Golconda Resources Ltd. (CVE:GA) (PINK:GOLCF) stock price gapped up and pulled in a trading volume of 965 thousand on Wednesday, which significantly topped the average 86 thousand. However the heavy action only lead to a heavy price fall on Thursday.
This was inevitable since the price had spiked up randomly and, although in line with general volatility, did break above its 50 day average, challenging the downtrend without the proper support from news front.
The recent updates were not very important. The company said on January 4 they intend to settle debt with David E. Mullen who is employed as a director of the corporation, as well as with one principle shareholder. The sum will total $1.6 million and will be paid by issuing 32 million common shares. Since the price of each of those shares calculates to 5 cents the stock also gained some value on the market. The newly issued stock will have a 4 month hold period.
Approval from the Toronto Venture Exchange will be necessary for such a payment. Dilution to other shareholders in this case will be 29.55%.
The company recorded $357 thousand net loss during the third quarter 2011 and held a working capital deficit of $5.2 million. The payment in stock was a natural way of compensation in such a situation.
