Gediminas Jasionis
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Alder Resources Ltd. (CVE:ALR) (PINK:ARLSF) Starts to Correct Back Down

by Gediminas Jasionis Jan 25, 2012
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alr_chart.pngAlder Resources Ltd. (CVE:ALR) (PINK:ARLSF) gained 86.4% over the past few sessions under heavy trading volumes that were significantly above average during all the run-up.

The price run appeared simultaneously with the annual financial results that the company published on January 20. The company's fundamental situation doesn't look that favorable though:

  • Value of properties got cut down nearly three times to $2.6 million;
  • Working capital position of $1.7 million was less than half of that recorded for 2010;
  • Expenses increased by 20% to 1.8 million.

Correction seems to be inevitable at the current state of the price rally. Overextended rallies tend to lose ground faster than normal ones and the process already started under a comparatively heavy trading volume.

alder_resources.jpgBut there is one more thing in play. Two weeks ago, on January 11, the company announced to have completed a non-brokered private placement of 30 million units priced at 10 cents per share. The proceeds from this offer will be used for general capital purposes, thus easing the situation a little bit. The units each carried one common share along with one warrant which can be exercised at 20 cents per share, which could mean even more capital will be pouring into the business if the price continues to reach higher.

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