What happened to Predictive Discovery’s share price?
Predictive Discovery Limited (ASX:PDI) shares are up 166% at the time of writing, to 1.5 cents.
Why did Predictive Discovery’s shares push higher?
Discovery ― a precious metals prospect generator ― tapped a rich gold zone at
the Ferkessedougou North Project in Cote d’Ivoire, Africa. Here’s a sample of
the best results from the discovery:
Indeed, while the gold grades don’t blow our socks away, Predictive Discovery reported thick intersections at shallow depth. That suggests there’s potential for a larger discovery at deeper levels, with higher gold grades.
The current prospective resource body is roughly 100 metres wide and 210 metres long. It’s also open to the south and at depth. For this reason, the company noted there’s ‘excellent potential to find more mineralised bodies…within the 17km-long gold-in-soil Ferkessedougou North gold-in-soil anomaly, which is largely untested by drilling.’
The share price skyrocketed on the news.
What’s next for Predictive Discovery?
Shareholders are certainty celebrating today’s discovery:
That said, despite the share price rocketing higher today, Predictive Discovery was trading at near 52-week lows before the discovery. The gold explorer has underwhelmed speculators in this tough commodities environment. But, considering the latest discovery, the share price might see better days if it’s confirmed on the next drill program (more details below).
Predictive Discovery is backed by Rick Rule, the CEO of Sprott U.S. Holdings, Inc. Sprott owns a substantial amount of Predictive Discovery — a massive endorsement for shareholders. Rule calls the company a ‘prospect generator’, as we mentioned above. A prospect generator is a company that acquires attractive land (i.e. generates prospects) and sells some to fund an exploration program.
Rule has made hundreds of millions from investing in prospect generators.
Predictive Discovery owns around 30-40% of most of its projects to reduce exploration risk. It normally ‘farms out’ the majority interest to companies with deeper pockets to minimise its funding requirement. In this case, Toro Gold — the company’s joint-venture partner for Ferkessedougou North — owns 70% of the project.
It’s a sound business model.
Predictive Discovery could make a fortune for shareholders, if Ferkessedougou North delivers the goods. That’s even with a minority ownership in each prospect, mind you. The joint venture’s resource target stands at roughly 1-2 million ounces, which isn’t bad. And while there’s no guarantee this target will be met, things are looking pretty good right now.
Managing Director Paul Roberts told the market today (our emphasis added):
These results are a significant improvement on the initial reconnaissance…results at Ouarigue South and suggest that overall gold grades are higher at depth i.e. below the near-surface weathered zone. Deeper drilling along strike to the south may therefore produce higher grades than the initial, shallow RC holes. Also, most of the mineralised body contains reportable gold grades, which bodes well both for ore continuity and tonnage potential.
If you didn’t know, Ferkessedougou North is located on the same greenstone belt as the Tongon (4.6 million ounces of gold) and Sissingue (1.0 million ounces) gold mines. That’s a good sign. Ferkessedougou North could be the next massive gold mine in the region. And considering that ‘most of the mineralised body contains reportable gold grades’, we’re not writing off this potential.
The bottom line: The exploration results are encouraging for a prospector ― they are thick and shallow. But it’s still early days. The company must back these results up with another drilling program at depth and towards the south. If the next round of drill results come in thick and high grade at deeper levels, we hope we’re smart enough to buy some shares before the price takes off!
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To your first million,
The Trading For Millions Team