gold acquisition!

http://asxguru.com.au/2011/03/eagle-eye-metals-limited-eye-gold-acquisition/

Eagle EYE Metals Limited (EYE) is a stock that was identified as a trading opportunity this morning. Before the market opened the company made the following announcement, which stated that they planned to acquire a company that held a number of highly prospective gold projects in West Africa. A quick read through the announcement showed that some of the exploration blocks acquired are located right next to an already discovered gold project of substantial size.

Going back through the most recent cash flow statement showed that the market capitalisation is very tight ? with only 44 million shares on issue. This was a key factor in determining whether or not the stock would run today. The planned acquisition would be made through the issue of 43 million shares. Again those terms were highly favourable.

The above chart shows the breakout, with the stock opening at 9c and rallying to high of 25c. Prior to today?s breakout the stock has not done much, and you can see from the chart, a sideways trading pattern at around 6.5c had been formed for quite some time. This morning it was obvious that the company was going to get re-rated as a result of the news. Below is an excerpt from the announcement which provides commentary from management:

Eagle Eye Chairman Wayne Ryder says: ?This is an exciting time for Eagle Eye. The acquisition of these gold mining projects in an extremely active exploration and production region is the culmination of a long search by Eagle Eye to acquire a major project with company maker potential. These outstanding gold areas come with highly qualified industry experts to manage the West African development program, and who will assist Eagle Eye to get the best out of its existing valuable gold and nickel/cobalt projects in Western Australia.?

The only disappointment today was that the stock gave up most of the gains made today. Eagle Eye finished the day at 13.5 cents which is still a very respectable 107% increase from yesterday?s close. The sell-off suggests that there will be further falls in the near future. However, I think it?s still very undervalued and there is good potential for this stock to go much higher over time