Passport Potash Inc. (CVE:PPI) (PINK:PPRTF) stock price is back to the lower part of the channel, providing an opportunity to swing trade the stock.
The price has been up since November, when the company announced a letter of intent with the Karlsson Group, Inc. for exploration and development of Holbrook Basin potash project. Boart Longyear M&E Drilling Services was selected to lead a drilling program on the project and mining operations commenced since mid-December 2010, despite the fact that a definitive cooperative agreement with Karlsson has not been negotiated to date.
Passport’s business is struggling financially and doesn’t have much tangible worth behind the current $11 million market cap. Karlsson Group was named as the ones responsible for bringing in technical and financial resources for the project, thus obstructing the proper valuation of Passport’s business and seemingly allowing to ignore their lack of working capital. As of August 2010 the company had little to show on the records:[BANNER]
- Only $77 thousand in cash;
- No revenues;
- Losses constantly covered by issuing and selling additional stock;
- Net tangible worth is only at $1.1 million.
There is not much more space for share price appreciation, based on fundamentals, however the existing channel should hold because of the new developments in play and price bounce is a good possibility at this point. Trading volume dropped yesterday, showing that selling pressure is fading. Price is currently near a support level, just above 25 cents, that has been tested a couple times already and held pretty well. Even in case of breakdown, there is a nearby support at $0.21 that could potentially prevent quick and large scale drop.
