Periodic spikes one after another. This is so typical for the shares of Arco Resources Corp. (CVE:ARR), (PINK:ARRXF) on the Canadian market. The stock simply loves to surge. ARR has produced six spikes over the last six weeks, the latest one was yesterday.
Unlike the previous jumps, this one was confirmed by a large turnover beating almost eight times the average. The stock soared 23% up, on a volume of approximately 2.9M shares. During the session, ARR marked a six-month high of $0.085 and finished the trade at $0.080.
We could assume that several factors are related to the current surge of the stock. The latest company announcement was from this Tuesday when Arco announced the completion of a non-brokered private placement for gross proceeds of $480 thousand. It might be possible that some traders reacted to this positive event with a little delay.
As official data indicate, probably another factor responsible for the shares’ behavior was insider activity from Mr. Sheldon Inwentash. Mr. Inwentash is not an ordinary man. He is well-known as a Chairman and CEO of several big Canadian companies, such as Mega Uranium Ltd. and Pinetree Capital Ltd.
How will the stock perform from now on? This is hard to be foreseen. The above-mentioned placement comes just in time for the company. Is it going to be enough? The latest quarter statements reveal that Arco is not exactly flourishing in a financial aspect.
Not counting the $480 thousand financing, the corporation had only $40 thousand in cash at the end of January. Arco has earned no revenue and has recorded a net loss of $0.52M for the nine months ended Jan. 31, 2011. Perhaps, the need for capital is one of the reasons that make the company’s directors sell some of Arco’s properties. In late March, the corporation signed a definitive option agreement with the Australian company Zodiac Capital Ltd. for the Tres Hermanas claims in Mexico. Pursuant to the contract, Zodiac will acquire 90% of the deposit over a three-year period for cash payments of $500 thousand. In addition, Arco will receive a 1% net smelter royalty on any production from the property.
