Did this ASX mining share really just leap 7,200%?

Is this ASX share really the moneymaker it appears to be?

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Key points

  • The Pacific Bauxite share price showed an increase of more than 7,000% today 
  • A discrepancy between the delisted share price and post-consolidated share price appears to be the trigger 
  • The company plans to carry out exploration across Western Australia for platinum-group elements 

It is not too often investors will come across a company that is up thousands of percent in a single day. Hence, a small ASX mining share by the name of Pacific Bauxite NL (ASX: PBX) is gaining interest on Wednesday.

At the closing bell, the microcap platinum-group elements (PGE) exploration company is showing a gain of 7,233%. However, this bonkers return in the space of a 24-hour period might be too good to be true after all.

What’s going on with this ASX mining share?

It appears on closer inspection that the Pacific Bauxite share price is not exactly a byproduct of optimism today. Instead, the outlandish performance being displayed is a consequence of a more complicated event.

The reality is Pacific Bauxite had a past life on the ASX before falling into administration back in 2019. Since then, the company has undergone a recapitalisation and pivoted from its bauxite operations toward PGE exploration.

Amid this fiasco, the ASX mining share conducted a 50 to 1 share count consolidation. In short, this reduces the number of shares on issue to one-fiftieth of what it was previously. In turn, the share price is artificially inflated to coincide with this reduction in share count.

According to an announcement, Pacific Bauxite has rejoined the ASX following its recapitalisation. This process involved raising $4.5 million through the issuing of 22.5 million new shares at a post-consolidation price of 20 cents apiece.

Starting afresh, Pacific Bauxite is now debt-free and boasting a modest cash balance of $4 million.

Management commentary

While ushering in its new ASX-listed life, non-executive chair Peter Lewis said:

The Company has emerged from our recapitalisation process in a significantly stronger position after two years of planning and hard work. We are now well-funded to complete our planned exploration activities. We have a fantastic set of assets which have the potential to deliver significant value to shareholders.

The ASX mining share holds exploration licenses over sites spread out across Western Australia. These include locations spanning the Eastern Goldfields and Pilbara regions.

Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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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