GWMGF – Position Doubled, MCP Completes Funding For Mountain Pass

To disclose, I have doubled my position in Great Western Minerals (GWMGF). Today’s action looks like capitulation as the stock breached the March lows and the 200 MA on heavy volume even as the stock has been beaten up after months of consolidation and rising prices of rare earths. Great Western has the best heavy rare earth deposit in the sector and has recently doubled future production potential, and cut the production timeline from late 2014 to early 2013.

There really isn’t anything wrong with buying here. As I said before, they are at a six month low and in that time company fundamentals have dramatically improved and the rare earth market has heated up even further. I entered at $.623 and am in still in the money due to my previous entry points. It’s possible that it rallies to $.74 and the 20 MA within the next week or two.

The selloff came after the news that there wasn’t a significant find at Douglas River. This piece of news is literally meaningless as their primary valuation comes from Steenkampskraal which alone is enough to have them above $3 at the very least.

http://finance.yahoo.com/news/Molycorp-Announces-Completion-bw-1843340788.html?x=0&.v=1

GREENWOOD VILLAGE, Colo.–(BUSINESS WIRE)– Molycorp, Inc. (NYSE:MCP – News), the Western hemisphere’s only producer of rare earth oxides, today announced that it has secured the final funds necessary for the capital build out of its estimated $781 million expansion and modernization project at its flagship rare earth facility at Mountain Pass, California with the completion of an offering of $230 million aggregate principal amount of 3.25% Convertible Senior Notes due 2016. Full funding of the capital plan of Project Phoenix is a major milestone in Molycorp’s overall rare earth ‘mine-to-magnets’ business plan.

In other words, the scare due to the fundraising was… greatly exaggerated. Like GWG, I don’t see anything wrong with entering MCP here with it just above support and the 200 MA. It has made two bottoming tails on the daily chart and a rally to $55 would not surprise me in the least.

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About Aaron Basile
Market Technician, Equity/Commodity Trader, Austrian Economist, Contrarian Investor

2 Responses to GWMGF – Position Doubled, MCP Completes Funding For Mountain Pass

  1. Pingback: GWMGF – Position Doubled, MCP Completes Funding For Mountain Pass | Wall St for Main St

  2. Pingback: Winners – GWG, MCP, Entry On SQQQ « Aaron Basile

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