Gediminas Jasionis
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Rio Novo Gold Inc (TSE:RN) (PINK:RIVVF) Bounces From The Bottom

by Gediminas Jasionis Nov 3, 2011
rn_chart.pngRio Novo Gold Inc (TSE:RN) (PINK:RIVVF) attempted to spurt up from the recently hit bottom, but without any material developments or other news the rally doesn't seem very strong.

RN stock price went up 17.1% on Wednesday carrying along a trading volume of 851 thousand. That marked one of few such heavy trading days, however, looking at the past performance, it doesn't bode anything special.

Bulls could try to bring the share price up to its 50-day moving average which is currently at 91 cents. However, the stock has never stayed above it over the past half a year and it had seen much stronger buying pressures when advancing.

rio_novo_logo.jpgRio Novo's market cap is $91.1 million, which is rather small compared to its underlying book value of $79 million. That is one of the reasons why the current price rally might succeed in pushing it to the 50-day MA.

The last time RN stock spiked up significantly was nearly a month ago when the company announced assay results from their ongoing diamond drilling program at Almas gold project in Brazil. Back then, traders reacted to findings of up to 2.25 g/t gold mineralization in several holes.

Despite the good news, the stock price didn't go up for long, which means it has even less chance for a sustained rally this time, when there is no news. On the brighter side, it is unlikely for RN market capitalization to drop below the book value, which calculates to support at around 71 cents per share.

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