Borislav Tonev

Pershing Gold Corp (OTCMKTS:PGLC) Sliding Down

by Borislav Tonev June 12, 2013
PGLC.pngYesterday Pershing Gold Corp (OTCMKTS:PGLC, PGLC message board) ended the session with trading volume 4 time higher than the average for the last three months and it closed the day around 4% below the previous value. While a 4% loss is not that unusual for a penny stock, the volume caught our attention and so we decided to see what's going on.

The paid promoters seem to have forgotten PGLC which, considering the results of the previous pump, is a good thing. The campaign for them took place back in March 2012 when the ticker reached nearly $1 per share, but a few days later, it had already slashed around half of its value.

Now though, there's no pump and the people who are willing to see the stock fly should only rely on information about the company operations. At least for now. And it would seem that there are some good news. On May 30 they announced that they have done some more testing on their Relief Canyon property and things seem to be looking up. The news came out about an hour before the start of the trading session, but surprisingly, it didn't catch the attention of the traders. While volume was above the average, the ticker gained no more than 9%.

It's even more baffling when you consider the fact that, for a penny stock company in the exploration stage, they are doing pretty well in terms of financials. Here are the figures according to their latest quarterly report covering the first three months of 2013:

  • cash: $2 million
  • current assets: $2.3 million
  • current liabilities: $1.3 million
  • no revenue since inception
  • quarterly net loss: $3 million

When we checked out the 10-Q we started wondering: "How come they have so much cash when you have in mind that they have not generated any revenues ever since they started?". The answer is found further down in the report.

4PGLC_logo.pngPGLC decided to leave their sports and entertainment business back in September 2011 and since then, they have been solely focused on mineral exploration. They made quite a lot of acquisitions of various mining claims but it would seem that they later decided that it wouldn't be viable to develop all of them. That's why PGLC sold most of rights to other publicly traded penny stock companies like Valor Gold Corp. f/k/a Felafel Corp (OTCBB:VGLD) and Marathon Patent Group Inc f/k/a American Strategic Minerals Corp. (OTCBB:MARA). Because VGLD and MARA didn't have the necessary cash to pay for the claims, PGLC received some shares instead. Consequently, those securities were sold in order to raise some working capital and that's how they managed to come up with such a strong balance sheet.

There is one problem, however - all the VGLD and MARA stock is now gone and from here on, PGLC will need to look for alternative ways to raise money. If they don't succeed, the Relief Canyon project will remain unexplored and the stock will most likely take a tumble. If they do and if the press releases are correct, on the other hand, they could see some substantial growth. That is definitely the biggest risk you need to consider before investing any money in PGLC.

Comments 1

1. Guest
July 03, 2013, 12:14PM

Quotes I don't like this stock, but its decline is due to the decline in gold prices. And what was claimed to be good news is only good news if it is comparatively good against its similarly priced peers (LSG, BFGC, BALM) or the miners already in production but at heavily depressed prices (BAA, VERIS)...

I enjoy Hotstocked, but its articles can't all be written following the same format. This is not a pump-and-dump like GOFF and SPOM, it's simply one of the few gold mining companies in an exploratory stage that hasn't lost too much of its share value, and as such, will likely fall more if gold also falls more.

Type the characters that you see in the box (5 characters).