Gold and GemStone Mining Inc (OTCMKTS:GGSM) Gets a Strange Volume Spike
In December 2012, just months after it entered into the mineral exploration business, Gold and GemStone Mining Inc (OTCMKTS:GGSM) issued a press release and talked about the enormous growth that Sierra Leone has experienced. It also said that “it plans for full scale alluvial mining operations to begin in Q2 of 2013.” Has it worked?
To find out, you need to open the latest 10-Q and look through the financial statement for the three months ended October 31, 2014. It looks like this:
- cash: $0
- total assets: $1,020
- total liabilities: $355 thousand
- NO revenue since inception
- quarterly net loss: $176 thousand
So, the estimations from the press release were wide off the mark, but sadly, that’s far from the only problem.
If you take a closer look at the 10-Q, you’ll notice that an alarmingly large portion of the notes to the financial statements has been copy-pasted directly from previous reports. The people putting the report together have even forgotten to change the dates and figures.
Then you have the management team. If the recent press releases are anything to go by, GGSM is now headed by a person called Rafael Pinedo and it must be said that this is not his first mining company. He has been involved with numerous OTC enterprises like Pilgrim Petroleum Cp (OTCMKTS:PGPM) and Airtrona International Inc (OTCMKTS:ARTR) (f/k/a Chancery Resources (CCRY)) and it’s fair to say that neither of them is particularly successful.
The dilution is pretty horrific as well. The number of issued and outstanding shares grew from just over 166 million in September 2013 all the way to 725 million in November 2014. The financial report tells us that some of the debt is convertible into stock at the average market price for the few days before conversion (which, at the moment, sits precariously close to the absolute bottom of $0.0001), and while we can’t be sure whether this has anything to do with it, we do know that the dilution didn’t stop at the end of last year. According to GGSM‘s profile at the OTC Markets, on February 2, the O/S count was sitting at almost 840 million. Nevada’s Secretary of State’s website tells us that in May 2014, the number of authorized shares was upped to around 2 billion, but apparently, GGSM‘s management team has decided that the shareholders don’t need to know that. The action is not reported in the latest 10-Q.
All in all, the company is in a bit of a mess at the moment. The promises from the press releases rarely come true, the reports are shocking, and the printing press is firing on all cylinders. Despite this, on Friday, GGSM experienced a wild trading session.
The ticker went up by 33% and finished the week at $0.0004. It also hit an intraday high of $0.0006 for the first time in almost eight months. More importantly, it logged a dollar volume of more than $230 thousand which goes to show that people are interested.
The only problem is, the reason behind the spike is nowhere to be found. You’ve already seen how poor the financial statements are, there’s no promotion, and there are no new press releases. The whole thing seems to be caused by quite a lot of speculation. A few people even reckon that some “big news” is coming.
You should be the one to decide whether this is a good enough reason to put your money on the line. If you reckon that it is, you should probably keep your fingers crossed and hope that the promises in the upcoming press release will be more realistic than the ones from two and a half years ago.
