The first month after silver switched to gold could be called successful, but unfortunately not for Gold American Mining Corp. (OTC:SILA) business, in which nothing has changed. Only the stock entered the new month with a number of new promoters on board.
The regular “Special Alert” SILA keeps catching the eye of promoters as a stock that can be easily and successfully promoted. Only yesterday seven different stock promoters disclosed their engagement to work for the appreciation of the gold mining stock, for which they receive compensations between $25,000 and $90,000 in cash. The effects are still to be seen, since yesterday the stock lost 2.13% to close at $0.92 on high trading volume.
Though, Gold American follows duly its PR strategy as well and thus it looks like nothing can happen to the stock right now, especially after the July promoting provided enough of support levels. According to the SEC data base, there are no actual updates about the company since the last time we spoke about SILA, but the updates are being presented in a much more attractive for traders way, namely in press releases.
Last Friday for example, Gold American Mining announced to have secured $7.5 million in equity financing, which the company plans to use in further acquisitions of mining properties, as well as for the further exploration and development of existing properties. A week before that, investors were also not deprived of the usual vague “progress update” on the Guadalupe property.
According to the latest financial report, for the nine months ended this April the company received $200,000 from the issuance of common stock, whereby 333,333 shares were issued for cash. Obviously, the market calculated how many shares will have to be issued to raise $7.5 million and the price decline of the stock on the day of the announcement looks like an adequate reaction.
But even if the future profits that the deal might provide sound quite fancy, the possible dilution looks really possible. Because with its current financial condition Gold American Mining couldn’t even start working on that Guadalupe property, which as we previously reported, is still just an unaffordable option. That would be at least the logical explanation for last week’s pull back, ruling out the speculative shorting effect on the stock.
