'One of the largest deals of its kind': Why this ASX gold share is soaring 22% today

This ASX gold share has some big news today.

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rising gold share price represented by a green arrow on piles of gold block

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It's been a top day for the All Ordinaries Index (ASX: XAO) and ASX shares so far this Tuesday. At the time of writing, the All Ords has gained a healthy 0.51%, lifting the index to back over 7,550 points. But let's talk about one ASX gold share that is doing markedly better than that.

The Besra Gold Inc (ASX: BEZ) share price closed at 27 cents yesterday. But today, the ASX gold share has rocketed all the way up to 33 cents a share. That's a gain worth a happy 22.22% at present. Earlier this afternoon, Besra shares climbed as high as 37 cents each, which was a gain worth more than 33% at the time.

So what's going on here that has seen this small-cap ASX gold share rocket so enthusiastically?

ASX gold share inks cash for gold deal

Well, it appears to be a result of the ASX announcement Besra made to investors this morning. This announcement revealed the company has secured shareholder support for a rather unusual variety of funding facility in a partnership with Quantum Metal Recovery Inc.

Quantum has now provided Besra Gold with an initial deposit of US$5 million. Under the agreement, the company may provide Besra with up to an additional US$10 million in funding per month, up to a cap of US$300 million.

However, Besra was at pains to say that this funding facility "is not debt and is interest free".

Instead of paying Quantum back its cash along with interest, Besra instead will "deliver to Quantum up to 3,000,000 ounces of future gold produced from the Company's projects".

It's cash for gold, on a corporate scale.

Besra Gold has declared that this arrangement "is one of the largest deals of its kind signed by an ASX-listed junior". It says the deal will enable it to "fully fund production at the Bau Gold Project and appraise other deposits within the Bau goldfield corridor."

Besra told investors that it is entitled "to deploy the proceeds towards a variety of uses, including exploration, feasibility studies, mine development purposes and working capital".

Clearly, investors are very excited over this news and have sent up the Besra Gold share price accordingly. Today's gains take this ASX gold share's price to a year-to-date gain of a whopping 550%.

Motley Fool contributor Sebastian Bowen 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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