ARTICLE
"If only it was January again!". Perhaps this is what managers of Petaquilla Minerals Ltd. (TSE:PTQ, PTQ message board), (OTC:PTQMF) yearn for at present. Back then, the shares had reached a two-year high looking stronger than ever.
Now this is history. Fortunately, sometimes history repeats itself. Sometimes, but not always. Especially on the stock markets.
It looks like the stock of Petaquilla Minerals Ltd. was unable to withhold for long the high price levels it had climbed to in mid-January. For a month now, the shares have been steadily going down. Since mid-February, they have lost 31.5%, and the fall still continues.
What is more, the stock is depreciating on rising volumes. This is principally a bearish sign and suggests that the decline might probably go on in the coming days. Yesterday, PTQ moved 6.5% down on twice the average turnover.
This negative performance of the shares was not at all disturbed by a positive company announcement from three days ago. Then, Petaquilla informed about successfully completing Phase 1 of the NI 43-101 compliant mineral reserve update for its Molejon Gold project.
The company festively informed to have mined a total of 743K gold ounces of proven and probable reserves at the property. It represents a 61% increase over the reserves calculated as of Oct. 1, 2010, production cut-off. Sadly, the news did not manage to impress traders enough.
Please, after all you have read so far, do not remain with the impression that Petaquilla is in big trouble. The current downfall, as we mentioned, comes after a period of very strong upward move of the shares on the Toronto Stock Exchange. The present stock price is still 181% higher than that in July.
In addition, we should mention that Petaquilla has a relatively stable financial state. In the end of last November, it reported $7M in cash, and in early January announced the closing of a $32M private placement. This gives the company a solid financial base.
Petaquilla_-_Logo_2.pngNevertheless, Petaquilla looks presently overvalued on the stock market. According to TMX official data, the market cap of the company is $153M, which is well above the net tangible worth of business.
This means that probably the January stock price has been rather inflated and hence the downfall we have been witnessing over the last month. Event the current price looks high and is not supported by the company's fundamentals.
However, only the future will show if and when the shares will leave the dark shade under which they have been staying since mid-February.
AI
