Ekaterina Zelenkova
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Homeland Energy Group Ltd. (TSE:HEG), (PINK:HMDEF) Stock Advances On Mitigated Financial Stress

by Ekaterina Zelenkova Oct 14, 2010
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HEG_price_chart.jpgYesterday, Homeland Energy Group Ltd. (TSE:HEG), (PINK:HMDEF) stock advanced on the released by the company update. On the news, some fueled with optimism investors unlocked the next and this time upward move of HEG stock.

After the huge spill this summer, these days HEG shares are leaving slowly the area of the "bottom stress". The main reason are the active measures of the company's management to ensure the mid-term financial stability of the company.

At the end of last month, Homeland Energy Group Ltd. announced the completed by the company debt financing for US$29 M, provided by GMR Energy.

Yesterday, the company said in its corporate update that the proceeds of the above mentioned loan were utilized to repay the outstanding loan owed by Homeland Energy Group Ltd. to Nedbank Limited.

As the company's CFO stated last month, "The completion of loan transaction was very critical for Homeland Energy, to ease the financial stress on its operating mines and to advance and develop its mining projects in South Africa".

Although the company's balance sheet showed at the end of this June net fixed assets worth $29 M, short-term debt of $31 M and improved but still negative operating income for the last five quarters, maybe investors got inspired by the promising plans for production and development. Thus, the jump up of HEG stock found support from investors' side. But all these numbers still raise the question, to what extent the new loan will solve the company's financial stress.

And the next HEG_from_the_site.pngquestion is, for how long will the financial stability be guaranteed, since the loan from GMR is for an initial term of one year and can be extended for another two years.[BANNER]

Yesterday, the shares of Homeland Energy Group Ltd. surged 33.33% on a volume of eight times the average volume of the stock.

From the date of the first release related to the secured debt financing up to yesterday, the optimism of both investors and shorters has shot HEG stock up. In that period, the share price added exactly 100%.

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