The shares of Rockgate Capital Corp. (TSE:RGT) have a very contradictory performance on the Toronto Stock Exchange (TSE) during the last trading sessions. As though this is a stock with two faces.
One day – on Monday – it slumps by 20%; the very next day – on Tuesday – it goes 6.4% up on a record trading volume of over 12.4M shares changing hands. Yesterday’s turnover surpassed eleven times the average for the company.
The dubious behavior of the stock could be possibly explained with the tragedy in Japan in mid-March, which led to a sharp fall in uranium stocks worldwide. Some of the uranium companies managed to recover almost fully after the crisis, others were not that successful. Rockgate seems to belong much more to the second category for now.
The shares were going strong in February when they noted a three-year high of $3.47, and in early March, before the disaster in Japan, RGT was traded precisely at $3.00. Currently, the stock is worth 50% less on the TSE. It looks like the shares still cannot rebound from the bottom where they fell after Japan’s tragedy. Just the opposite, excluding the last session, they continue to regress. On Monday, RGT even sank to a four-month low of $1.30.
Another reason for the contradictory share performance is, maybe, the dissemination of some rather controversial news this week. In a release from yesterday, the company denied the information, published on Monday by “Agence France-Presse” (AFP) and stating the Government of Mali had agreed to suspend Rockgate’s exploration activities at Falea project. The company’s president assured the public that “Rockgate’s exploration and development work at the Falea uranium, silver and copper project continues without interruption”.
Probably, many investors read the discouraging AFP news on Monday, and being disappointed began fiercely selling RGT shares, which led to a sharp fall in the price. Perhaps the next day they were satisfied to read the refutation issued by Rockgate and started to buy the stock even more furiously, which resulted in a record trading volume.
Though RGT is currently well below its early-March levels, there are some positive developments that could eventually come in support of the shares. The company is in a stable financial condition. In the end of 2010 it had $21.8M in cash; in early February it closed a private placement for additional $34.6M. Besides, in February Rockgate acquired additional land at the Falea project in Mali.
If the company wants to recover better in the future, it will have to deal with some problems, namely: the lack of revenue; the significant losses it incurs – the net loss for the last quarter of 2010 was $3.37M; the increased stock dilution: one year ago the issued shares were 67.3M, now they are almost 95M – a rise of 41%.
