Yesterday, on the Toronto Stock Exchange (TSE), WLC jumped by almost 12%. The turnover was huge too – more than 1.195M shares changed hands, or three times the average. The stock had strong performance on the American OTCQX market too, where the volume marked a one-year high of 752K shares traded.
Apart from the usual speculative motive, there are also other factors that might come in support of the shares. The first days of February gave Western Lithium reasons to celebrate. The company managed to list its shares on the Toronto Stock Exchange, considered to be the senior Canadian Exchange. It also qualified for trading on the prestigious OTCQX market, the premier tier of the American over-the-counter market.
The latest filed financial reports for the year ended Sep. 30, 2010 indicate positive trends for Western Lithium:
- The working capital was $14.35M at the end of September 2010. One year before that it was $5.91M;
- On Sep. 30, 2010 the company had cash and equivalents totalling $14.73M, a jump of 125% from Sep. 30, 2009.
There are, however, several negative factors which could lead to a down move of the share price in the future. The company is still in the process of making a pre-feasibility study at its lithium deposit in Nevada, USA. For this purpose, it hired last January the services of Tetra Tech Inc. It is clear, there is still a long time to go till the project starts bringing revenues. A lot of expenditures will have to be made in the coming months too.
Besides, there is significant risk as well. As stated in the company’s financial statements, “there is no assurance that an economic mineral deposit will ever be discovered and subsequently put into production”.
Western Lithium will probably have to make harder efforts if it wants to be more successful on the stock markets. For now, it has made quite a progress by jumping to more prestigious market tiers. However, the company owns only one major project in Nevada, and there is no guarantee if and when it will become profitable.
