The stock of Pele Mountain Resources Inc. (CVE:GEM), (PINK:PMNHF) once again made a huge impression on the TSX Venture Exchange (CVE). Last Thursday, it was a volume hero and among the most demanded by investors items on the Canadian market.
This happens shortly after new developments, related to one of the company’s main properties, were released.
On Wednesday, Pele reported to have completed a NI 43-101 Resourse Estimate for its Eco Ridge Mine in Ontario. For the first time it includes both uranium and rare earth oxides. The NI Report shows almost 52M pounds of Indicated total rare earth oxides (“TREO”) plus an additional 96M pounds of Inferred TREO. To these resources we should add 15M pounds of Indicated and 31.4M pounds of Inferred uranium oxide.
On Thursday, GEM climbed 7.7% up, on a big turnover of almost 6.3M shares. This beats three times the average trading volume. The stock finished the week at $0.49, remaining unchanged from the previous close.
Pele has the advantage of being in the rare-earth sector, which is highly attractive and speculative at the moment. This is driven by the China’s reduction of export quotas, that has resulted in large demand and high prices of rare earth metals.
The announced promising resource estimates at the Eco Ridge Mine drove the share price up. It is unknown for how long though.
The company’s current market value of $65M seems a bit exorbitant compared to the $18M net worth of the business. Besides, the financials of Pele do not in speak support of a significant rise of the stock price in the future.
For the year, ended Sep. 30, 2010, there was a net loss of $2.68M, while the operating cash flow was $1.08M in the negative side.
Probably, Pele will be much better when it leaves the development stage and starts to yield a profit from its activities. This might compensate the huge losses incurred by the company so far.
