By: Tomas Ronolski - AllPennyStocks.com News

Wednesday, October 9, 2013

Earnings season is back underway with Alcoa, Inc. releasing its results on Tuesday, surprising analysts with an adjusted profit of 11 cents per share, versus the 5 cents per share that analysts expected. In a typical scenario, the markets likely would have reacted favorably to the Alcoa report, however, as every investor realizes, there is nothing typical going on in the markets at this moment with the U.S. government shutdown and posturing over the debt ceiling and budget. The nine days of a partial shutdown and ongoing rhetoric in Washington, D.C. has impacted commodities as investors fret over potential long-term impact on the U.S. economy and the manufacturing industry. On those points, investors are looking for bottomed stocks that have been held down under slipping commodity prices, financials that are moving the right direction and technicals that support a decent upside.

NovaCopper Inc. (TSX:NCQ) (AMEX:NCQ) announced on Wednesday its financial results for the third quarter and nine months ended August 31. As with nearly all developmental firms – especially miners – NovaCopper posted a net loss, but cut its net losses on lower general and administrative fees and mineral property expenses. Net loss for the quarter was $6.9 million, or 13 cents per share, compared to $12.6 million, or 27 cents per share, in last year’s third quarter.

Other reductions for the June-to-August period consisted of a lower stock-based compensation charge of $0.8 million in 2013 compared to $1.9 million in 2012.

NovaCopper is focusing its efforts in the Ambler mining district in Alaska, one of the richest and most-prospective known copper-dominant districts that hosts world-class volcanogenic massive sulfide, or VMS, deposits that contain copper, zinc, lead, gold and silver, and carbonate replacement deposits which have been found to host high-grade copper mineralization. The company controls about 143,000 hectares (353,361 acres), which host the Arctic VMS deposit and the Bornite carbonate replacement deposit. Results of recently completed drilling were released on Monday, highlighted by hole RC13-224 intersecting two high-grade mineralized intervals comprising 229.4 meters grading 1.73% copper and 6.6 meters grading 7.70% copper.

During the third quarter, NovaCopper completed an 8,142-meter drill program at the Bornite project, which has the potential for both open-pit and underground mining. The results will be added to a technical report released in February after analysis is completed. The quarter also featured positive results of a Preliminary Economic Assessment study for an open-pit scenario at the Arctic deposit.

Toronto-listed shares of NCQ are trading lower on Wednesday with the earnings report, but look to be trying to hold above a support level at $1.83. This is an important support point as it represents a higher base for the stock since holding a lower support through the summer around $1.70. This is giving the chart the look of a large rounded bottom, which could support the concept that the chart is going to continue to rise slowly. In order for the chart to take a more bullish look, the next leg will mean that the price has to climb through some initial resistance at $2.08 and ultimately have to make a new high above $2.20 to continue the formation of an upward channel. As always, this is simply our interpretation of the chart and we encourage investors to conduct their own due diligence.

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