Premier Gold Mines Ltd. (TSE:PG) (PINK:PIRGF) will be added to a Canadian market index next week which serves as a good advertisement for their stock. Traders don’t seem excited to hear the news though.
PG will be added to the Toronto Stock Exchange’s S&P/TSX Composite Index on Sep 19. This is a major achievement which required the company to hold sustained growth and have a reasonable share price performance over a long period.
The graduation didn’t have much effect on Premier’s stock performance. PG price is still struggling to overcome resistance around $6.90-$7.05 on what appears to resemble an ascending triangle pattern. Trading volume continues to beat the average for the second week in a row, but the buying pressure is not yet enough.
Premier Gold financial situation is comparatively good for an exploration stage company:
- $34 million in cash;
- $28 in working capital;
- Losses from operations average $2.3 million per quarter;
- Exploration and development expenses eat up another $10.2 million;
- Dilution rate was only 5.6% over the last year.
To raise capital the company cleverly uses flow-through shares, which are more attractive to some investors, and bought deal financings guarantee money flow without disposing Premier to the risks of open market. Premier doubled their share capital since the beginning of 2010 and had attracted $155 million by mid 2011.
