The recently announced improvements in resource estimates obviously didn’t satisfy the shareholders of Yukon-Nevada Gold Corp. (TSE:YNG) (PINK:YNGFF) as their share price went down radically on Wednesday.
YNG stock collapsed moving down by 18% and extended the downtrend in a parabolic move. Trading volume was 2.22 million, or 2.5 times the average of 815 thousand. Usually such a price action means that correction is underway once the volume begins to fade. There is a vague support at 37 cents, but the major one at $0.40 has already been breached.
Positive news was published just before the move, but the reaction was inversed. On May 3rd the company announced to have increased the mineral resource estimate for Jerritt Canyon gold mine in Nevada. Indicated resources were increased 30% from 2007 levels to 1.46 million ounces and measured resources were 1.08 million.
The news basically worked as a catalyst for the previously disclosed contradictory financial results for the year end 2010. Published at the beginning of April, the report then sped up the downtrend by showing that the company’s performance hasn’t really improved:
- Working capital deficit was $38.6 million;
- Cash position was only $2.4 million;
- Gold sales went up significantly to $71 million, but the gross profit margin remained negative;
- Incurred $93 million loss for the year 2010, compared to $42.6 million for 2009;
- Stock dilution was 90.7% over the year 2010;
- Yukon-Nevada issued $35 million net worth of shares and debt to cover expenses and liabilities.
