The early call of the warrants will likely generate an action from now to within the the first two weeks of January 2011... It makes sense that there should be some confusion as the 9 million shares attempt to make the most of the ambient price... at what price though will accumulation step in...
Any strength will likely be sold into... there was a short presence of 100,000 that was covering as of DEC 15th.. by accident or by purpose that short will add more pressure...
A company issues such an early expiration notice for a few reasons.... Basically warrants are issued in the first place by the company to generate cash flow for projects. By forcing the exercise... the company can generate cash in times when they might not be able to get financing (which is not the case here IMOP ).
They can put money in the bank without dilution, and possibly if a financing may be needed in the future... these warrants would be an added burden to the float... so clearing them out now before further price rise would be be in the best interest of both the company and the retail investors (IMOP). They were always there, now we know the timeline.
The fact that they have not been exercised is likely a good sign that the holders expected higher prices to come.
The best we can hope to anticipate the final outcome is to wait for nine million shares traffic to pass (or January 24th 2011 when they become worthless)... and witness the action starting the Dec 29th to 31st... If there is no bidding strength... this would be helpful in holding the price up as sellers would only sell to sizable bids rather than jump for a loss, however since the strike is .20 cents... this wouldn't be much of a factor.
Having said that... the aftermath would likely be share price appreciation and bode well for a future financing at higher prices where the financiers would be able make a better decision without having to factor in an existing warrant situation.
This is likely the reason for near term future financing... While an inconvenience... the early call of warrants puts things on a better footing.
GOLDQUEST MOBILIZES DRILL FOR PHASE II DRILLING AT LA ESCANDALOSA IN THE DOMINICAN REPUBLIC
Goldquest Mining Corp. has started a phase II drilling program at its 100-per-cent-owned La Escandalosa project in the Dominican Republic. The company has deployed a rig to the project and planned a program of approximately 30 to 40 holes totalling approximately 2,500 to 3,500 metres.
The phase II program is focused on upgrading the current NI 43-101-compliant resource estimate at La Escandalosa and to test potential extensions along strike to the north and south.
Anna Stylianides, Goldquest's president and chief executive officer, commented: "Now that all the necessary licences and permits are in place, we are pleased to be in a position to start the next phase of drilling with the objective of upgrading and expanding on our recent resource estimate. We have had some excellent results from La Escandalosa and are confident that further drilling will continue to show strong mineralization and expand the resource area. We expect a small number of holes to be completed in December and drilling activity to accelerate from the beginning of January. Assay results will be announced upon their receipt and analysis by the company."
The present inferred mineral resource at La Escandalosa is 4,862,835 tonnes grading 2.596 grams per tonne gold at a nominal cut-off of 0.3 gram per tonne of gold containing 405,924 ounces of gold and has a strike length of about 600 metres (refer to news release in Stockwatch dated Nov. 16, 2010). To date, the number of holes drilled at La Escandalosa is 25 drill holes with a total length of 3,291 metres. As previously reported in Stockwatch on Nov. 16, 2010, the company believes that there is exploration potential for the discovery of additional mineralization in structural feeder zones or possibly related to porphyry copper-gold type mineralization. The La Escandalosa property contains stratiform gold mineralization with copper, silver and zinc of intermediate sulphidation epithermal style. Alteration and mineralization has been traced for 2,200 metres from Hondo Valle to La Hilguera.
A map of the location of the drill holes at La Escondalosa is available on the company's website under Las Tres Palmas, the former name of the La Escandalosa property.
GLTA Lostoutwest
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