This penny stock’s up 246% over the past year. What on earth’s going on?

Penny stocks typically carry higher risk than blue-chip companies. This is because they have a much smaller market-cap (sub-£100m), so even relatively small purchases or sales can trigger sharp volatility.

Yet the opportunity can be large. Here’s one I spotted that’s rocketed 246% higher in the last year.

Positive sentiment

I’m talking about Orosur Mining (LSE:OMI). The gold exploration and mining firm has operations primarily in South America, including Uruguay and Chile. Therefore, it doesn’t come as much of a surprise that the rally has been induced by the potential for ongoing projects to move towards a more commercial stage.

For example, a big jump came in August. Orosur reported strong high-grade gold drill results from its Pepas prospect at the Anzá project in Colombia. These results were interpreted as progressing Orosur closer to issuing a NI 43-101. This is a legal instrument setting standards for public disclosure of mineral projects by issuers. For investors, this is a key valuation catalyst for junior gold explorers.

An update in October confirmed things were progressing well. A survey showed “gold assay results identifying a substantial, gold bearing system”.

Another factor that’s helped is the spike in gold prices throughout 2025. It’s up 53% over the past year, which helped Orosur, because any project where gold’s to be found is suddenly worth a lot more.

Granted, the company isn’t at the stage of selling the gold proceeds to realise this benefit. But the fact that the asset being mined has gone up in value has directly helped the share price.

The view for 2026

If Orosur successfully completes a NI 43-101 resource estimate for Pepas (or another prospect), that’s a major milestone that often re-rates exploration stocks. Put another way, if a project significantly increases in value, then the share price should follow suit. We’ve seen some of this already in 2025, but there’s still a large potential for further gains in 2026 for the penny stock if this happens.

I also think that the commodities boom isn’t close to being over. I believe gold prices could keep rallying, based on continued geopolitical concern and general economic uncertainty.

Of course, I’m not pretending Orosur isn’t a very high-risk penny stock. It isn’t generating revenue at the moment, so it’ll always have to refinance and raise capital through the stock or other markets to keep going. At some point, it’ll have to start making money otherwise funding will dry up, and the company could go bust.

Another risk is that the rally‘s being fuelled by optimism around projects, rather than concrete actions. Sentiment can shift very fast with penny stocks, meaning that a sharp share price drawdown can’t be ruled out.

Even with these concerns, I think it’s a stock to consider for investors who understand the risks and are comfortable with them.

The post This penny stock’s up 246% over the past year. What on earth’s going on? appeared first on The Motley Fool UK.

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Jon Smith has no position in any of the 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.

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