For the last couple of months, the managers of Bryn Resources Inc (PINK:BRYN) seem to have been doing nothing else but canceling restricted stock. As a result, a total of 63.5 million shares of restricted BRYN stock have been canceled so far with the purpose of increasing shareholder value. However, will this move really serve this purpose, or postpone the inevitable
As seen from the chart, BRYN stock has been on a downtrend since late-July. The two rounds of stock cancellation which occurred on Aug. 30 and Oct. 4, respectively, did nothing to reverse the trend. As a matter of fact, such a reversal only started on Nov. 8 when BRYN soared by 50% up to $0.105 per share. Yesterday, BRYN scored a third positive performance in a row by going up 17% to a five-week high of $0.14. Obviously, this short-term run was enough to trigger a wave of free trade alerts in support of BRYN stock.
Since BRYN has provided no updates with regard to its Nova Scotian property, the current upsurge of BRYN stock has no solid basis to rest on. Indeed, the company’s float and O/S have both shrunk by approx. 50% to 51.2 million and 13.5 million, respectively, which might have pushed the price up for the time being. Yet, one should not forget that the company could always reissue what it has cancelled in either the same, or an alternative form such as freely tradable stock, thus saturating the market.
Even if such a scenario were a coming, it would not adversely affect current shareholders provided that the company makes a breakthrough with its Renfrew Property. The property which consists of 62 claims stretching over an area of 2,400+ acres used to produce gold and ore until the end of the 1930s. So, the big question here is: Is there anything left that is worth exploring for
In terms of financials, BRYN’s condition is quite unenviable as well. As of Jun. 30, 2011, its current assets only consist of $500 in cash. By contrast, the company’s current liabilities are nearing the $800K mark. At this stage, it is unclear how BRYN’s sole employee, who is simultaneously acting as CEO, CFO and Treasurer, will be able to carry out business operations, let alone manage large-scale gold exploration activities.
