GDN has edged up 10% this week to pre-Easton-announcement levels, suggesting pundits may be backing a successful conclusion to Easton's $6m bid for the higly prospective Leonora tenement.
Details of the deal have met with considerable skepticism since Easton had to achieve a re-listing on the Canadian exchange as well as find investors willing to stump up the cash. But as the date approaches for deal closure (around Feb. 7 I believe) it seems investors are betting on successful closure of the deal, worth .043 cents per share to GDN.
$6m would represent a massive cash injection for a penny stock like GDN and would imply significant market undervaluation of its assets if the deal is concluded. Punters seem to be anticipating a significant upward revaluation should the deal be finalized. A risky assumption perhaps but given the SP has only just returned to pre-announcement levels and GDN's chart at that time suggested breakout, the reward for risk ratio seems attractive.
I bought back in March last year for a mix of chart and fundamental reasons, based on an article by Cath Davey on Investorweb, who has GDN pegged as one of the potential "big movers" of the spec gold stocks. At present I'm inclined to hold pending announcement regarding the Easton deal. IMO, even without it, GDN has enormous potential on both chart and tenement grounds - and it's worth remembering that proving up Leonora could be even more lucrative than selling it.
How do others see the recent upward price action? Speculators taking a position? News in the wind? I'd be interested in any views.
R/Gupper
GDN Price at posting:
0.0¢ Sentiment: None Disclosure: Held
