The Resolute Mining Limited (ASX: RSG) share price was in exceptionally strong form in May.
With a gain of almost 26%, the gold miner’s shares were actually the best performers on the S&P/ASX 200 Index (ASX: XJO) last month.
Why was the Resolute share price on fire in May?
There were a number of catalysts for the strong performance by the company’s shares in May.
The first was bargain hunters swooping in after its shares were sold off in previous months. In fact, despite its incredible gain, the Resolute share price was still down 28% year to date at the end of May.
This weakness was driven by a poor full year result, disappointing guidance, and news that the Ghanaian government had terminated its Bibiani Gold Mine licence. The latter happened just weeks before the expected completion of the sale of the mine to Chifeng Jilong Gold Mining for US$105 million.
While the mining licence has since been reinstated, the Ghanaian government has ruled out a sale to Chifeng Jilong Gold Mining. Management is now working out what to do with the mine.
What else happened last month?
Also giving the Resolute share price a boost last month was a strong gain by the gold price.
The precious metal broke through the US$1,900 an ounce level in May, hitting a five-month high in the process. A weakening US dollar and easing bond yields supported the price of the precious metal.
It was for this reason that fellow gold miners Evolution Mining Ltd (ASX: EVN), Gold Road Resources Ltd (ASX: GOR), and Perseus Mining Limited (ASX: PRU) recorded gains of at least 17% during the month.
Finally, a couple of positive broker notes gave the Resolute share price an additional boost.
On the very last day of April, both Citi and Macquarie upgraded the miner’s shares to the equivalent of buy ratings from neutral. And while the company’s shares are now approaching Macquarie’s price target of 60 cents, there’s still decent upside potential based on Citi’s price target of 70 cents.
This could make it one to watch again in June.