This ASX gold share is about to enter the ASX 200. Should you buy?

ASX gold share Predictive Discovery Ltd (ASX: PDI) will enter the S&P/ASX 200 Index (ASX: XJO) at the next rebalance on 23 March.

Rebalances occur every quarter to ensure market indices rank companies correctly in order of market capitalisation.

With Predictive Discovery shares up 137% over the past 12 months, it’s not surprising to see the miner ascend into the ASX 200.

Today, the Predictive Discovery share price is 78 cents, down 7.5%.

What’s the big deal about the ASX 200?

There are several benefits to getting into the ASX 200, the main one being the potential for additional passive investor demand from exchange-traded funds (ETFs).

Many ETFs and managed funds track the performance of the ASX 200, so they have to adjust their holdings at every rebalance.

Like all ASX gold shares, Predictive Discovery has benefitted from the soaring gold price.

On Thursday, the gold price is US$5,164 per ounce, up 73% over the past 12 months and up 20% in the year to date (YTD).

Predictive Discovery is not yet a gold producer in its own right.

The ASX mineral explorer is currently developing the potential Tier-1 Bankan Gold Project in Guinea, West Africa.

Bankan has a mineral resource estimate of 5.5Moz.

Predictive Discovery completed the Definitive Feasibility Study (DFS) in June last year.

The study gave an ore reserve estimate of 2.95Moz.

It also estimated average production of about 250Koz per annum over a more than 12-year mine life.

The Guinea Government has approved the environmental Impact assessment, and the exploitation permit application is in the final stages.

Merger with Robex Resources

Meanwhile, Predictive Discovery is expecting to finalise its merger with Robex Resources CDI (ASX: RBR) this month.

The deal means Predictive will gain access to cash flow from Robex’s gold-producing mines, Kiniero in Guinea and Nampala in Mali.

At the BMO Global Metals, Mining & Critical Minerals Conference last month, Predictive Discovery gave a presentation explaining that the merger would result in three mines with a 9.5Moz resource estimate and targeted production of more than 400koz per annum by 2029.

Robex shareholders will receive 7.862 Predictive Discovery shares per Robex Resources share under the deal.

Should you buy this ASX gold share?

Ord Minnett recommends buying Predictive Discovery shares.

The broker upgraded the ASX gold share from a hold to a buy rating in the last week of January.

Ord Minnett also lifted its price target from 74 cents to $1.15 at the time.

On the CBA trading platform, three analysts are rating Predictive Discovery shares.

Two analysts give the ASX gold share a strong buy rating and the other gives it a moderate buy rating.

The post This ASX gold share is about to enter the ASX 200. Should you buy? appeared first on The Motley Fool Australia.

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Motley Fool contributor Bronwyn Allen 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.