Gediminas Jasionis
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Large Production Order Motivates to Trade Feronia Inc (CVE:FRN) (PINK:FRNFF)

by Gediminas Jasionis May 11, 2011
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frn_chart.pngFeronia Inc (CVE:FRN) (PINK:FRNFF) saw an increase in the trading activity after the company disclosed to have received a significant production order.

On May 9, 2011 Feronia staid 756 thousand oil palm seeds were requested by a West African operator. This was the largest order the company has received to date.

Trading was messed up despite the positivity of the news. Share price went up barely 5%, even though it took out the closest resistance at 60 cents. Trading volume was spectacular though, with 2.54 million shares changing hands over the session it was 16 times more than the average of 154 thousand.

feronia_logo.jpgWith such setup the price is unlikely to advance up very fast, and it also has a close resistance to take out at 65 cents. The vague price action might be the result of recently filled annual results that were published on May 2, 2011. Over 2010, Feronia:

• Increased crude palm oil production by 31%;
• Reduced the net loss for the year to $6.5 million, or 40%;
• SG&A expenses went down to $7.9 million or 29%;
• Ended the year with $8.9 million in cash.

However, the strong financial position came at the costs of diluting the shareholders. The company raised $16.8 million over 2010 by selling equity, which increased the amount of outstanding stock 4.8 times.

The announcement of annual results a week ago received no reaction from traders - share price didn't move at all, nor was there a significant increase in the trading activity.

Feronia Inc. operates as a commercial farmland and plantation operator and is domiciled in the Democratic Republic of Congo.

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