Genco Resources Ltd (TSE:SLX) (PINK:GGCRF) retraced back to the 80 cents zone, and is now staggering at an important support level. Breaking further down may result in heavy percent losses for the stock, but it might as well bounce back up following the prevailing uptrend.
50 day moving average, that’s been working as a support, has been breached as well as the general uptrend, but a sell-off hasn’t happened yet, so there’s a change of SLX bouncing back up. Trading volume faded with the appearance of possible breakdown signs, demonstrating no background for panic selling.
With one mine in production the company can sustain inflated share prices better than purely exploration stage businesses. Yet it’s the first time in two years that it went above 80 cents and there are no reliable guide points above that.
The $15 million funding round, finalized in December, is starting to show the negative side. The constant need for additional capital holds a risk of dilution for shareholders, and Genco is juggling sums in millions of dollars. The money needs to be put to effect for shareholders value to increase. Yet with the cash allocated as a general working capital on two mining locations, there won’t be a quick increase in value and thus the share price could make another large swing down before any meaningful developments occur.
