Shotgun instead of a rifle

Dec 2nd, 2009 – Comment

At this particular point in the company’s history they are using the shotgun instead of a rifle in an effort to find a property that will get them to focus on one prospect to the exclusion of all others. It is also interesting that when you survey the management team at CAJ they all have backgrounds in finance and accounting but none seem to have technical expertise in geology or mining.


About the Author

Lou Schizas is an equities analyst, investor, entrepreneur, professor and television and radio personality – and a true believer in the happiness-inspiring powers of capitalism.


Read the author's full profile.


Further Research

Read more about Mining.


Canasia2

Lou,
Can I ask you your opinion of CAJ? I’ve held the stock now for three months and rather than going north, it’s been following the birds south……..
Would appreciate your opinion.
Thanks,
Ken

Hi Ken,

Thanks for the assignment. Canasia Industries Corporation ( CAJ TSXV) is a mineral exploration company with projects in Canada  the U.S., and Mexico. The hunt is on for gold, coal, silver, potash,copper, and lithium. And that could be the problem.

In terms of investor preference there seems to be a bias for pure plays.  It seems natural to ask how can you have expertise in the development of properites  from gold to lithium? At this particular point in the company’s history they are using the shotgun instead of a rifle in an effort to find a property that will get them to focus on one prospect to the exclusion of all others. It is also interesting that when you survey the management team at CAJ they all have backgrounds in finance and accounting but none seem to have technical expertise in geology or mining.

caj

The three year chart provides a good view of  what has been a fairly typical pattern. Big drop in 2008 and a nice bounce in 2009.

What I get from this chart is that the 2009 advance stalled when it met resistance  near the previous high from the summer of 2008.

 

 

 

 

caj2

The three month chart provides a better view of the advance that perhaps got you excited and its subsequent pull back from the high of $0.405. The RSI generated an overbought signal at the top and the MACD also indicated that the buying surge was coming to an end.

 

Another factor in the retreat would be related to the private placement that was closed in August that offered units at $0.05. Each unit consisted of a share and a warrant with a strike price of $0.10 good for 5 years.  I would have to think that lots of those warrants were turned into cash adding selling pressure on the price.

Right now CAJ is holding on to support on the 200 day moving average and depending on the news coming out of the drilling program that was conducted at the Debut property by Kinross Gold USA you could see  some action.

But keep in mind that CAJ is a junior exploration company with no production ,that has to constantly raise money to advance its projects. Next time you are looking in this space make sure to check the paper that has been issued and the background of management.

MAKE IT A BIG DECEMBER AND HAPPY CAPITALISM!

Categories: Mining
Content © Relentless Economics - Charts courtesy Stockcharts.com - Employees Entrance - Optimization Media