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Why Gold Road Resources just joined the S&P/ ASX200 Index

The Gold Road Resources Ltd (ASX: GOR) share price is up around 110% over just the past year and as some reward for investors the company is set to join the S&P/ ASX200 (ASX: XJO) Index of Australia’s leading companies on September 23.

Generally, when a company joins the S&P/ ASX200 its share price can receive a free kick as popular index tracking funds that must hold every constituent of an index to an equivalent rating are forced to buy shares in the company irrespective of valuation. 

However, over the long term that’s not really material to Gold Road Resources investors who are pinning their hopes on the miner’s WA joint venture the Gruyere Gold field.

Over calendar 2019 the company now estimates the field will produce between 75,000 to 100,000 ounces of gold, with it also exploring at other WA gold prospects that it has 100% ownership of.

For the quarter ending June 30 2019 it posted a net operating cash loss of $16.9 million with no revenue from gold sales. 

The company has $63 million cash on hand with $65 million in drawn bank debt. 

Other companies to be elevated to the S&P/ ASX200 include KFC merchant Collins Foods Limited (ASX: CKF) and online lotto retailer Jumbo Interactive Ltd (ASX: JIN).

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Tom Richardson has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Jumbo Interactive Limited. The Motley Fool Australia has recommended Collins Foods Limited and Jumbo Interactive Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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