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Junior Miner Bounces off 52 Week Low after Restructuring News; Technical Chart Looks Bullish
By: AllPennyStocks.com News
August 5, 2010
Diamonds aren’t just in the news because of Naomi Campbell. 2010 has brought about a recovery in prices for rough diamonds after a very rough 2009, giving hope that the world’s economy is rebounding. As the prices continue to climb, companies worldwide are ramping up production. Industry giant, DeBeers, is the only major diamond mining company that has announced slowing down production.
Vaaldiam Mining Inc. (TSX:VAA) is a Canadian-based diamond mining and exploration company listed on the Toronto Stock Exchange with two established mines in Brazil, advanced exploration projects in Brazil and Canada, a royalty interest in a copper project in Peru and investments in Canadian public and private companies. Vaaldiam has undergone some major changes this year to advance their business strategies. Earlier this year, the Company announced the closing of a contract to which Tiomin Resources Inc. acquired all of the outstanding common shares of Vaaldiam Resources for considerations and then changed its name to "Vaaldiam Mining Inc." The newly formed company has been aggressive in its actions to minimize inefficiencies in the organization and generate cash.
On August 3rd, Valldiam announced selling their Kwale Mineral Sands Project ('Kwale') to Base Iron Ltd. (ASX:BSE) of Australia for US$3 million in cash and a cash royalty of 1.5% on all gross revenue from Kwale. The Company plans to continue with its strategy to dispose of non-core assets to finance building a mid-sized mining company focused on gold and diamond exploration, development and production in Brazil.
Technically speaking, the VAA chart has a nice symmetrical triangle look to it. After a rapid drop on news of the restructuring, which touched a 52-week low at $.185, the price per share (PPS) has recovered into a tighter trading pattern after the big bounce off of $.185 up to $.44. Basically it is coming to the point of a 4-month triangle. All of the short to mid-term moving averages are underneath the PPS at this point, including the 50dma, which is generally perceived as bullish. Volume for the week has increased as buying pressure appears to be coming back in as the price has moved from $.245 to $.28 presently. $.28 is an area of resistance for VAA as it was a previous high that it could not break through in early July. A more significant resistance is coming at $.30 as there is a long history of previous support that did not hold and has since only been broken back above on brief occasions.
The PPS is trading on the upper side of the bollinger bands and the MACD is now breaking above zero (commonly called “breaking the money line”). Other positive indications that the PPS is going to make a strong attempt to break the resistance are seen in the On Balance Volume (OBV), Accumulation/Distribution (A/D) and the TRIX indicators as they are all in bullish uptrends.
Vaaldiam Mining is an interesting company with regards to the recent changes in corporate structure this year. The industry is doing well as gold and diamonds are still hot commodities, but some changes are being incorporated to maximize their efficiencies that will take a bit of time. The chart is positioned to try and break higher, but if the resistance cannot be broken there is a good chance that the PPS will once again test the support established at $.245. Remember that this is only are interpretation of VAA and its stock chart. We strongly encourage conducting your own due diligence and seeking the advice of a financial advisor before making any investment decisions.
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