Stock of the day: Traka Resources share price explodes 270% as it secures gold project

The Traka Resources Ltd (ASX: TKL) share price exploded 270% today after the mining exploration company announced it secured rights to a gold project.

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The Traka Resources Ltd (ASX: TKL) share price exploded by as much as 270% today after the mining exploration company announced it had secured rights to the advanced Mt Cattlin Gold Project.

Traka agreed to exchange its free carried 20% interest in the Mt Cattlin North Tenements for 100% of gold and other mineral potential (excluding pegmatite minerals) on the tenement area. 

What does Traka Resources do? 

Traka Resources is a mineral exploration company based in Western Australia. It looks for gold, copper, nickel, platinum, iron ore, titanium, and lithium, among other minerals. Listed on the ASX since 2003, Traka Resources has 3 current projects across Western Australia and Queensland. 

What did Traka Resources announce today? 

Traka Resources announced it had secured the rights to the Mt Cattlin Gold Project via an agreement with Galaxy Resources Limited (ASX: GXY). The Mt Cattlin North Tenements have a long history of gold mining and exploration. After decades of inactivity, Traka Resources says this represents an excellent advanced gold project. 

The new agreement with Galaxy Resources dissolves the existing joint venture but gives Traka the ability to acquire mining leases over future gold production areas. One of the prime targets, the Maori Queen Mine, contains a high-grade gold shoot characteristic of opportunities to be mined. It was originally discovered by an outcropping of gold and copper on the surface. 

How has Traka Resources been performing?

The Traka Resources share price jumped as much as 270% higher today following the news. It has since been sold down slightly and closed today's trade up by 250% at 3.5 cents.

The company also has a 100% beneficial interest in the George Creek Project which is targeting lead, copper, cobalt, and Zinc. Traka completed a comprehensive exploration project last year and identified the targets minerals at the site, however COVID-19 restrictions are currently preventing access to the project. 

Traka Resources used $883,000 cash in operating activities in the 9 months to 31 March 2020. It began the quarter with cash and cash equivalents of $387,000, down from $903,000 at the start of the financial year. It received $250,000 from the disposal of a tenement in FY20.  

Motley Fool contributor Kate O'Brien has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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