Ontex Resources Limited (TSX: ONT) experienced a 6.78% drop in share value along with 755,375 shares traded. On November 9th they announced that their private placement financing for maximum total proceeds of up to $4 million. The financing comprises two separate placements. This has caught our attention at PinnacleDigest and we have since begun evaluating the aspects surrounding this development and their main project. The factors influencing the market which Ontex Resources operates within are fundamental to our review. We are focused on their immediate future objectives and will be reviewing them as we move towards the winter season.
At PinnacleDigest we are currently focused on the small to mid cap markets. We are focused on companies operating within the mining and energy based sectors in North America. Our main goal has and will always be to enhance our members approach to the market, while adding additional research.
US stocks for a fourth trading day the longest negative stretch in 8 months after banks continued to report mounting losses originating from bad home loans. Oil and metal prices fell hard on Monday bringing down shares. It has been the same story in the markets the past few months. Record energy and gold prices are battling a financial sector heading for ruin. Last Monday was a great example as Perfect losses in the market were incurred due to Citigroup Inc. reporting as much as $11 billion in additional write-downs. Citigroup lost 12% of its value last week alone. The markets are being seriously corrected as the fear that financial companies will face continued losses in the wake of sub prime home loans continues.
The economy has recently reported higher than expected growth as the Fed is still showing confidence the cut will be enough to spur growth. This was quickly forgotten as US stocks have fallen to their lowest levels in 2 months. The Dow Jones dropped 4.1% last week, the largest decline since July, and lost 55.19 points Monday closing at 12,987.55. Merrill Lynch has recently reported their largest quarterly loss in its 93 year history. An occurrence of this magnitude must be treated as a warning sign. US home sales are continuing to tumble and this also must be factored into the North American market. The S&P 500 retreated 3.7% points last week and lost 14.52 points to close at 1439.18 Monday. Both of these benchmarks closed at records on October 9th.
The markets appear to be heading into very strenuous times, as the housing and financial sectors are not only unstable, but are in a desperate situation at the moment. The only thing worse than negative earnings and clearly defined problems is uncertainty and there is plenty of that in the markets at the moment. Statistically speaking the markets emerged from the beating they were dealt this summer at the behest of the mortgage meltdown and a continually sliding housing market. It looks like round two could be even more to handle. Irregularities in the market such as US stocks capping the largest September advance in 8 years after the Federal Reserve cut interest rates have led us to focus on the international mining and energy sectors. This years best performing industry has been the energy sector, as energy specific companies have risen 25% on the S&P 500 this year already.
The TSX and TSX-Venture exchanges are our focus at PinnacleDigest. Resources based companies operating in these exchanges are our bread and butter. Canadian stocks fell the most in 3 weeks led by the Royal Bank of Canada last Wednesday. The markets rebounded Tuesday as renewed optimism that global demand for Canada’s resources can withstand an economic slowdown in the United States. On Monday the TSX Composite lost 264.37 points, somehow topping the 258.77 points it lost Friday. The index closed at 13605.45 Monday. The fact CitiGroup Inc. will have to write down another 11 billion dollars and the mortgage fiasco is spiraling at the moment is having a tremendous effect on the Canadian markets.
Volatility is once again sweeping over the market. Less than two weeks ago the TSX Composite closed one point shy of a record. This volatility is leading us to caution many investments at the moment. The index has been soaring on record energy prices and a 27 year high for the price of gold. These factors have mining company’s earnings prospects looking higher than ever. We have our eye on the oil and gas sector at Pinnacle Digest as the price of oil continues to trade at historically high levels.
At Pinnacle Digest we feature three companies trading within the mining and oil and gas industries.
In respect to Ontex Resources we are interested in their most recent development, but even more specifically the trend of the sector influencing their ultimate success. We are interested in the allocation of the proceeds of the financing which will be used for continued exploration of Ontex's 100% owned Brookbank Gold property which has reported a deposit of 629,900 ounces of gold. As gold is trading at historical highs we are very focused on how they will increase and create new gold production. They have stated that their objective is to increase reserves, as well as for general and administrative expenses.
