ABOT Mining Co. (PINKSHEETS: ABOT) has started the trading week off on the right foot as the mining company engaged in discovering, acquiring, developing, producing, and marketing precious and semi-precious metal properties has seen shares jump from a Friday close of 0.0273 to a high of 0.0420 on Tuesday with volume already surpassing the 19 million mark by noon. Shares of ABOT are currently hovering around the 0.032 level, slightly ahead of their 50-day moving average of 0.0308.
ABOT has been an interesting play for investors as the company has seen plenty of volatility over the past few months, hitting a 52-week high of 0.090 on December 9, 2011 but less than three weeks later those same shares were at a 52-week low of 0.0038. This kind of volatility is usually the result of investors buying and selling for quick profits while promotional campaigns pump the price of the stock higher, when those campaigns end so to do the price gains.
So after a busy December in which ABOT issued a number of press releases the company essentially went silent in January but they are back. Just last Friday the company announced that the civil engineering work on the Aztlan 8B property has been completed with more definitive mapping and property delineation. ABOT holds a 50% interest in the Mexican property following an agreement struck with Rising Star S.A. de C.V, a Mexican corporation.
By all appearances the Aztlan 8B property will be the focus of ABOT moving forward after they stated they had “received encouraging initial flotation engineering results, indicating a recovery value of 89.00% of the Au and Ag and show 2.51 ounces of Au and 19.00 ounces of Ag per metric ton.”
Back on December 23, 2011 ABOT revealed their first production plan for the beginning of 2012 which included the initial production run of 1,000 tons of ore after which they plan to “increase the tonnage up to 10,000 tons per run subject to agreement with various mills. ABOT Mining further expects feed grade to improve from 2.51 to up to 10.00 ounces of Au per metric ton as the production team access the ore from beneath the surface.”
Morris Rafi, President of ABOT, said the beginning of 2012 would be a “watershed moment” for the company and stated “we will commence full production that will make us a cash flow positive company. Proceeds from operations shall be fully invested to increase the production rate from this allocated tonnage and will concurrently allow us to develop other properties in our portfolio.”
Becoming a cash flow positive company may be a stretch for ABOT as they have yet to generate any revenue from previous projects including the Las-Lagunillas Silver-Copper-Lead-Zinc Mining Project in District of Santa Lucia and Cabanillas, Province of Lampa and San Roman in Peru. For those investors who remember, ABOT boasted of the potential in Peru yet there has been no news on the development of that property.
In many cases these small mining companies concentrate on collecting property and then issuing press releases that indicate there is a potential for high yields of gold, silver or any other precious metal that could produce a high yield. The truth is the likelihood of actually mining these properties is slim at best and the company usually moves on to the next property and runs the same game one more time.
That’s not to say that ABOT will follow this pattern but it will take a significant commitment to develop the Aztlan 8B property; it’s not like the company is on the brink of riches.
What this means is that ABOT will almost certainly be reliant on the sale of securities to continue funding their operations, something that shareholders know all too well already. This will of course lead to further dilution and even more volatility as shares get dumped on the market. Watch for additional promotional campaigns to capitalize on the string of press releases sure to come but when they end history has already proven that within a matter of weeks these shares can collapse, making it difficult for ABOT to follow through with their plan, which is “to create long term shareholder value by implementing an aggressive exploration program, making new precious metals discoveries and developing mining properties with long-life and low cost operation.”