Prima Colombia Hardwood Inc (CVE:PCT) (PINK:PCTZF) stock price finally started to move up but the breakout is based on events of questionable nature.
PCT rallied for several days in a row and had a major 22% breakout on Friday under significant trading volume of 1 million.
The breakout stopped right at 50 day moving average of 11 cents per share. The candle pattern is currently unclear – looking from intraday perspective, trading simply stopped after the stock hit the current price and failed to breach further up. The buildup in volume does not follow a pattern for a possible follow either since there was no active trading by the end of the last session.
There were a couple causes for the price rally. On August 29, 2011 Prima announced to have completed a non-brokered private placement offering consisting of 39,587,500 units priced at $0.09. The gross proceeds from this offering topped $3.56 million. Units are made of one common share and one share purchase warrant exercisable at 35 cents. Potential dilution from this offering is 35% in the event of all warrants conversion.
The same day Prime filed a financial report for the period ended June 30, 2011. The company depicted a rather questionable financial situation:
- Ended the quarter with roughly $1 million in working capital deficit;
- Recorded a net loss of $2.2 million due to operating and SG&A expenses;
- Year over year stock dilution topped 97%;
- Pulled off $712 thousand net cash flow due to income from financing activities.
Prima has an annual general meeting of shareholders scheduled for September 30, 2011 where their progress should be discussed in more detail.
