New World Gold Corp (OTCMKTS:NWGC) Rides the Wave of Excitement
There’s something very strange about New World Gold Corp (OTCMKTS:NWGC). And that’s saying a lot because the OTC is full of strange companies. Yet, NWGC still manages to stand out from the crowd.
According to its latest financial report, the company logged about $2.8 million in quarterly revenues during the three months ended June 30 and it also closed the quarter with a net income of around $820 thousand which is a rare sight in Pennyland. Yet, despite this, the company is working out of what appears to be a virtual office which is also utilized by more than a few other OTC enterprises.
And although running a successful mineral exploration business is far from easy, Robert Talbot, NWGC‘s CEO, apparently has enough time to spare. He seems to be at the helm of Andes Gold Corp. (OTCMKTS:AGCZ) and a person by the same name is also listed as the CEO of Medical Services Cla (OTCMKTS:MSITF).
Another peculiar thing about NWGC lies with the fact that despite the undoubtedly impressive profits, the company doesn’t have the habit of keeping large sums of money in the bank. At the end of the second quarter, for example, the cash reserves sat at a somewhat modest $80 thousand.
The lack of cash means that NWGC has been struggling to pay off its debt, and this, in turn, has had a pretty devastating effect on the stock. Between January 2014 and June 2015, the number of issued and outstanding shares grew from just over 450 million all the way to more than 1.7 billion. Exactly 1,250,000,000 of the newly printed shares saw the light of day as a conversion of debt at a rate of just $0.0001 per share.
Despite what the management team describes as the “excellent financial and operational results”, the stock couldn’t really take the pressure coming from the truly absurd dilution. Its performance over the last year or so has been pretty horrific and it’s now sitting deep in the triple zero levels. As far as OTC Markets’ website is concerned, the company’s market cap now sits at around $850 thousand which is actually pretty close to the quarterly profits logged a few months ago.
It is growing, though. In fact, NWGC doubled its value during yesterday’s session and it did it on a dollar volume of about $130 thousand which is a pretty hefty amount for a $0.0005 per share stock. People are buying and they’re doing this because the management team told them that if they own at least 1 million shares of common stock on October 31, they will be eligible for a royalty coming from NWGC‘s BR Mine which is about to go into production on November 1. The royalties should start flowing in April of next year and, in the management team’s estimates, they could reach $0.0007 per share per year. That, many people reckon, is a significant yield, and they seem determined to hold on tight and wait for the cash rivers to start flowing.
The last time we saw such a thing, investors were expecting some dividends from Calissio Resources Group Inc (OTCMKTS:CRGP), but unfortunately, it all turned out to be a rather big mess which ended with a FINRA halt.
Hopefully, NWGC won’t experience such problems. Even if it doesn’t, however, you mustn’t forget that the people who received more than 1 billion shares at $0.0001 already have a massive profit sitting right in front of them and they might not be willing to wait for the royalties (which, NWGC said, are not guaranteed). You should also bear in mind that NWGC recently raised the number of authorized shares from 2 billion to 3 billion which means that the debt conversion might be far from over.
