We singled this stock out as one of the few that would NOT rebound. More recently we took the optimistic side and expressed the view that a small bounce might be forthcoming. So far this has not happened. Yesterday the company announced that Geotech in Aurora (and Brazil) , Ontario will do areal geophysical surveys, more or less like flying a large metal detector over the land by helicopter, to more properly define the location and quality of the ore body. The transaction with Pacific Road is amended (delayed) and made subject to the results of this survey. The phase 1 obligation to buy 2 mln. shares for $2 a piece seems a little out of touch with reality. Combined with warrants this would have added about $7.5 mln to the company’s war chest. Pacific Road has already acquired 1.9 mln. shares in the open market and is allowed only 1.1 mln. more. Given the company’s burn rate and its cash position and the probable limited availability of additional financing we would stay away from this stock.
In pure EW terms the pattern appears to be that of a double a-b-c. The bottom would be somewhere between here and 20 cents, where the stock was 2 years ago. From there a good bounce may, in fact, develop. The RSI and MACD do seem to support that view.