Can this 10%+ riser beat Hurricane Energy plc?
The share price of nickel-copper sulphide mineral exploration company Amur Minerals(LSE: AMC) has surged as much as 10% higher today. This takes its gain over the last three months to 6%, with investor sentiment seemingly on the up following a positive update yesterday.
By contrast, oil and gas exploration company Hurricane Energy(LSE: HUR) has recorded a fall in its valuation of 50% in the last three months. Could it be worth selling in favour of its resources sector peer for the long term?
A positive update
Amur's update released on Tuesday showed that the company continues to make encouraging progress with its drilling programme. Its drilling now totals 13,142 metres, with 6,006 metres completed at its IKEN deposit and 7,136 completed at its KUB deposit. This means that around 65% of its planned drilling for 2017 has been completed.
Since May, drilling has been focused at the company's IKEN deposit along the western 1,600 metres of the 2,800 metre-long ISK target, which is in between the IKEN and KUB deposits. Widely spaced holes have confirmed the presence of mineralisation within two distinct pods with a total combined mineralised strike length of around 1,200 metres. Drilling indicates both blocks average in excess of 0.9% nickel and 0.2% copper at average thicknesses of more than 35 metres. Importantly, the thicknesses are suitable for underground mining.
Clearly, the drilling update from Amur has been well received by the market. This is in contrast to the recent performance of Hurricane Energy, which on Wednesday announced that it may not progress with its pre-emptive offer for $5m of the company's shares.
It was planning to provide shareholders with the opportunity to subscribe for shares following its $530m fundraising. This was intended to be at an offer price of 32p per share, but since the announcement the company's stock price has now fallen to below that price level. As such, the firm will no longer press ahead with the pre-emptive offer, unless its volume weighted average share price is above 32p during the next week.
While the news released by Hurricane Energy has not had a negative impact on the company's share price, it shows how poor its performance has been from an investment perspective. Certainly, a weaker oil price and a share placing have been at least partly responsible, but investors seem to be somewhat uncertain about the company's outlook.
This is in contrast to the recent performance of Amur. Clearly though, the mining company remains relatively high risk and dependent on news flow regarding the success of its drilling programme. As such, both it and Hurricane Energy could be relatively volatile places to invest. That means other, larger, resources stocks could be more attractive for risk-averse investors. In terms of their potential rewards though, both stocks could deliver improved share price performance in the long run.
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Peter Stephens has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.