American Manganese Inc. (CVE:AMY) (PINK:AMYZF) had a few recent bumps on the prevailing uptrend that might be interrupted due to the conditions of the recently done funds raising.Friday’s trading volume of 648 thousand was well above the average of 179 thousand. Even though the selling pressure remains comparatively weak, strong trading volume on a red day points out profit taking.
The most noticeable point of resistance above the current price is at $0.485, which was hit in March 2010. It is another 31% up from the current share price, however, the fundamentals might not support such a value and lead to an earlier reversal. The current market cap of over $25 million adds a significant premium to the underlying net tangible worth, which is just over $6 million, including the most recent funding.
American Manganese announced a non-brokered private placement of $2.1 million last week. Units were issued at a price of 30 cent per piece. Related warrants are convertible at 40 cents and are valid for two years. These price levels add pressure to the current market price. The inflated value might lead to sudden collapses if private investors decide to take their easy profits.
Another thing influencing AMY share price is the outstanding letter of intent. Rara Terra Capital Corp. has a LOI with American Manganese to acquire up to 60% of its interest in Lonnie niobium and rare earth property in British Columbia. The transaction still needs the approval of the TSX Venture Exchange.
