings

On the terms of the deal, Pacific can earn up to 60% interest through a staged farm-in with a total expenditure of up to $2 million.

Commenting on the Salazar deal, PAK Chairman Geoff Hill said:

Salazar has undertaken detailed preliminary exploration with a number of targets that are drill-ready. This investment in gold, coupled with the Company’s most recent venture GP Hydro, supports PAK’s strategy to diversify into high value assets that have significant returns for shareholders.

The company has also raised $750,000 in cash (before costs) for the project that will go towards earning a 35% stake, which is the first tranche of the deal.

What happens next?

The deal is still pending on a 60-day due diligence period.

Once approved, the company is planning to start exploration on three gold targets: Rainbow Dam, the Nugget Patch Anticline and Red Gate Shear.

While the company says the area is ‘highly prospective’, it’s not easy to pick gold explorers that will actually find gold.

It’s why The Rum Rebellion’s editor Greg Canavan has prepared a guide on ‘How to Pick Winning Gold Stocks’.

You can access this free report here.


Selva Freigedo

Selva Freigedo is a research analyst for The Rum Rebellion.

Born in Argentina, her passion for economic analysis started at a young age. Her father was an economist for the Argentinean governments and the family used to discuss politics and economics at the dinner table.

Argentina is a country with an unusual economic history. Growing up there gave Selva first-hand experience on different economic phenomena such as hyperinflation, devaluation and debt default.

Selva has also lived in Brazil, Spain and the USA.

Back in 2000 she was living in the US as the dot com bubble popped…
And in 2008 she was in Spain as the property market exploded and then collapsed…

She has seen first-hand what happens when bubbles burst.

Selva joined Fat Tail Investment Research’s team in 2016, as an analyst. She now writes from her vantage point in Australia, where she settled in 2015.

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