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Firefly (ASX:FFR) share price tanks despite further positive drill results

The Firefly Resources Ltd (ASX: FFR) share price is tanking even after management announced more good news at its Yalgoo gold project.

Shares in the explorer crashed 19.6% to $0.18 during lunch time trade as the broader market is rallying.

The All Ordinaries (Index:^AORD) (ASX:XAO) and the S&P/ASX 200 Index (Index:^AXJO) gained around 1% each with every sector trading in the black at the time of writing.

Second drill results fail to save the Firefly share price

But the Firefly share price got swatted as it announced “standout” intercept of 48 metres at 1.71 grams a tonne (g/t) of gold from 33 metres at its project in Western Australia.

The miner said this is the widest “true-width” or “across BIF” intercept drilled to date at Melville. It correlates well with a historical “scissor” drill-hole of 56m @ 1.34g/t from 16m.

These intersections were drilled at opposing angles to each other and validate the potential for a large volume of consistent shallow BIF-hosted gold mineralisation at Melville.

Profit takers strike

But investors may have decided to take some profit off the table today given that the stock had raced up to a one-and-a-half year high since the start of the month.

The rally was triggered by an earlier announcement on 7 September, which reported spectacular gold hits from maiden drill program at Yalgoo.

The initial results came from the first four reverse circulation (RC) drill holes that uncovered 1m at 1,439.55g/t within a broader zone of 6m at 244.91g/t from outside the historical resource envelope at the Melville Deposit.

High expectations

Perhaps this first set of results set a high bar for expectations that today’s findings could not jump over.

“We have had an exciting start to our maiden drilling program at the Yalgoo Gold Project,” said Firefly’s managing director, Simon Lawson.

“Our inaugural program at the Melville Gold Deposit has delivered a mixture of exciting high-grades and thick wide zones of gold mineralisation at shallow depths.

“This drilling gives us confidence that the historic geological interpretation and mineral resource estimate at Melville was done in a reasonably systematic and robust manner.”

What’s next for the FFR share price

While the stock failed to hold its ground today, shareholders will be hoping that the dip is temporary given the big rise in the gold price.

The next catalyst for the stock may come next week as the miner embarks on the next phase of its 10,000m drill program.

The Yalgoo Project is located 175km east of Geraldton and encompasses a 600km2 tenement package. The project covers an entire historical goldfield that has an extensive history of high-grade gold production but has had no exploration for the past 15 years.

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Motley Fool contributor Brendon Lau 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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