Galileo Resources PLC (LON:GLR) saw its shares leap over 20% higher today in reaction to Thursday’s news the group is s to exercise its option to acquire the Star Zinc project in Zambia through a joint venture to be established with BMR Group PLC (LON:BMR), with broker comment possitive.
In late afternoon trading, Galileo shares were 22.7%, or 0.42p higher at 2.30p.
In a note to clients today, ‘house’ broker Beaufort Securities said the “potential to acquire an interest in the Star Zinc project is positive news for Galileo.”
The broker’s analysts said: “We note that zinc prices continue to be well supported on the back of dwindling inventories caused by declining global production.
“The availability of primary zinc deposits is diminishing and the Star Zinc project has a non-JORC compliant resource of 0.3Mt grading 20.2% Zn which remains open along strike and at depth. “
They added: “We look forward to the completion of the settlement agreement followed by a formal JV agreement with BMR as well as confirmation of the non-JORC resource.
“In the meantime, we maintain our speculative buy on the stock.”
In its statement yesterday, Galileo said it has entered into a binding agreement with BMR to conditionally advance the firm US$591,600 - at an interest rate of 12% per annum - which is intended to be used for the purpose of completing the exercise of the Star Zinc project option.
The AIM-listed firm plans to subscribe for a 51% equity stake in the joint venture through a newly created special purpose vehicle, to be named Enviro Mining Limited, which will be financed by the cancellation of the loan to BMR
Beaufort Securities yesterday completed a placing of 54,672,500 new ordinary shares in Galileo at a price of 2.0p each to raise £1,093,450 before expenses.
The group said, in addition to its acquisition of interest in the Star Zinc project, it intends to use the proceeds of the placing to fund, amongst other things, follow-up exploration and drilling on its US gold property in Nevada, and advancing the company's Glenover Phosphate project in South Africa.