March 18, 2013 at 11:04 AM EDT
First Liberty Power Corp. (PINK:FLPC) Pauses for Correction
Double-zero tickers will often fall down on massive selling, as investors who acquired the easily accessible stock shed their holdings before losing their investment. In this way, while First Liberty Power Corp. ( PINK:FLPC ) lost a little less than 9%, close to 60 million shares were dumped on the market, questioning the current upward trend for the company. The reason for the recent interest in FLPC, leading to a 134% jump in price is the pump by Wisealerts.com , the last email arriving on March 14th. As usual with double-zero stocks, this one came to life and posted volumes unseen in the past three years. Fundamentally, the pink sheet has little to offer, although it promises to mine strategically important metals: Zero revenues $362,069 operations loss $1.5 million market cap $28,470 cash $1.5 million current liabilities It is unknown how the company will fare in the near future, as it promises to put to market several minerals with the "Mined in America" the central feature of their products. The latest press release from FLPC is the promise that antimony mining will start soon, and that lithium, uranium and others would follow soon. It is unknown how the company has managed to secure the $2.6 million funding that was mentioned in its press release, but there is a mention of an upcoming "structured finance" deal for a total of $3 million. Given the company's lack of revenues, such a line of credit may be exchanged for shares, at the danger of dilution and insider selling. The case of FLPC is a reminder of a previous mania among penny stocks, the US-based mining of graphite. It turned out the projects were not feasible, since the potential for US-based mining was too limited to make a dent in the gigantic imports. The likes of Graphite Corp. ( PINK:GRPH ) shot up several hundred percent, only to wipe out the gains when the paid promotions for the pack of companies fizzled out. While the press releases for FLPC claim the company has long-term goals, its CEO is something of a red flag. Mr. Donald Nicholson was at the head of Terra Nostra Resources Corp. ( TNRO ), a now-defunct mining company. There are other worrying details about the company, such as 18 million shares owned by Magna Group, LLC, and 16 million shares to the name of John M. Fife, a hedge fund manager charged with fraud. A total of 75% of the company's shares are held by insiders or 5% owners, and with a daily volume of 60 million shares, it is possible that any one of those shareholders could gain a huge profit from the holdings and depress the price. The logic of a paid pump becomes even more obvious in this case, so beware before believing FLPC for its long-term promises, and think twice before taking it up even for a short period where a correction could wipe out most of your investment.
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