Rua Gold Inc. (CAN:RUA / US:NZAUF) just announced that shareholders of Siren Gold Ltd. (ASX:SNG) have voted to accept Rua Gold’s offer to purchase its 100%-owned subsidiary, Reefton Resources Pty Limited.
Why should this be of interest to investors?
The short answer is that this is the biggest piece in the puzzle as
Rua Gold consolidates a high-grade gold district in a rapidly re-emerging gold jurisdiction: New Zealand. And to close this acquisition, Rua had to fend off a bid from one its New Zealand neighbors.
The longer answer is that gold mining stocks offer investors an historic opportunity in equity markets. Despite the latest-and-greatest bull market for gold itself,
gold mining stocks have never been more discounted versus the price of gold. That’s “historic”.
Gold mining companies are scrambling to assemble large land packages to produce the next generation of gold discoveries. At the same time, they are capitalizing on the greatest disconnect ever between the actual value of these mining properties and the (current) prices of the companies that own them.
While residential real estate is a “bubble” in many (most?) of the world’s premier housing markets, prospective gold mining properties can still be purchased at pennies on the dollar.
What is the prospective potential of the Reefton Resources properties just acquired by Rua Gold? Check out the eye-popping numbers from Siren’s
March 2022 news release on its Alexander River property (part of the acquisition):
- 1,460 g/t gold over 0.6 meters
- 358.2 g/t gold over 2.5 meters
Even in a gold jurisdiction known for its bonanza-grade gold deposits, these numbers stand out.
Equally interesting is that Siren’s shareholders voted to accept the Rua offer despite a
competing offer another gold mining company with land holdings directly adjacent to the Reefton Resources properties. Siren Gold accepted the Rua offer even though there was (potentially) more cash on the table from the competing offer.
Siren’s shareholders will also acquire a substantial stake in Rua Gold, itself (~26%). The inference being that shareholders saw more upside in combining with Rua Gold.
For Rua Gold, the
~85,000 hectares acquired from Siren Gold will
more than triple Rua Gold’s exploration footprint in the Reefton Goldfields district of New Zealand.
Dynamic Wealth Research has previously connected the dots for investors on the highly prospective exploration potential for high-grade gold discoveries in the Reefton Goldfields district.
Numerous historical high-grade and bonanza-grade gold mining operations in New Zealand have
never been explored at depth. This is the because older mining technology did not permit mining operations at greater depths.
In neighboring Australia, the same gold-bearing geology (the Lachlan Orogen) has yielded massive high-grade gold intercepts for Southern Cross Gold (ASX:SXG).
- 455.3 meters @ 7.2 g/t Au
- 404.4 meters @ 5.1 g/t Au
- 331.5 meters @ 6.8 g/t Au
This major gold discovery was enough to produce a ten-bagger return for SXG investors.
For investors looking for the next major gold discovery in the Lachlan Orogen, Rua Gold is currently conducting drilling operations on some of its other high-grade gold assets.
Near term investment potential via Rua Gold’s upcoming drill results. Longer term potential as a district play: the dominant land-holder in a highly prospective high-grade gold district.
With a current market cap of ~$33 million, Rua Gold is positioned to deliver enormous value for investors.
Ruagold.com
Rua Gold corporate presentation
DISCLOSURE: Rua Gold Inc is a paid client of Dynamic Wealth Research.
