Most probably the surge is driven by a release from the beginning of this week. The company announced the largest by far gold discovery in its Pickle Crow mine property in north-western Ontario. The gold has been intercepted in three new widely spaced diamond drill holes.
Obviously, investors were greatly stirred upon hearing the news, and the huge buying of PC Gold shares began. It was additionally backed up by several online alerts on the stock.
Further support to the shares’ rise might have come from the relatively sound financials of PC Gold Inc. As of Sep. 30, 2010 the company reported almost $9M in working capital and cash of $9.55M. Besides, at the beginning of December it raised additional funds after completing a $10M bought-deal offering. Currently, PC Gold has no long-term debt whatsoever.
But things are not so bright as they seem. The company continues to incur losses. For the Q3 of 2010 the negative net income was $285K, and there is a $686K cash loss from operating activity.
Although PC Gold has sufficient capital to meet its current needs, it will certainly require additional cash in the long-run to finance properly the further exploration of the Pickle Crow property.
All these considerations make it hard to foresee how the shares’ price will alter in the future and whether the investors’ enthusiasm about the gold discovery will soon fade out. PKL is entering the overbought area, but we cannot say for how long it will remain there.
