Last Friday, the stock of St. Eugene Mining Corporation Limited (CVE:SEM), (PINK:STEUF) impressed many investors on the TSX Venture Exchange (CVE) with its large turnover. This is the second huge volume spike after the one from mid-December.
Similar to the volume rise from two months ago, the present surge also came after announcing the resource estimate results from the company’s Amisk gold project. The estimates were provided by St. Eugene’s joint venture partner – Claude Resources Inc.
Unlike the earlier surge, the current one is not accompanied by a huge jump in the share price. On Friday, SEM moved only 5.6% up; in December, it had doubled its value.
There is another difference too – the mid-December volume of 14.9M shares was a record for St. Eugene on the CVE. Last session’s turnover of 7.4M was twice less that figure, but still exceeded eight times the average for the company. SEM was defined by some analysts as one of Friday’s small-cap breakout stocks on the Canadian Exchange.
Unfortunately, the fundamentals of St. Eugene do not seem steady enough and do not speak in favor of future run-up of the stock price. The financial state of the company looks quite feeble:
- The net loss for the third quarter of 2010 was almost $170K;
- At the end of last September St. Eugene recorded no more than $143K of working capital;
- As at Sep. 30, 2010, the average number of outstanding shares was 73M compared to 23.7M one year before that. It means increased dilution risk for shareholders.
Though the company completed a $4M private placement offering just before New Year, it will require more cash to manage its two key projects. Besides, they are still not in the production phase, and it is a mystery how profitable they would be once they reach it.
