Lithium Corporation. (OTCMKTS:LTUM) Surges on Speculation
Lithium Corporation. (OTCMKTS:LTUM)’s stock has something of a checkered past. Back in 2010, it became the target of a multi-million dollar pump carried out by a newsletter called Untapped Wealth (UW). In the promotional materials, UW’s editor, Tim Fields, said that LTUM (which was then traded around the $0.75 per share mark) could easily go to $17. In reality, the ticker’s performance was so horrific, that a Market Watch columnist by the name of Chuck Jaffe wrote an article about LTUM and about the dangers of investing in promoted penny stocks.
Probably because of this, interest in the stock subsided and until about a week ago, nobody seemed to care about it. Dollar volumes were low and although LTUM managed to register a green session every now and then, it spent most of its time dropping towards the lower end of the charts. Then, on Wednesday, it woke up and started gaining ground at a rapid rate.
In just four sessions, it managed to add an incredible 441% to its value and yesterday, it even logged a dollar volume of nearly $530 thousand which is quite impressive for a ticker that seemed all but dormant until a couple of days ago. So, what is causing the massive surge?
There are no active paid promotions which is a definite plus point. There are also no new press releases and SEC filings which isn’t.
In fact, the whole commotion seems to be due to Tesla Motors Inc (NASDAQ:TSLA)’s plans to build a giant new lithium-ion battery plant. It will be the largest of its kind and TSLA insist on calling it a “Giga Factory“.
Apparently, a lot of investors think that OTC-listed lithium companies can benefit immensely from the new facility (which won’t be ready until 2017) and tickers like LTUM and Lithium Exploration Group Inc (OTCMKTS:LEXG) are currently flying high. But are exploration stage penny stock ventures really about to become rich because of TSLA‘s giga factory?
We have some doubts. For one, Tesla did say that they are going to have some partners help them with their new plant, but, for now, they don’t seem too keen on telling us who the partners are. Analysts reckon that Panasonic are going to take part, but nothing is official as of right now and small cap enterprises like LTUM aren’t mentioned anywhere.
On the bright side, LTUM does appear to be one of the more financially stable penny stock ventures in the mineral exploration sector. Their latest 10-Q covers the third quarter of 2013 and it displays the following figures:
- cash: $873 thousand
- current assets: $901 thousand
- total liabilities: $2 thousand
- no revenue since inception
- quarterly net loss: $128 thousand
Indeed, they are still in the exploration stage which means that the revenue generation process has not started yet and the losses are mounting, but they do have some money and the debt is clearly kept at bay.
Even so, the balance sheet isn’t really strong enough to justify the $9.4 million market cap. Neither is their principal office for which they pay $700 per month and which seems to be located in a residential house in Las Vegas.
