Lou Schizas, Schizas' mailbag
Hi Lou,
I have held this stock, Petaquilla Minerals, through its many ups and downs. It recently became a "commercial" mine. Can you please share your thoughts on this junior miner in Panama?
Thanks, Kelvin.
Hi Kelvin,
Thanks for the assignment. Petaquilla Minerals Ltd. got a nice pop in the fall of 2009 as there were a number of changes in the executive suite and a new round of fund-raising putting $12-million into the company's coffers. You are right that the company has moved to commerical production at their Molejon Gold Mine in Panama. Now the question is: Is it a buy a sell or a hold?
The three year chart provides a good view of the aggressive move to the upside on the management changes and that funds raised through a private placement. From this chart there doesn't seem to be too much resistance to a further advance
But you have to look at the six month chart to see the patterns that signaled the move and where we might meet resistance.
The three month chart clearly shows a double bottom forming in late October to early November of 2009. A double bottom is a reversal pattern indicating that the downtrend was about to turn upward. In addition the trend line to the downside was broken as the stock moved through $0.35.
We also have a golden cross on the chart as we came into January of 2010. There does seem to be some slight resistance forming at $0.95 but not a ton.
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On a fundamental basis you have a company that is just increasing production and will have some teething pains to deal with as they get their mine operating at greater efficiency. When you look at the cash cost per ounce in Q1 of 2010 reported at $722.80, you know they will ratchet that down as they push more material through the plant.
Management plans to aggressively explore their mining concession which will provide lots of news releases to drive the stock as results are reported. PTQ is also planning to spin out their infrastructure assets on a one share for each four shares of PTQ owned, which is a nice kicker.
From the indicators that I follow, PTQ looks like it has a good chance for a further advance from these levels.
Happy Capitalism!
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Lou Schizas