Here's why the GME Resources (ASX:GME) share price is up 36% today

Here's why the GME Resources Limited (ASX: GME) share price is up more than 35% today, and was up almost 70% at one point.

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The GME Resources Limited (ASX: GME) share price has rocketed today following the release of a drilling update by the company. At the time of writing, the GME share price is up 35.71% to 5.7 cents per share, giving the company a market capitalisation of around $23 million.

It was an even better story earlier in the trading day as well. The GME share price opened at 7.1 cents this morning and spiked to 8.8 cents at one point. That spike represented a new 52-week high for the company. At that level, GME shares were up almost 70% from last week's closing price.

What's driving the GME share price today?

So what's behind the dramatic surge in the GME share price today? Well, the company released a market announcement to the ASX this morning before market open. This announcement probably explains why investors are fighting to get a hold of GME shares today.

In this announcement, GME told investors that drilling at its Fairfield gold site has intersected a high-grade deposit of gold ore. The most promising result from the drilling was an ore sample containing 4.8 grams of gold per tonne of ore. The best sample ever recorded at Fairfield was reportedly 9.9 grams of gold per tonne of ore.

The company stated the following in the announcement:

Drilling has confirmed the presences of two moderate to high grade shoots and associated broader zones of low to moderate-grade, supergene, gold mineralisation within near surface weathered host rock… Of particular interest is the drilling interception of shallow moderate to high-grade gold mineralisation at the northern end of the deposit. This mineralisation is open both along strike to the north and down dip and opens up potential for extension of the deposit to the north which is untested.

The company tells us that "further work" is currently being planned to test the extent of the discovery of these drilling results. GME stated that "resource modelling and subsequent technical and economic studies will be pushed back until further drilling has been completed".

What does GME Resources do?

GME is a mining company. Its primary project is the NiWest Nickel-Cobalt project in Western Australia, of which it owns 100%. NiWest is estimated to house 830 kilotonnes of nickel and 52 kilotonnes of cobalt. The company tells us that its resources are developed into 'battery-ready' form. Rechargeable lithium-ion batteries (especially larger ones) use substantial amounts of both nickel and cobalt in their manufacturing process.

GME also owns the Fairfield gold deposit in the northeastern goldfields region of Western Australia. Interestingly, this deposit has been mined at various times for gold dating back to 1912.

Motley Fool contributor Sebastian Bowen 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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