Why Landore Resources just rocketed 272%

We already knew that Landore had struck gold at Junior Lake, but the size of the discovery and the ease with which it can be mined has just sent the sleepy share price rocketing as much as 272%. Previously focussed on unloved nickel, the end to the commodity super-cycle has been hard on Landore - but adding a gold string to its bow should add a safe haven element to its portfolio.

Landore shares went to bed on Friday at just 0.75p, not far off a record low. Five years ago they were worth 21p. But even after today's surprise news, early risers could have still snapped up shares in the Canadian miner for little more than a penny. It took until mid-morning for them to peak at 2.79p.

Investors know that Landore's hopes are pinned on its Junior Lake property in northwestern Ontario, which includes two nickel deposits. Landore first found gold there in 2003, and reported drill results only three weeks ago. And it's gold that's got everyone excited in the loss-making company all of a sudden.

Run by chief executive William Humphries and finance director Richard Prickett, both former colleagues at Argentinian gold explorer Brancote Holdings, Landore said the "significant" BAM East gold discovery was over 30 metres wide and near the surface.

Because of where it lies, BAM East can be accessed through a low-cost open pit operation. Cash generated from this first stage could help fund further development of the project to deeper levels, which will be crucial as the group reckons a larger mineralised zone of higher quality lies beneath.

Latest drilling has extended BAM East over 100 metres along strike and to 100 metres down dip. It remains open to the east and west along strike and at depth.

Proving that the gold's quantity and quality does improve with depth, a drill hole found that a section of this zone held 1.82 grams per tonne (g/t) of gold 40.75 metres down. There was also a 2.25 metre intersection at 10.28g/t and a 3 metre section at 5.74g/t.

Landore will now complete a trenching and channel sampling programme in the second quarter, with further drilling to extend the new gold zone in the second half.

As the discovery sits to the east of Landore's B4-7 nickel-copper deposit and to the northwest of its VW nickel deposit, Landore thinks it will make "substantial" cost savings over their development and operation.

B4-7 has an exploration target volume of between 1.5-2 million tonnes with a grade of around 1.24%, while VW has an inferred resource of 720,000 tonnes at a 0.49% grade. This "favourable environment" could exist along a strike length of approximately 10 kilometres, says the company.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.