MGK rose by 56% yesterday....from 3.3c to 5c, and fell back just as quick on high volume. I am actually surprised by the extent of the sell-off. They are back to 3.4c today. that is what I call a 'flash in the pan'. There are several reasons to question the market sell-off:
1. Appealing gold-copper anomalism is a precursor to trenching-drilling, which will provide a better guide to mineability/commercial potential.
2. The company now has a JV partner willing to invest significant amounts into their projects. Of course this is the hope.
3. Time before we see mining. Clearly this is a long way off...but considerable value can still be realised from the current point. This was the reason for the sell-off. That value will come care of the JV partner.
I was actually expecting some support at 4c....because of the partner. I guess the market needs more confirmation of viability. I look at the size of the mineral field, the ore-rock type association, the geological terrain, and tend to think they they are on a winner. The same can be said for Vital Metals. We tend to think as exploration as risky...but it need not be so. But it is still early days...so lets wait for some trenching & drilling results.
Clearly the market is less convinced than me of the long term potential of this project...that's ok. We can wait a few months for the next rally. We would expect the next rally to be underpinned by trenching results across the various orebodies, and possibly some early drilling results. I would expect that trenching will focus highly, as they will need to construct roads I suspect to access the drilling pads they will need to construct at drill sites. So, there will be plenty of labourers working the hills of the Poi project.
We need to remember that gold prices are destined to reach $2400/oz, so there is no rush to sell this stock. There might also be some work on their other gold projects.
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