Share price of Matamec Explorations Inc. (CVE:MAT) (PINK:MTCEF) burst up on heavy trading volumes over the past couple of days and is possibly heading for a breakout.A trigger for this rally could be assigned to the news issued on April 7, 2011, stating that Matamec published a 3D animation that has been commissioned from SGS Geostat. The animation, featuring 3D views of drill holes on the company’s property for drilling done in winter 2009 and summer 2010. More drilling data is being received for the period of winter 2010 – resource estimates will be revealed after it is evaluated.
Seeing is believing. Traders proved this expression to hold true – MAT share price added 40% after the trading community saw the potential of Kipawa HREE-Y-Zr (Heavy rare earth elements-Yttrium-Zirconium) deposit in 3D. Trading volume was more than 6 times above the 90-day average – a strong indicator for a potential breakout.
The most stubborn resistance will be met at 64 cents per share. The level was challenged on Tuesday – intraday chart shows the trading near this level went on for roughly an hour just before the closing. A lot of selling pressure will be seen here today, but if morning panic doesn’t kick in, price action could lead to a beautiful breakout.
The company’s fundamental situation is impaired at the moment – their underlying business value is ten times smaller than that assigned by the market participants. MAT relies on new stock issuing to cover their expenses and operates with considerably small capital budget. Considering these fundamentals, the $73 million market cap appears to be supported only by their findings in Quebec rare earth mineral property and a general demand for REEs since China is cutting of their exports.
