Cortez Gold Corp (CVE:CUT) (PINK:CRTZF) stock price rallied in reaction to a closing of a funding deal.
CUT stock price moved further away from its multiyear lows after gaining 15.4% over Wednesday’s sessions and spiking way above the 200 day MA. Concurrently with the price move CUT also recorded the heaviest daily trading volume for the past three years. 3.3 million shares changed hands which is substantially above the 90 day average of 130 thousand.
The trading activity increased after Cortez announced to have closed a non-brokered private placement deal for $414.5 thousand. The company sold 4.1 million units at 10 cents each. Each unit included one common share and half a warrant convertible at 15 cents per share.
The company can accelerate the expiry date on these warrants if their stock price stays above 20 cents per share for 20 days in a row. This won’t apply to the current rally though as the issued securities are subject to a four month hold period.
$414 thousand is nearly half of the company’s reported current assets for the period ended November 30, 2011. The new capital infusion just raised their cash position to a level enough to cover the current liabilities. While that’s a good thing, the company will be left with nothing more to cover the costs of operations in the near future, thus another funding round should be expected in a foreseeable time frame.