Resource Development Group Ltd (ASX: RDG) shares were riding a wave of optimism today after the company announced a significant increase in its mineral resource estimate. By Thursday's market close, the Resource Development share price was trading 14.29% higher at 4.8 cents.
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What boosted Resource Development shares?
The Resource Development share price jumped by around 40% to an intraday high of 5.9 cents following the company's latest announcement.
Resource Development advised that its wholly-owned Lucky Bay Garnet project, which is located between the coastal towns of Kalbarri and Port Gregory in Western Australia, reported an increase of mineral resource tonnage of 1,808% from 23Mt to 438.8Mt. Its total mineral resource of garnet increased an incredible 1,520% from 1Mt to 16.2Mt.
The company further advised that 86% of mineral resource tonnage (379.5Mt) has been classified as indicated and measured. This means the company has undergone enough sampling to have a high degree of confidence in the grade, quantity, and physical characteristics of the mineral.
What's the significance of the Lucky Bay project?
Resource Development acquired Lucky Bay in February 2021. According to the company, the location — 580km from Perth — shares a common border with the world's largest supplier of high-quality alluvial garnet.
The company clarified that high-quality alluvial garnet products are used in the abrasive blasting and waterjet cutting markets. Resource Development believes there are opportunities to supply the coarse-grade version of the product, which it says is undersupplied.
What did management say?
Resource Development Group managing director Andrew Ellison is confident in progressing the business to project development studies. He said:
This significant Mineral Resource upgrade is an outstanding result and confirms the upside potential we identified when RDG first evaluated the potential at Lucky Bay. With 86% of the Mineral Resource in the Measured and Indicated categories, we can proceed with project development studies with a high level of confidence.
First production is being targeted for early 2022.
Resource Development share price snapshot
Despite today's gains, the Resource Development share price has fallen by almost 6% so far this year. It has, however, gained around 55% over the past 12 months.
Based on the current share price, the company has a market capitalisation of around $135 million.
