CBM Asia Development Corp (CVE:TCF) (PINK:CBMDF) is looking to drop back down on Monday as the momentum fades on the massive price rally from Thursday.
A monumental share price spike of 31.43% was followed by a slim 6% gain the next day. Trading volume shrunk on Friday and was only half of the 1.45 million recorded on Thursday. It was still 6 times the average of 120 thousand.
The massive gains were a reaction to the gas findings on Sekayu PSC. High saturation of gas was confirmed by MedcoEnergi in one of their wells. Further testing is being conducted and it was reported that small amounts of gas are already being produced on the site.
The news also coincided with the CMB Asia’s completion of a second tranche of private placement under which the company finally sold the whole proposed stock for $974 thousand in total. This further helped to propel the share price.
The financing doesn’t really change the big picture. However, the company temporarily fixed their balance sheets, which was lacking liquid capital and will be able to keep pursuing this potentially profitable opportunity.
The short term technical indicators for this latest rally are rather difficult to put down. Support levels are currently at 23 and 18 cents. The price failed to stay above 25 cents, which was the questionable resistance from the beginning of 2010. Is has now been reconfirmed.
Engaged in unconventional gas exploration and holding interests in coalbed methane projects in Indonesia the company is yet to produce a revenue stream from its activities.
