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Avesoro up on resource upgrade – is the retrace over? (ASO)

Avesoro resources (LSE:ASO) is up 4% today on news of a 29% increase in reserves at its Youga gold mine in Burkina Faso and also reported a 2 year extension to Life of Mine (LoM). The company’s share price has enjoyed a strong climb this year – peaking-out at 294p in April – but has since retraced, does today’s price of 259p offer a good entry point?

Avesoro acquired the Youga asset along with its Balogo mine at the end of last year. As a result, Avesoro is forecasting a 15-25% YoY increase in gold production to 220-240Koz in 2018, and gold sold in Q1 2018 soared – up 162% compared with Q4 2017.

The share price tested support at 240p two weeks ago and bounced convincingly. The stock now needs to break free from the 260p zone to chase further upside via first resistance of 265p. The 50 Day Moving Average (DMA) also sits around this level.  The stock does appear to be consolidating nicely with its Relative Strength Index (RSI) forming a recovery of higher lows and highs. Resistance is likely to be met at the previous high close of 290p, then 312p, and 337p – which I believe technically looks like a decent target price. It’s worth noting that the MACD has gone in to positive divergence territory too, which adds further strength to the argument Avesoro is on the cusp of a thrust upward.

Author: Stuart Langelaan

Disclosure: The Author owns shares in the company mentioned above

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