Special Report: REZ wowed investors with news of a bonanza grade hit on Tuesday, with shares climbing over 200 per cent.

By the closing bell yesterday, Resources & Energy Group (ASX:REZ) shares had rocketed 228 per cent to 10.5c on the exchange of a whopping 574.3 million shares.

But that’s just the tip of the iceberg, according to one analyst, who predicts more share price growth ahead.

That strong kick to the share price was all thanks to news of a new, extremely high-grade gold discovery at the Gigante Grande prospect, part of the East Menzies Gold Field project in Western Australia.

Drilling by REZ delivered a peak high-grade 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.

To put that into context, anything around 5g/t is generally considered high-grade and while there is no official definition for a ‘bonanza’ grade (just a way of describing speccy finds), it’s safe to say the 76.4g/t hit would definitely make it into the bonanza category.

The new discovery is significant for REZ because these new results demonstrate strong potential for Gigante Grande to host a very large mineralised system.

REZ was drill testing the previously reported 2.5km by 400m gold in regolith anomalies.

The discovery of high-grade mineralisation below the regolith has the potential to lead to a new economic gold deposit that is located less than 130km north of Kalgoorlie and within the eastern part of the historic Menzies gold field.

This stellar result has prompted Barclay Pearce Capital to initiate coverage on REZ, anticipating a further 43 per cent kick to its share price.

Barclay Pearce Capital’s Russell Wright says he expects REZ will continue to deliver strong results at Gigante Grande, quickly building on historical resources.

“This gives us confidence to initiate on REZ with a 12-month price target of $0.15 and a SPECULATIVE BUY recommendation,” he said in a research report released on Wednesday.

Results have so far been received for five holes of the initial 32-hole program and significant intervals of gold mineralisation have been found in two of the holes.

REZ has previously identified the potential to find large mineral resources between 150,000oz and 500,000oz in the eastern area and has stated it is chasing a 1 million oz find.

And there is plenty more exploration upside that REZ plans to immediately follow up.

“We are planning to go back and consolidate on the fantastic results we have seen so far,” executive director Richard Poole said following Tuesday’s news.

“Clearly five or so holes weren’t enough, and we need to head back out for another drilling program and see if we can firm up the size and start to step it out and see what we find.

“We’ve got probably four or five what you’d call significant active project areas that we’re doing exploration on at the East Menzies Gold Field project.”


This article was developed in collaboration with Resources & Energy Group, a Stockhead advertiser at the time of publishing.

 

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.