Polymetals Resources (ASX: POL) has jumped 89% on the ASX this morning as it reports drilling results. Note that this has no connection with Polymetal, the London listed gold miner, nor with Polymet, the American copper nickel miner. It's a coincidence of names, not a common interest or ownership.
Polymetals used to concentrate on gold mining in Guinea, in West Africa. “Usde” is being a bit polite there as it's only been going three years. But that wasn't producing any thing all that interesting, shown by the fact that this is definitely a microcap - $15 million market capitalisation even after this rise today. So, a recent change of strategy and they took over the Endeavor Mine in New South Wales. This is a lead, zinc, silver and gold mine currently on a care and maintenance basis.
At which point we should wonder a little. So, why did those other guys stop mining? Is the mine worked out? Well, yes and sort of. But mining and exploration technologies improve over time so there's always an interesting strategy available. Start where we know there's at least something interesting, with infrastructure and so on, and see if better exploration can find more of what caused there to be a mine in the first place? Exactly what Polymetals is doing at Endeavor.
Polymetals Resources share price from Australian Stock Exchange
There is never any guarantee that there is more there worth mining. But Polymetals has announced today that there's highly likely to be. The mineralisation extends further and so on - it might well be worth reopening the mine. Do note that this is all pretty early in he process. This is the results of drilling, nothing is proven as yet. But then this stage of mining is just that, a series of explorations, each stage providing more information about what is there. It's possible for the process to fail at any stage, but no one stage in itself is proof of success - it's the whole process that does that.
There's also been an interesting contractual change - they've swapped a 100% silver royalty for a 4% Ag, Pb, Zn one. That means that the silver content counts to the economics of Polymetals expenses - that might change the viability.
Again, this is still early stage but the leap in valuation is that at minimum there's something there at Endeavor which is worth working on some more.