TAON magnificent soar from yesterday resulted in a total 328.57% higher closing price of $0.03 and the trading volume of over 52 million shares was the highest in the past decade. In the middle of October the company announced a letter of intent to acquire a new gold and platinum project in Colombia, but the information remained unconfirmed. The provided update last Thursday only repeated the already known, but it looks like this week some speculative announcement have been spread out.
TAO Minerals had minor $72,000 of cash reserves at the end of July and have not done anything else than organizing and planning their business for their six years of existence, but this week traders are probably expecting the filing of the report from the evaluation of the property to be acquired, or believed for some reason that TAO have received $300,000 in cash to start production at some of their other properties.
None of that can be confirmed, but it is almost certain that even if the LOI becomes a real deal it will bring in excessive dilution. It is the company’s common practice to pay with shares for the settlement of its debts and accounts payable and for services received. The latest cash has been provided in the middle of August also in the form of debentures due in February 2011, convertible into shares of common stock at a 50% discount on an average estimate of the current market price. After the 200-for-1 share consolidation last September, there were 2.76 million shares outstanding at the end of January. Currently, the number is 76.9 million.
Also interesting is that in May this year the company signed an investor relations agreement to provide marketing, promotional and investor relations services through November 1, 2010. Of course, part of the compensation was the issuance of 100,000 common stock, which however had not been issued as of October 11, 2010.
