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Orosur Mining (LSE: OMI) looks like a penny stock that could be coming good. From around this time just two years ago, the price is up more than 540% to 16p per share — for a market-cap above £64m now. And the shares have been even higher, up at 39p earlier this year.
The ride shows just how volatile a penny stock can be, and investors need to be cautious of that.
Even with recent gains, we’re still looking at something well short of the heights it was two decades ago. But Orosur has crept into the lists of most-bought shares in Stocks and Shares ISAs in September. So is a new resurgence on the cards? Let’s take a closer look…
Digging for wealth
In short, we’re chasing gold here. Orosur operates in South America, and has two key projects. One is its flagship Anzá project, an advanced gold exploration site in Colombia. It also has a gold and silver exploration site in southern Argentina.
Both are 100% owned. Right now, the Anzá project’s behind all the excitement, where drilling at the El Cedro prospect commenced this month. On 2 September, the company told us:
Drilling has only just begun, however a porphyry intrusion was immediately intersected, demonstrating attractive stockwork veining, silicification and potassic alternation. This first hole, CED001, is planned to reach a depth of 500m which is expected to take roughly five weeks to complete.
What does it all mean?
So, erm… porphyry intrusion, stockwork veining, silicification and potassic alternation. No further explanation needed, right? Well, those words don’t mean a lot to me either. But it’s actually pretty good.
Consulting one of those AI chatbots, I discover that gold/copper porphyry-hydrothermal systems, which is what this appears to be, can turn out considerably more extensive than surface evidence suggests. We must treat AI with caution, but for advanced factual searching it can be valuable.
In addition to the new drilling, the company’s expanding the total area of the project to around 530 square kilometres through new licence applications. That’s only a bit smaller than the Isle of Man, or Ibiza.
Oh, and Orosur’s Pepas West prospect is also uncovering high-grade gold. And there’s evidence that it also may extend into a wider system.
What should we do?
As well as further news, the price of gold is very likely to move the share price of miners like this. So I’d definitely expect further volatility in the months, and years, ahead. After all, the Orosur share price has ranged 12.5p-41p over the past 12 months. Still, the current price is close to the bottom of that range.
Over the years, I’ve seen fortunes made and lost in the pursuit of gold shares, and I generally avoid them. But in this case, I’d rate Orosur as perhaps the most promising I’ve seen for some time, and worth considering.
Investors could always think about pairing it with a nice dividend stock to help balance the risk.
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Alan Oscroft does not hold any positions in the companies mentioned.
This story originally appeared on Motley Fool
