Finally! The miracle happened! Having been dropping heavily over the last 1.5 years, the shares of Bravo Gold Corp. (CVE:BVG), (PINK:BVGIF) made a giant upward step yesterday on the TSX Venture Exchange (CVE). Not only this, they started their come-back with a trading record. What a way for the stock to begin its recovery!
We shall first present the facts and then the causes for the surge of the stock. In yesterday’s session, BVG jumped by 40% and finished the day at $0.105. The volume spike was even more striking than the price run-up. More than 12.7M shares were turned over on the CVE, which is an impressive trading record for the company. This made BVG the second most demanded item on the Canadian Exchange yesterday.
The stock was also among the top percentage price gainers from the previous close. The most obvious reason for the huge advance of the shares is a company announcement from yesterday. Bravo disclosed an updated resource calculation for the Homestake silver deposit in British Columbia. The new resource report, completed by Roscoe Postle Associates Inc., is NI 43-101 compliant. As the company informs, it indicates about 100% increase over a previous mineral resource estimate made in 2010.
The good news was able to aid the stock bounce off the bottom to which it had fallen in mid-March. Only three weeks ago, BVG had decayed to a five-year low of $0.07 and no signs were evident that the shares would begin to recover any soon. It is still questionable, however, whether the stock will manage to continue its come-back, or the favorable effect of the announcement will quickly fade away.
The latest financial statements, filed by Bravo in the end of March, look somewhat positive, which speaks in favor of the shares:
- At the end of January, the company had more than $2.77M in cash and a working capital of $2.3M;
- Bravo Gold has no debt of any kind.
Besides, the company looks underestimated by investors. Its present market cap is $17.2M, while the net worth of business is $32.3M. This probably implies there is enough space for further rise in the share price.
There are also several negative facts regarding the company. Bravo reported a net loss of $0.7M for the six-month period ended Jan. 31, 2011. Moreover, cash and equivalents decreased by $1.28M during the quarter ended Jan. 31, 2011.
The shares have a very long way to go till they climb to the old levels and recover their old glory. In the beginning of this year, BVG was traded at $0.14 per share; at the start of 2009 the stock was worth $0.6. Based on these numbers, you can draw a conclusion how the shares have been doing over the recent years.
