GoldStockMania.com

Last week I received an email about Petaquilla Minerals (PTQ, PTQMF) from a GoldStockMania.com reader concerned about their recent share price reaction to the gold refinancing news release.  I am sure he is not the only one wondering why the stock price did not react favorably to the news release. Here are my thoughts on what it will take to get Petaquilla Minerals’s share price off the ground and into orbit where it belongs.

I don’t usually post questions I get from readers, but since many PTQ investors probably felt somewhat disappointed by the share price reaction to the refinancing news release, I thought I would post my response to this reader’s concerns instead of just replying via email.

Question from GoldStockMania.com Reader:

I have a significant share holding in PTQ and really was somewhat surprised and disappointed at the lack of positive reaction in the shares when the gold lease deal with Deutsche Bank finally broke.  As you said this solidifies the mine’s solvency, but the total lack of buying into this news seemed very strange to me.  I don’t buy into the fact that gold being down today or the recent overall down market conditions was the cause of this weakness.

IMO this news should have moved the shares, but the low volume today and the down share price has me wondering if the Street thinks PTQ got hosed in this deal?

I know there’s other news on the horizon with PTQ,  but I just can’t figure out this news didn’t move the shares.  As cheap as the shares are here I can’t believe this is a sell-the-news event. There has to be something more to it.  Any other thoughts?  Thanks

First of all, congratulations friend for having a significant holding in PTQ. I too have a substantial holding in PTQ, in fact my largest holding is now in PTQ. Having the confidence to buy stocks at bargain basement prices seems to run contrary to the behavior of many investors. Great investors understand the fundamental difference between price and value. PTQ’s price is way too low for a producing gold miner that is currently producing about 6K oz/month and soon to be over 100K oz/year.

This company reminds me of Timmins Gold, whom I first purchased at .41 cents a share and held on through all the ups and downs. I am sitting on an extremely nice profit at this point. There is no reason why PTQ will not experience  a very similar share price appreciation soon. Timmins took a while just like PTQ and displayed extreme weakness just before making major moves up. I bought more shares on their weakness as there were no reasonable justifications for Timmin’s share price drops.

Mark my words, Petaquilla will take off like a rocket when the conditions are right. I will continue to buy on dips as long as the fundamentals for this stock are there.

Why did Petaquilla’s share price not move up on the refinancing news release?

I believe it did not for 4 reasons:

1. The financing is not complete. Only 42 million applied to debt and terms on are okay but not great. ~$30 M still needs to be refinanced.
2. The on going gold and general stock market sell off. Most stocks are being sold off right now.
3. Negative PTQ rumors being spread around.
4. Lack of trust in PTQ’s management and past history of failed execution. This will not be an issue much longer.

When will PTQ’s share price rise?

I believe you will see substantial share price appreciation as PTQ achieves each of the following:

1. PTQ shows 2-3 qtrs of profitable and consistent  gold production.
2. PTQ Ramps up to full production.
3. The remainder of PTQ’s debt is refinanced with reasonable terms.
4. PTQ launches an aggressive PR campaign.
5. PTQ gets bullish drill results from Ore del Norte drilling campaign.

Petaquilla is making enormous progress and sooner or later their share price will reflect that. However, there is still more work to be done in order for PTQ to prove their worth to the street. Also, the market often behaves irrationally and presents us all with exceptional buying opportunities so take advantage of them.  It is just a matter of time before the market catches on to PTQ.

Be patient, as these things always seem to take a bit longer than you want them to.

Related Posts:

• Petaquilla Minerals Financing Update
• Petaquilla Minerals Update 9-20-10
• Petaquilla Minerals Update 6/02/2010
• Petaquilla Minerals Update 7-26-2010
• Petaquilla Minerals Financing Update 8-20-2010

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Disclosure: I have not received any compensation from Revett Minerals, Timmins Gold, Metanor, or Petaquilla Minerals. None of these companies are advertisers on GoldStockMania.com. I am extremely bullish on Petaquilla, Timmins Gold, & Metanor and currently hold shares.

Disclaimer: I am not a professional/qualified investment advisor. Readers should note I am not responsible for errors or omissions in this report. Also, I am not responsible for your trading decisions as you should do your own due diligence before making any investment decisions.