These days the shares of Adanac Molybdenum Corp. (TSE:AUA), (PINK:AUAYF) made substantial progress in terms of value. Only yesterday they appreciated by exactly 22.22% on the Toronto Stock Exchange (TSE) and on the American OTC market. This performance comes just as the company filed with SEDAR its audited financial reports for the fiscal year ended Apr. 2010 and also its unaudited interim financial statements for the years ended July 2010 and Oct. 2010, respectively.
On the TSE, the stock doubled its price over a week, closing yesterday at $0.110 per share. During the session it marked a 6-month high of $0.115 as well. What is more, this run-up was confirmed by a heavy trading volume that surpassed five times the usual for the company turnover during the last month.
The filed financial reports reveal some worrying for Adanac Molybdenum results. At the end of October 2010, the company’s total liabilities outweigh its total assets by almost $46M. The net loss for the quarter was over $7.5M and there was a negative cash flow from operating activities amounting $729K, which is almost 56% higher than the one for the corresponding quarter in 2009. If there is something encouraging, this is the available cash of $6.5M. At the end of October it was about $2.3M.
It is therefore a little astonishing how such financial results could have led to the current surge of the stock. Perhaps there are some other forces that might have driven this run-up. Probably it is a case of a speculative stir of the shares, which will not last much longer. Besides, AUA is already overbought and this implies that maybe a decline is about to ensue.
The mentioned discouraging financial results can only press the price downwards, in case some dramatic change does not occur. What is more, the Ruby Creek Molybdenum Deposit, the company’s main property, needs additional project funding for its further development.
