On Friday, the shares went 9.6% up on a turnover of more than 1.34M. This surpasses 23 times the average volume of 58,000. In the end of the day, AZ was traded at $0.40. It is below the value that AZ had at the start of the current year when the stock was worth $0.48.
No new company developments have been released over the last 10 days. This means we have officially nothing to explain the volume surge. What might have risen investors’ interest then? Possibly, a late reaction to an earlier company announcement. Increased shorter’s activity is another probable reason.
The latest news that Armistice spread out was from mid-May. The corporation provided an update and a progress report on its pre-production activities at the McGarry Mine. Maybe, some traders have now appreciated the encouraging facts contained in the announcement. Armistice states several times how “pleased” it is with the ongoing operations on the mine.
The company continues to employ people on the deposit – their number is expected to reach 100 by the end of 2010. Perhaps, it is of greatest importance that Armistice is sure to “remain on track” to achieve its main goal – to commence gold production in the fourth quarter of 2011. The corporation’s directors expect the mine’s gold output to rise gradually and to reach about 600 tons per day.
The stable financing position of Armistice is another factor that speaks in favor of positive stock performance in the future. In the end of March, the company had $9.42M in cash and a working capital of $5.38M. Besides, in late March the corporation closed a $15M debt facility, thus securing “sufficient capital to fund its mining and production programs” on McGarry.
The negative moment in the story is that such kind of financing might greatly increase the indebtedness of the corporation. This is related with possible future liquidity risks.
Of course, in case gold production really starts in the end of this year, Armistice will have little to worry about as revenues will begin flowing.
