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An employee poses with the Archduke Joseph diamond during an auction preview at Christie's in Geneva. The 76 carat diamond is expected to fetch between 15 million and 20 million US dollars at it auctions in Geneva on November 13th. (VALENTIN FLAURAUD/REUTERS)
An employee poses with the Archduke Joseph diamond during an auction preview at Christie's in Geneva. The 76 carat diamond is expected to fetch between 15 million and 20 million US dollars at it auctions in Geneva on November 13th. (VALENTIN FLAURAUD/REUTERS)

Schizas’ Mailbag

Shore Gold suffers along with the sector Add to ...

Hi Lou,

Can you comment on SGF?

Jules

Hey Jules,

Thanks for the assignment.

This will be the second time that I have taken a look under the hood of Shore Gold Inc. The first time was on Oct. 23, 2009, when the shares were trading for $1.01. Toni wanted to know why the shares had pulled back from $1.34. An examination of the charts suggested that the best outcome was a trade that seemed to be forming around a cup and handle pattern but that proved a false signal. It was advised to take profits when available.

More Related to this Story

Further texture on the back-story includes a stock that hit a high of $7.65 on Feb. 28, 2007, as the excitement surrounding their diamond deposit in the Fort a la Corne area of Saskatchewan crested. The company has advanced their case since then, identifying 34.4 million carats and a 20-year life of mine resource up from 20 million carats and a 12-year life of mine in 2009. The deposit is currently at the permitting stage and now management has to cycle up development financing.

When SGF released their third-quarter 2012 results on November 8 it was reported that they had $9.5-million in cash which will have to be spent wisely to get to the next phase in the development of this opportunity to harvest prairie ice.

Another run at the charts will provide some assistance in evaluating the current case for this stock.

The three-year chart indicates that a long and wrenching decline began in 2011 and ran to a rock bottom near $0.17 in July of 2012. I would say that most of the selling has come from a general malaise that has descended on the junior mining sector as opposed to management issues at the firm. The stock did catch a bounce to $0.34 by mid September but couldn’t sustain the advance.

The six-month chart indicates the resistance along the 50- and 200-day moving averages that has stalled every attempt to move higher. The MACD and RSI both signalled the top at $0.34 notifying investors that it was time to hit the silk. There are currently no patterns that I can identify that would suggest a reversal of the downtrend.

Make it a profitable day and happy capitalism!

Have your own question for Lou? Send it in to lschizas@globeandmail.com.

 

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