Thursday’s turnover of over 7.3M shares was around four times the average. EPO managed to climb by over 17%, closing at $0.54 per share. What is more, the stock hit a new 52-week high of $0.56 during the day – this could be defined as a resistance level for the shares too.
As there are no new announcements to explain this surge, we might suppose that the shares are probably rising speculatively. Maybe some investors are trying to take quick profits from their bids on EPO.
When there are no new developments or other relevant information, the company’s financials are one of the few left reliable data resources. The latest filed reports for the Q3 of 2010 show positive trends compared with the relevant period of 2009. This speaks in favour of future appreciation of the shares.
- The net loss was 30% lower than in the third quarter in 2009;
- At the end of September 2010, there was a working capital surplus of $3.92M in comparison with just $0.63M one year before that;
- As at Sep. 30, 2010, Encanto had $4.03M in cash, a $3.5M increase compared to the relevant period in 2009.
As for the future behaviour of the stock, we should note that there are several factors that might hurdle the advance and even bring it down. One of them, for example, is the delay of the much anticipated by investors NI 43-101 resource report on the company’s Muskowekwan First Nation Prospect. It was planned to be delivered in January, but is obviously still not ready. It is required in order for a further Feasibility Study to be implemented. This will require substantial expenditures that Encanto has to cover. The current delay of the NI 43-101 makes things even more unpleasant for the company.
Still, the positive factors around Encanto Potash clearly prevail over the negative. A big slump of the shares in the near days looks unlikely and illogical, although during the last session EPO lost about 5.6% of its value.
