Reality 2: The breakdown is coming Over and over people are saying the same explanation why this stock is a good investment but those people just buy at higher prices. Look, they are not going to start drilling until the next summer. What happens before that time...? They have $900,000 to spend so they complete this year’s work. Makes no difference.
They drilled targets but missed them. A real program on the VG Zone, they are going to need millions of dollars to do 5,000 to maybe 15,000 metres. If they have good results the stock is going to go up. But that is a long time away. If they start in late spring results are not showing up until the fall just like right now. Basically anyone buys now spends 30¢ share that will not see drill results for maybe one year. So you don’t think shares are going to be cheaper over the winter when nothing happens and the tax loss selling gets stronger…?
So what happens from now to then…? First they got a private placement that opens up free trading on Wednesday that was 35¢. So probably people will sell because they only lose a few cents now but won’t hold shares waiting over the winter. Plus they have the warrant for 80¢. So if the stock goes up from next summer’s drillings they are going to make good money anyways. So no point to hold because the shares could be cheaper before January. They also have the flow through shares with that so those people probably sell too because they make money after the tax if they sell above 23¢.
So basically the retail shareholders have 1 day to sell before this selling comes against them and price goes down more into the 20¢ area.
Next they do a private placement in the bad market to get money for next year’s drilling. So more shares on the market that will all be liquid months before the drill results arrive.
So I tell you again this stock is going down for a while. We have a dead cat bounce right now but there is no reasons over the winter for the stock to go up. They have a discovery but they need millions and maybe one year to get drill results. All the time the private placement shareholders going to be free trading plus the warrants. No point to lose money over the next months I can buy it cheaper after the bottom and the chart turns around. I see you again in the 20¢ range.
BD