Yesterday, SXG went 14% up nearing its 52-week high of $0.83 per share. The close level of $0.81 was 33% higher than the stock price from two weeks ago. Moreover, last session’s turnover was a record in the company’s history. This was a result of the huge insider buying volume, as CVE official data show. Will the shares’ surge continue? It probably depends on whether the insider trading will go on and at what pace.
Samex Mining Corp. is concentrated on the acquisition and exploration of mineral properties in South America, particularly in the country of Chile. Its activities are focused primarily on the search for precious and base metals deposits.
The reasons for the current insider trading are not completely clear, just as it is rather unclear where the stock will go in the coming days – up or down. There are some considerations, however, that do not speak very favourably about the future of Samex.
The company owns abundance of properties, which are still explored for gold, silver and copper. It is far from clear how much resources the projects really possess and how much revenue they could bring. Besides, the activities on these properties require significant spending. It is doubtful whether Samex has enough capital to cover the expenditures. The doubts are additionally intensified by the figures in the financial reports for the third quarter of 2010:
- At the end of September 2010, Samex had only $0.78M in cash and about $1M working capital;
- There was a recorded net loss of $0.26M for the mentioned quarter.
In addition, the market value of the company, which at present is $97M, seems to be overvalued compared to the $11M net worth of the business. Nevertheless, it does not mean the shares are bound to move down. The graphics suggests SXG can meet resistance at the year-high of $0.83 and find support at $0.67.
