Redstone puts its case after spike

Western Australian-based junior gold and nickel explorers Redstone Resources Ltd and Shannon Resources Ltd have witnessed significant hikes in their shares price following recent listings on the Australian Stock Exchange.

Redstone Resources, which listed on the ASX at an issue price of 25 cents, reached a high of $1.01 last week, a 304 per cent increase on issue price, before falling back to close at 73 cents earlier in the week.

The sharp spike in the company’s share price resulted in the receipt of a ‘please explain’ price query from the ASX regarding the increase from 65 cents on August 9 to $1.01 on August 10 and the volume of securities traded.

In an announcement to the market, the company said it was not aware of any unannounced information explaining recent trading, however it did cite recent comments from managing director Anthony Ailakis stating that: “We have attracted most of the major mining houses who want to initiate discussions with us”.

Redstone said the interest from major companies had occurred over a number of years and was not specifically related to the listing of the company.

“Whilst this interest is continuing, any discussions are preliminary in nature and no agreements have been entered into,” Redstone said.

“The company considers that such interest is due to the significant project holding that it has assembled in the West Musgrave Region and the strength of Redstone’s technical team which, combined with its global targeting strategy for world class deposits, is of attraction to major companies.”

Redstone listed on August 3 after raising $5.5 million from the issue of 22 million shares.

In its prospectus, the company said $4 million of the funds raised would be used to fund a two-year mineral exploration and development program of its projects, including more than $2.3 million to fund the development of its West Musgrave projects, which feature nickel, copper, gold and silver deposits.

Perth-based Shannon Resources Ltd, while not experiencing quite the same significant hike in its share price as Redstone, reached a high of 65 cents on July 25 before dropping back to 40 cents at the end of last week, after listing at 20 cents a month ago.

The junior gold explorer, which is chaired by Carrick Gold’s chairman Frank Carr, earlier raised $2.6 million in its initial public offering after successfully issuing 13 million shares, with funds raised to be used mainly for resource definition and exploration.

Shannon Resources has an interest in two mineral projects in the eastern Goldfields, including the Kurnalpi project and a project located near Gindalbie, north-east of Kalgoorlie.

In its prospectus, a geologist report highlighted the possibility of some of the Kurnalpi prospects containing undiscovered extensions even though it had been explored for nickel and gold, with gold mineralisation already identified. 

The geologist report said the Gindalbie project was in the early stages of exploration and required more intensive exploration. 

The company, in a move to increase the interest in and liquidity of trading in its shares, has also recently listed its shares and is currently trading on the OTC market of the Berlin-Bremen Stock Exchange.

Mr Carr is the largest shareholder in the company, currently holding 9.6 million shares.