Wednesday, August 20 2008 @ 09:07 AM EDT
Contributed by: Don Winner
By DON WINNER for Panama-Guide.com - It appears investors have lost all confidence in the Petaquilla gold mining operation in Panama. After having hit a high of $3.36 on 2 January 2008, in the past eight months the stock (ptqmf.ob) has lost more than 73% of its value, closing at .91 cents yesterday. This fall off is probably a combination of a shaking of confidence in the Petaquilla management, with investors now wondering if the mine will ever produce its first ounce of gold. Another possibility is that this slumping of the stock price might be some kind of a poison pill action, based on the fact that Toronto-based Inmet Mining Corp launched a takeover bid on July 7 for Vancouver-based Petaquilla Copper for about C$2 ($2) per share, or an estimated C$321 million in total. The offer from Inmet is valid until 3 September, so if the deal goes through then there might (emphasis on might) be a significant bounce in this stock shortly thereafter. If don't mind a little risk you might want to consider some bottom fishing on ptqmf. Long term investors and those who are significantly risk averse should (of course) stay away from this stock until uncertainties over ownership and management are straightened out. Petaquilla has been saying that the offer from Inmet is "inadequete" but in fact they will probably take it, lacking a better offer. If that happens then, presto-change-o, the stock will pop back up to about $2.00 Canadian almost overnight, or about $1.90 per share. Gold is still high at $812 per ounce - the Petaquilla property became profitable on paper when gold went over $300 per ounce so that's still there. Costs to put the mine into production have about doubled, mostly thanks to higher fuel and transportation costs. But the one thing that has not changed is the amount of gold and copper under the ground. Sooner or later, and it might be 20 years from now, but this mine is going to be opened under someone's management. The simple fact is that the mineral resources in the ground are too valuable to pass up.
Copyright 2008 by Don Winner for Panama-Guide.com. Go ahead and use whatever you like as long as you credit the source. Salud.