Broker calls REZ selloff a big buying opportunity
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REZ has now uncovered gold mineralisation over 1.2km at its Gigante Grande prospect providing early indications the company could well be onto “Australia’s next significant gold project”.
Resources and Energy Group (ASX:REZ) hit multiple zones of gold mineralisation in three holes drilled 700m south of the Gigante Grande prospect, part of its East Menzies project.
The mineralisation is in a similar geological and structural setting to the recent ‘bonanza’ grade gold hit of 1m at 76.4 grams per tonne (g/t) included in an interval of 20m at 5g/t from a 66m mineralised zone starting at just 71m.
“The company continues to uncover and develop it’s East Menzies project, which with these results along with historical and surrounding evidence would suggest it could well be one of Australia’s next significant gold projects,” broker Barclay Pearce said in a note following the news today.
Despite the bullish news, REZ was sold down heavily on Wednesday morning, pushing shares down over 30 per cent.
But Barclay Pearce reckons this just represents a good buying opportunity for investors.
“The market has completely underestimated the value of this announcement and what it represents,” investment analyst Ethan Perrett said.
“But on the other side of the glass half full it’s great for any investor because it just presents a buying opportunity for anyone looking to get into a company that has a basis for quite a significant gold deposit.
“This is a significant gold deposit that has the opportunity to develop into a sizeable mine within 18 months. There is huge upside from here.”
The three new drill holes were targeting a potential continuation of gold mineralisation along the contact between the Moriarty Shear Zone (MSZ) and the Gigante Granite (GG).
The first hole returned 15m at 1.04g/t from 46m, including a peak assay of 2m at 3.85g/t from 58m.
The second hole delivered a hit of 10m at 0.91g/t, with a peak assay of 1m at 3.85g/t from 105m.
The final hole, meanwhile, hit multiple zones of 1 and 2g/t gold per metre results between 54m and 113m.
Two of the holes were only drilled down to 120m and 126m, stopping short of the depth of the previously reported high-grade hits of 76.4g/t, 49.9g/t and 26.7g/t intersected at 134m,
135m and 186m, respectively.
REZ has also uncovered mineralisation 240m north of the bonanza 76.4g/t hit. The company reported a 98m zone of continuous mineralisation from 34m with a peak hit of 1m at 2.91g/t gold.
REZ says the confirmation of mineralisation demonstrates that the Gigante Grande prospect potentially hosts a large gold system with a significant strike component.
And mineralisation remains open to the north and south, which means REZ hasn’t yet hit the edges of this potentially large system.
The target zone measures about 150m to 500m wide and extends for about 5km.