Power Metal Resources PLC (LON:POW) have said on Tuesday afternoon that they have seen gold at their Alamo project located in Arizona.
The firm particularly highlighted the presence of gold nuggets within the project area, however shareholders have not been so confident in the update.
Shares in Power Metal have dived 10.69% to 0.31p across Tuesday trading. 4/2/20 14:24BST.
Power Metal said: “This sampling demonstrated the presence of coarse, near-surface gold while the topographical surface morphology supports a likely proximal hard-rock source for the gold. The findings also provide some support to reports that some 60 ounces of gold nuggets have been recovered within the project area (the largest nugget reportedly weighing approximately 5 ounces).”
Yesterday the firm said that one of its investee companies, in Katoro Gold PLC (LON:KAT) had transferred ZAR5 million to Blyvoor Gold Operations to commence a joint venture project.
Paul Johnson Chief Executive Officer of Power Metal Resources plc commented:
“We are pleased with the progress made regarding our assessment of the Alamo Project. The identification of a potential porphyry engine for the phenomena seen at surface is of particular interest.
In addition, we are encouraged by the confirmation of near-surface gold nuggets, through a very limited metal detecting exercise and the potential for a proximal bedrock gold source within the Project area.
We now need to ensure that the claims package is complete and covers the prospective ground with a sufficient buffer and will undertake some additional work to ratify our assumptions to date.
We will discuss in greater detail the terms of a potential transaction upon conclusion of our due diligence.
I look forward to providing our shareholders with further updates in due course.”
Power Metal December update
Power Metal Resources saw their shares spike in December, following an announcement which showed progress on their Alamo project.
The Alamo project is a package of mining claims covering an area of approximately 340 acres and is situated in west-central Arizona, the company said.
Power Metal will take over subject to due diligence, this includes nugget verification and geochemical sampling. The firm will pay Carrabba and Nye $25,000 – through the issue of 4.9 million shares – during the due diligence period, which may test shareholder patience.
The period can be extended, which Power Metal will then be forced to issue a further 2.9 million shares, at the same price. The shares have been priced at 0.4p, which reflects a slight undervalue to the current trading price.
It seems that Power Metals have agreed a deal which encourages the investment into the firm, and also raise funds to expand further operations.
Power Metal can then earn the 60% stake in the project by spending $1.1 million on property payments and exploration costs. The company said it would expect to pay a “modest” $150,000 in the first year.
Despite progress at the Alamo project, it seems that shareholders have not held much faith in the company as reflected in today’s stock price movement.
