In need of financing

Nov 6th, 2009 – Comment

Given the low value of trading and the pending financing and consolidation I think that you would be best served to confirm the financing is in place before chasing this stock.


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bay

Hi Lou

Always enjoy your perceptive analyses.Could you please comment on Bayswater Uranium. It is one of the few Jr uranium companies with good liquidity but I have a lot of trouble trying to figure its technical patterns.

Thanks,

John

Hi John,

Click to Zoom

Click to Zoom

Bayswater Uranium Corporation ( BAY TSXV) has just concluded a formal agreement to buy the Reno Creek Uranium Project in Wyoming and will have to raise $50M to get the deposit into production by 2015. The company also has many other advanced stage and exploration stage uranium projects in Canada where it controls 5.5 million acres in known uranium basins.

The question is whether BAY can manage all this activity efficiently and if investors can wrangle some gains out of the stock?

The three year chart provides a good view of the aggressive decline of the stock starting in 2007 as the bloom came off the uranium sector. The stock found a bottom in late 2008 at $0.05 and had a run but the uptrend looks to be broken at this point.

The three month chart gives us another perspective on the trading action of BAY. The stock is holding on to support at $0.11 but is trading below its 50 and 200 day moving averages which has to be seen as a warning flag.

Click to Zoom

Click to Zoom

The spike in October that took BAY to $0.20 was prompted by drill results from their Kilgore joint venture with Otis Gold Corp. ( OOO TSXV) in Idaho. Otis can earn a 75% interest in the gold deposit as a result of their activities on the property.

The spike drove volume into BAY skewing the view of liquidity. The average daily volume over the last 3 months is 809,000. Yesterday it traded 166,600 shares which represents approximately $18,326 in value. It suggests that the stock is not as liquid as it might appear.

The next big hurdle for Bayswater will be raising the $50M it needs to get the Reno Creek Project into production by 2015. The company will have to restructure at that point and consolidation of the stock is on the table.

Given the low value of trading and the pending financing and consolidation I think that you would be best served to confirm the financing is in place before chasing this stock.

Happy Capitalism!

Categories: Uranium
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