This week seems to be more than fruitful for the stock on the CVE. On Monday, AAA set a remarkable trading volume record of 10M shares, never seen before in the company’s history. It also hit a new year-high at $2.310. Yesterday, the buyers’ dominance on the market pushed the price another 8% up in comparison with the previous close. Presently, AAA is traded at $2.250 per share and brings 217% more profit to shareholders than at the start of the year, when it was only 71 cents.
This time the rise is probably related to the recent company announcements. They regard several funds raising activities undertaken by Allana. On Monday, the public learnt that Liberty Metals & Mining Holdings, a subsidiary of Allana’s largest shareholder, has agreed to purchase about 4M company shares for total proceeds of over $6.2M. This is in connection with previously announced by Allana brokered private placement.
Several days before that, the company informed about entering into a bought deal private placement agreement for total proceeds of over $23M.
It seems Allana has secured the much-needed funds, to be used for the continued exploration and development work on its two projects. This has no doubt increased the confidence of investors in the company. As a result, came the impressive shares’ performance in the last two trading sessions.
It does not mean, however, that everything is bright and sunny for Allana Potash. It is not known when the company’s properties will finally come out of the exploration stage and will begin to yield revenue. It is no surprise that Allana continues to incur heavy losses – just for the third quarter of 2010 the net negative income was $867K. If this trend continues, the company might actually go nowhere.
Predicting the future behaviour of Allana’s shares seems not an easy task. We should note that at present the market cap of the company is almost $332M and looks quite exorbitant compared to the net tangible worth of the business. This suggests that Allana is very much overvalued on the market.
