A perfect start to the New Year all but affirms what could be a break out year for Midas Gold Corp (OTCMKTS:MDRPF). After a lackluster 2018, the stock has bounced back and in the process recouped a substantial amount of losses accrued last year. An emerging uptrend is the latest development pointing to a pivotal year for the exploration and mining company.
Catalysts And Price Analysis
The stock is already up by more than 30% in the early days of the year. The trigger behind the recent upswing is the announcement that the company has agreed with communities surrounding one of its major mining sites. The agreement is a significant development given that the community had initially opposed the company’s Stibnite Gold project.
Fast forward, things are looking good for the company on the mining front. The result is the strengthening of investor’s confidences and sentiments in the stock. The recent rally has sent the stock close to a critical resistance level at the $0.70 level.
A rally followed by a close above the critical resistance level should reaffirm the emerging uptrend. Above the $0.70 level, bulls could come in and push the stock back to its 52-week high of $0.95. Below the $0.70 level, Midas Gold remains susceptible to further declines, taking into consideration the long-term downtrend.
The stock faces immediate support level at the $0.60 level. A sell-off followed by a close below the critical support level would leave the stock vulnerable to dropping to the $0.50 level, in continuation of the long-term downtrend, seen as the next substantial support level.
What Does Midas Gold Do?
Midas Gold is an acquisition exploration, and development, company focused on mineral properties in the United States. The company is primarily focused on gold, antimony and silver deposits in central Idaho across the Stibnite-Yellow Pine District. The Stibnite gold is the company’s main project.
Stibnite Gold Project Approval
The stock is skyrocketing on the announcement that its subsidiary Midas Gold Idaho Inc. has entered into an agreement with seven of the communities closest to the Stibnite Gold Project. The communities had initially shot down attempts by the company to kick-start mining operations in the area, consequentially sending the stock plummeting.
The agreement paves the way for the establishment of a collaborative agreement that will see Midas Gold work with the communities for the entire life of the Stibnite gold project. The agreement will also result in the creation of Stibnite Foundation that will support community projects.
“Working alongside communities has always been an important pillar of the Stibnite Gold Project. We have spent a lot of time out in the community speaking with our neighbors and listening to their ideas because we know this information helps make our project stronger,” said Laurel Sayer, CEO Midas Gold Idaho.
Under the terms of the agreement, the Stibnite Advisory Council is to meet regularly to get updates from the company. In addition, they will discuss topics of interest to the Stibnite Gold Project. Midas Gold is also tasked with the responsibility of supporting projects that benefit the communities surrounding the project. The company will also have to address the impacts of the project such as power and road improvements.
The Stibnite Project had suffered a significant blow in October of last year after the local communities opposed the project in entirety. The communities had initially raised concerns about the potential impact of the project on natural resources resulting from the development of the Stibnite mining district.
Midas Gold remains on track to explore the Stibnite mining District especially on receiving a major financial backing early last year. In May of last year, Barrick Gold Corp (NYSE: ABX) purchased about 46 million common shares of the company for gross proceeds of approximately $38.1 million.
The investment should go a long way in supporting continued efforts to complete the feasibility study and permitting of the Stibnite God project.
Midas Gold spiking higher in response to the landmark agreement for the stibnite Gold project does not come as a surprise. The deal paves the way for the company to launch exploration and mining operations in one of its major mining projects.
The Stibnite Gold Project has the potential to produce more than 300,000 ounces of gold per annum at competitive operating costs. Backing from, Barrick Gold means the company remains well financed to bring the project to fruition.
That said the stock looks set to continue surging, after the underperformance of last year, as Midas Gold starts work at the major Stibnite Gold project.
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Disclosure: We have no position in MDRPF and have not been compensated for this article.