Electrum Resources (LON:ECR) shares spiked over 30% higher at midday reaching 1.675p per share, after the group announced yesterday that it acquired two gold-base metal exploration projects in Argentina.
The two projects, Sierra de las Minas and Los Aquirres, are both situated in the La Rioja Province.
Shares were trading at 1.38p, up 17% in early afternoon deals.
In a note to investors today, Edison analyst Charles Gibson commented on the company’s plans for the new projects: “Electrum aims to unlock upside through an exploration programme assessing historic and new high-grade, low tonnage gold mining opportunities."
However the analyst emphasised that the projects are at an early stage, with no resource statements, therefore he reiterated his current valuation for Electrum.
According to Gibson Electrum’s £3.8 million market value is at a 51% discount to a ‘sum of the parts’ £7.8 million valuation.
“The value of listed assets alone is £3.17m”.
“Assuming Electrum’s primary interest at Copper Flat re-rates to a resource value similar to those of its peers then we value Electrum at £19.4m.”.
In yesterday’s announcement Electrum highlighted that Sierra de las Minas has the potential for relatively near term production.
“We are very excited about the potential of the Sierra de las Minas and Los Aquirres projects,” Electrum managing director Patrick Harford commented.
“A rapid work up of exploration targets potentially appropriate for accelerated progression to the mining stage will commence shortly.”
Argentina has become an increasingly popular destination for junior explorers in recent years, and the country is attracting more and more attention from investors. Argentina’s gold industry has been a particular focus in recent months after a number of sizable discoveries and growing interest from international mining majors.
That said Electrum emphasised the region’s potential.
“Despite an increasing degree of attention from the global mining industry, Argentina remains relatively unexplored,” Harford added.
Sierra de las Minas covers around 75,000 hectares. The project area hosts a number of historic small scale gold mining areas and it also has widespread gold and base metal showings.
Electrum has already identified exploration targets at Sierra de las Minas.
It believes that these targets have the potential for rapid definition of high grade, smaller tonnage deposits, suitable for early development to production.
The company has hired MPH Consulting to carry out a preliminary evaluation of the projects.