Traders are starting to lose the initial enthusiasm related to Pele Mountain Resources Inc. (CVE:GEM) (PINK:GOLDF). The buying pressure prevails today, but the volatility that was showcased over the previous two sessions has already diminished with most of the herd leaving to search for better opportunities.
Share price increased 4.2% under a trading volume of 259 thousand, recorded amid the session, which has the potential to go above the average, but was a comparatively slow start of the day. GEM share price bounced up after hitting resistance at 12 cents per share today.
The intial gap up a couple of day ago was caused by the news from the company which stated their Eco Ridge mine rare earths and uranium project in northern Ontario was estimated to hold a 50% pre-tax internal rate of return. Operating costs were calculated to reach $71.33 per ton. Additionally the indicated and inferred resources were increased significantly.
The net present value, calculated at conservative pricing of rare earth oxides and uranium, was calculated to be $1.02 billion at a 10% discount rate. This has put Pele in the centre of traders attention for while.
A day later the company announced their decision to sell Highland gold projects in Ontario to a subsidiary of Prodigy Gold (CVE:PDG) for a total price of $1.8 million. The company will retain net smelter return on some portions the property. The news caused virtually no reaction as their share price continued to roll down.
The current situation clearly calls for consolidation above 12 cents per share since the good news allows for such a valuation to have merit.
