The shares of Decade Resources Ltd. (CVE:DEC) are trying to recover from the recent crisis that had led them to a 52-week low of $0.15 last Thursday. They were surely aided by the acquisition of a new property by the company – an event announced yesterday.
The stock climbed 9.4% up during the last session, closing at $0.175. The rise was confirmed by the large turnover of over 1.87M shares, which exceeds more than six times the average for the company.
Yesterday, Decade informed about purchasing ten mineral claims in British Columbia located near the Premier Silbak mine. The new silver property is, no doubt, a valuable asset for the company. Will it, however, manage to save the day and revitalize the stock that has been steadily falling over the last year? The future will show.
Last June, DEC was traded at $0.64, now it is worth 73% less. For now, there are at leat signs that the shares are trying to recover some of the lost ground and to rebound from the bottom. It is probably more important whether they will be able to continue the rise.
The financial state of the company is relatively stable, which might come in support of the share performance too. In the end of January, Decade reported a cash position of $3.2M, and a working capital of almost $3.8M. The company has to long-term debt to worry about.
The negative facts about Decade’s financials include:
- A great dilution of stock – the average number of shares has risen from $23.5M in June to the present figure of $48.6M – a rise of 107%;
- Lack of any revenue. Decade continues to incur losses from its activities.
Probably, the company will have to find other possible ways to secure the funds it needs. For now, it relies primarily on equity financing, something that could increase share dilution too much, as we already mentioned.
Technically speaking, some indicators, such as MACD bullish cross-over, imply the the shares might continue to advance in the coming days. Of course, it needs confirmation. As the chart shows, DEC could find several support levels – at $0.150, $0.155 or $0.160. The stock might possibly encounter resistance at $0.205.
