Different people, different tastes. Some prefer to live a calm, quiet and predictable life. Others yearn for adventures, risk, quick earnings, power, high adrenalin, etc.
Most investors probably belong to the second category. That is why they are perhaps not greatly impressed by the recent performance of AM Gold Inc. (CVE:AMG), (PINK:ACERF) stock on the TSX Venture exchange.
Over the last month, AMG has been floating in a rather narrow trading range – between $0.40 and $0.48 per share. Last Friday, it closed at $0.45, ending the week just where it started. It is still unclear for how long the stock will remain so quiet, almost asleep.
Might this be a calm before the storm? It could be. The tight and narrow bollinger bands perhaps foretell that a huge change in price might just be on its way. Investors should be on alert because in case this happens, they could yield a profitable trade.
There were few company developments announced last month. Obviously, they did not stir the public much. Consequently, the shares remained so calm on the market.
In early February, AM Gold informed about commencing an intensive 2011 exploration program at its 100% owned Pinaya Gold-Copper Project in southern Peru. Ten days ago, it announced the termination of the letter of intent with Cappela Resources Ltd., under which the two companies should have combined.
The present market cap of AM Gold, which is about $24M, seems relatively high – it surpasses about 2.75 times the net tangible worth of business. This means that, probably, there is not much room for a substantial rise of the share price in the future.
On the other hand, the company is financially stable, with no long-term debt and a working capital surplus of $2.138M as at Sep. 30, 2010.
However, if AM Gold does not start earning revenue from its projects soon, things might become a bit worrying and distressing. The company continues to incur significant losses. For the third quarter of 2010, the net loss was $2.98M, an almost 500% increase over the figure from the previous three-month period. If this trend continues, AM Gold might find itself in trouble indeed.
