Why the Resource Development (ASX:RDG) share price is one to watch

The Resource Development share price dropped 1.9% in the closing moments today in the wake of an acquisition announcement.

ASX share price on watch represented by surprised man with binoculars

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Shares of Resource Development Group Ltd (ASX: RDG) weren't trading until moments before close today. But the share price slipped 1.96% in that small timeframe in the wake of this afternoon's acquisition announcement.

Despite falling 50% during the February to March coronavirus-fuelled fire sale earlier this year, the Resource Development share price is up 150% year-to-date, and up 400% from its 25 March lows.

By comparison, the broader All Ordinaries Index (ASX: XAO) is up 2% so far in 2020.

What does the group do?

Resource Development provides contracting, remedial and construction services to the mining and oil and gas sectors within Australia as well as residential building and development. Its construction segment generates a majority of the firm's revenue.

Resource Development Group's shares first began trading on the Australian exchange on May 2011.

What's driving the Resource Development share price?

Resource Development announced it has entered into a binding agreement to acquire 100% of the Balline Garnet Project. The agreement was reached with shareholders of Australian Garnet Pty Ltd.

The company said the tenements in Balline, Western Australia, are contiguous with the world's largest supplier of alluvial garnet. Alluvial garnet products are used in the blasting and waterjet cutting markets.

Commenting on the acquisition, Resource Development managing director Andrew Ellison said:

Balline is a high-quality shovel ready project that is expected to produce a suite of highly sought after alluvial garnet products. We believe these products are undersupplied in global markets and are in high demand.

This is supported by our initial engagement with potential customers. Balline is one of only a handful of garnet projects globally capable of supplying high-quality garnet products.

The acquisition remains subject to the usual conditions precedent, which includes completing legal and commercial due diligence and AGPL agreeing to settlement terms with its creditors that are satisfactory to Resource Development.

Following on settlement, Resource Development plans to finalise its plans for the project infrastructure. That includes a wet concentration plan, mineral separation plant, and non-process infrastructure. The company reports this work will be funded with its existing cash reserves.

The Resource Development share price is up more than 150% in 2020, and was trading at 51 cents at close of trade yesterday.

Should you invest $1,000 in S&P/ASX 200 right now?

Before you buy S&P/ASX 200 shares, consider this:

Motley Fool investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and S&P/ASX 200 wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

And right now, Scott thinks there are 5 stocks that may be better buys...

See The 5 Stocks *Returns as of 30 April 2025

Motley Fool contributor Bernd Struben 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 Bruce Jackson.

More on Share Market News

Contented looking man leans back in his chair at his desk and smiles.
Share Market News

5 things to watch on the ASX 200 on Friday

Will the market finish the week on a high? Let's find out.

Read more »

Person pressing the sell button on a smartphone.
Broker Notes

Sell alert! 3 ASX shares the brokers are calling time on

Brokers say it's time to hit the sell button on these ASX shares.

Read more »

A couple smile as they look at a pregnancy test.
Share Market News

After the recent debacle, what price target does Macquarie have on Monash IVF shares?

Supported by strong industry tailwinds, this ASX stock could be worth a second look.

Read more »

Fancy font saying top ten surrounded by gold leaf set against a dark background of glittering stars.
Share Gainers

Here are the top 10 ASX 200 shares today

It was the ASX's fourth day of gains for the week today.

Read more »

A happy couple drinking red wine in a vineyard.
Best Shares

5 ASX 200 shares just upgraded to strong buy ratings

The experts say these 5 shares are set to rise over the next 12 months.

Read more »

Businessman using a digital tablet with a graphical chart, symbolising the stock market.
Share Market News

What is next for ASX 200 shares after last month's upheaval?

Macquarie reveals its outlook for ASX 200 shares in May in a new research note published today.

Read more »

a man raises his fists to the air in joyous celebration while learning some exciting good news via his computer screen in an office setting.
Share Gainers

Why Cedar Woods, Healius, NextDC, and Platinum shares are charging higher today

These shares are rising on Thursday. But why are investors buying them? Let's find out.

Read more »

A young man clasps his hand to his head with his eyes closed and a pained expression on his face as he clasps a laptop computer in front of him, seemingly learning of bad news or a poor investment.
Share Fallers

Why Brainchip, DroneShield, Resolute Mining, and Woodside shares are falling today

These shares are under pressure on Thursday. What's going on?

Read more »