What happened to the Jameson Resources share price?
At the time of writing, shares of Jameson Resources Ltd [ASX:JAL] are up by 24.24%, to 20.5 cents, in today’s trading. Jameson Resources is a junior resources company focused on the acquisition, exploration and development of strategic coal projects in western Canada.
Why did Jameson Resources shares do this?
On Friday, Jameson Resources announced an agreement with Bathurst Resources Ltd [ASX:BRL] to fund the Crown Mountain Coking Coal Project in British Columbia, Canada. Bathurst (through a wholly owned Canadian subsidiary) will initially invest CA$4 million to fund the 2018 summer exploration program.
All up, if it chooses to advance the project, Bathurst has the option to invest a total of CA$121.5 million. That should get the project production ready. If it happens, Crown Mountain will become a 50/50 joint venture between Jameson and Bathurst.
What now for Jameson Resources?
This is an excellent deal for Jameson shareholders ― the management team should pat themselves on the back. Bathurst is a successful and profitable operator of several coal mines in New Zealand. It has an experienced team of operating, marketing, financial and technical personnel which should benefit the development of Crown Mountain.
Zero Jameson shares will be issued for the transaction. That means, while Bathurst works on the project (should they continue to invest capital), Jameson has the option of focusing on other projects to generate additional shareholder value in the future.
It sounds positive for the company’s shareholders…
That said, the exploration results must deliver for the project to advance. That’s the key to the near-term story and why Jameson’s market capitalisation is trading below $50 million today. If the project delivers following the next exploration program, however, shareholders should be rewarded over the long-term ― especially if coal prices hold up.
Resources Analyst, Markets & Money
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