Friday’s 25.6% surge in the stock price and the large trading volume of almost 2.23M shares are quite notable signs for the huge positive movement of the stock. The spike was perhaps triggered by the acquisition of two iron deposits in the region of Nunavik in northern Quebec. Unfortunately, the rise of the stock did not last long. Yesterday, ZNR dropped 15% down, falling back to $0.23.
Zone Resources is actually dealing with evaluation of potential oil and natural gas projects for future opportunities and development. At present, iron has become of top priority for the company. Last week, in two consecutive releases, Zone announced its intention to acquire two iron projects: the Moore-Ross deposit and the Girard Iron Ore project.
The new acquisitions led the shares to a new yearly-high of $0.285 on Friday. As it seems, investors reacted to the news on the last days of the past week. It is doubtful, however, whether the stock can start advancing again in the coming days. The financial reports, filed yesterday on SEDAR, reveal some not so pleasant data such as current assets of only $70,650 and a net loss of $0.63M for 2010.
In addition, we must take into account the huge stock dilution – the weighted average number of shares has risen from 3.7M in 2009 to 19.6M in 2010. Besides, Zone has earned no revenue so far, as it has not advanced to the production phase yet.
Nevertheless, the outlook for the company does not look bad at all, having in mind that ZNR was traded around $0.10 at the start of this year. At present, it is worth more than double this value.
