Two weeks ago shares of All Grade Mining Inc. (OTCQB: HYII) were trading as high as 0.0175 but the development-stage company focused on mining properties in South America has found it difficult, to say the least, to keep their share price above the penny plateau and after sinking to a low of 0.0021 yesterday they are now trying to build their way back up on Tuesday, having climbed as high as 0.0037 in early trading activity.
HYII announced this morning that they were in discussions to acquire the Plateada Copper Sulfide Project located in Chile as a means of bolstering sales revenue and augmenting cash flows. In this announcement HYII said that the project’s initial phase was successful and its projections were achieved as planned; this initial phase being part of joint venture between HYII’s primary contractor, Foreign Commerce Consultative Services, Inc. and a group of private investors.
Satisfied with what they have seen thus far HYII now believes it is time to move towards acquiring the project and company CEO, Gary Kouletas, stated in the release that “Letters of intent and all necessary contracts for the assignment and assumption of the business are in place and will be ratified within the first two weeks of August.”
While HYII believes that the project is “ready for its next expansion phase” that will do little to remedy the company’s current financial situation. Looking at their most recent quarterly report HYII had no revenues for the three month period ended March 31, 2013 and while they had $20,595 in cash that money is the balance left over after receiving $80,000 from financing activities; additionally the company has an accumulated deficit of $12,937,534.
So how exactly HYII intends to fund their intended acquisition in Chile is somewhat of a mystery but the fact that they modified their authorized shares to 1,000,000,000 common voting shares on June 24, 2013, this after reporting authorized shares of 500,000,000 at March 31, 2013 may play a role in how they raise the money.
Of course how much financing they can raise from this increase is unclear but it should be noted that in June 2013 they issued 25,000,000 shares of common stock on settlement of accounts payable of $25,000. That should be an obvious indicator that there will be substantial dilution on the way if they are to offer up securities for financing as a means of funding their Chilean project.
Unfortunately HYII appears to have a history of putting the cart before the horse when announcing acquisitions as evidenced by what has transpired with a title acquisition for an iron ore mine in Chile for $3,250,000 back in September 2011. After paying $350,000 of that amount HYII still has a balance of $2.9 million which is due by August 2014.
As noted in their quarterly report “As of March 31, 2013, we are not in compliance with the terms of this agreement due to non-payment of the amounts due on May 31, 2012, August 31, 2012 and February 28, 2013. The only good news out of this is that there has been no formal notice of default on this agreement but there appears little doubt that HYII will fall short of handing over that $2.9 million balance anytime soon.
This could serve as a warning to what may come with any future projects and acquisitions announced by HYII. These announcements are tremendous for gaining investor awareness and triggering trading activity but they don’t always end with a revenue generating project or any long-term benefits for shareholders.
Right now shares of HYII are trading at 0.0029, well below their 50-day moving average of 0.0051 and significantly lower that their 200-day moving average of 0.0237. With another 500 million common shares now on the books it could be a real long time before HYII sees their share price hit a level that will impress their shareholders.