The shares of Andean American Gold Corp. (CVE:AAG), (PINK:ANMCF) remain calm on the TSX Venture Exchange (CVE). Unstirred by the newly issued financing news, the stock even witnessed a slight fall during the last session.
Yesterday, AAG finished at $0.880, losing 2% from the previous close on a more than humble turnover. What is typical about Andean’s share performance, are the low trading volumes. The average turnover for the last 30 days is less than 211K shares. It seems the company’s shares are not in great demand by investors. Probably, this is something that will have to be improved in the future.
The recent financing news released by Andean obviously did not help the stock rise. A week ago, the company completed a $15M financing. This was made in accordance with a deal between Andean and Trafigura Beheer B.V. Under the agreement, the Dutch firm Urion Minig International B.V., Trafigura’s wholly-owned subsidiary, acquired more than 19.5M common shares of the company at an agreed price of $0.77 per share.
This did not manage to support an upward movement of the shares. What is more, other recent news indicate there is some kind of a mess around the company at present.
In the beginning of February, Andean informed that a review of the properties held by its subsidiary Sinchao Metals Corp. has shown that four of the Sinchao assets were not properly registered by the former owner. Consequently, Sinchao does not have valid ownership of the properties.
Andean further comments, it is taking steps to remedy the discrepancies, but “there are no assurances that these steps will be successful”. How does it sound to you? Will investors be highly attracted to a company that cannot register its own assets properly?
However, there are also positive developments, which might help the share price climb in the future days. Andean seems financially more than stable. At the end of last year the company had a solid cash position of over $14.7M, not counting the fore-mentioned $15M financing.Still, Andean will have to make further efforts to diminish several negative trends regarding its financial state. The net loss for the quarter ended Dec. 31, 2010 was over $1.5M, and the accumulated deficit at the end of last year exceeded $62.6M. These pessimistic results need to be favourably reversed if the company is aimed at success.
