FP on Goldquest GoldQuest shares pop 313% thanks to Dominican Republic drill discovery
Peter KovenMay 24, 2012 – 5:33 PM ET | Last Updated: May 24, 2012 5:34 PM ET
Frantzesco Kangaris/Bloomberg
As global economic volatility increased and investors lost their appetite for risky stocks, juniors have struggled to get any attention recently — making the 313% bump in GoldQuest shares on Thursday all the more impressive.
Finally, some good news from the beaten-down junior mining sector.
A small junior called GoldQuest Mining Corp. had investors cheering on Thursday as its shares jumped 313% because of results from a super drill hole in the Dominican Republic. More than 20 million GoldQuest shares changed hands, an almost unheard-of number for a junior on the TSX Venture Exchange these days.
During the heady days of the commodity boom, price spikes like this were a frequent event when a junior miner put out positive results. But as global economic volatility increased and investors lost their appetite for risky stocks, juniors have struggled to get any attention. Many of them are hoarding their cash and simply trying to survive the tough times.
‘It’s an amazing hole … We have more questions than answers right now’
That made the bump in GoldQuest shares all the more impressive. The Toronto-based company said its intersected 231 metres grading 2.4 grams per tonne of gold and 0.44% copper at its Las Tres Palmas project.
“It’s an amazing hole,” chief executive Julio Espaillat said in an interview. However, he cautioned that this is a new discovery and not much is known about it yet. “We have more questions than answers right now,” he added.
GoldQuest has been working on this project for a few years, but this discovery is to the north of its other work in the area. The company will begin a drilling campaign focused around this discovery. Las Tres Palmas is in a little-explored section of the Dominican, and is not on the same gold trend as the giant Pueblo Viejo project controlled by Barrick Gold Corp. and Goldcorp Inc.
Wendell Zerb, a junior mining analyst at Canaccord Genuity, said the bounce in the mining equities this week provided some positive sentiment that could have contributed to GoldQuest’s jump on Thursday. He also noted that GoldQuest’s chairman (Bill Fisher) was chairman of Aurelian Resources Inc., a highly successful junior gold miner that was acquired in 2008.
“Those things in combination have sparked interest in this story,” he said.
Other juniors have managed to build a little momentum in recent months, only to see it evaporate because of negative market sentiment. The challenge for GoldQuest will be to keep investors interested.
“It’s just one drill hole and there’s more information required,” Mr. Zerb said.