RE: Doc Holiday on CGO23 Apr 2021 18:10
Doc knows
Zak says...
Contango (CGO): Making The Right Moves
While we have grown accustomed to companies in 2020 converting themselves miraculously into COVID-19 plays, it may be said that the more logical and switch to make this year has been into the gold / precious metals space. This has worked well for the likes of Wishbone (WSBN), Gunsynd (GUN), Oracle Power (ORCP) and Contango. In the case of Contango its flagship asset was a 70% interest in the Lubu coalfield project in north-western Zimbabwe. This was added to in October by the acquisition of the Garalo Project for gross consideration of US$1M, targeting production scenario of 30,000oz per annum. At the time Contango said that further drilling was expected to expand resource and mine life. This has certainly proved to be the case with the latest news being that it is sitting on a potential gold resource of 1,800,000 oz at average grade of 1g/t, representing a 460% uplift from the previous estimate. There is an additional as yet untested resource potential below the historic 150m drilling depth. Given that Contango is still only an £18m market cap, and the raised £1.8m at the time of buying Garalo, it may very well be the case that once investors stop rubbing their eyes at the resource upgrade they may well decide a positive re-rate is in the offing for Contango.