Goldsource still in coal, share price slides

Vancouver Goldsource Mines (GXS-V) is back into thick coal intercepts at its Border property near Hudson Bay, Saskatchewan. But after dizzying gains in the past few months the results translated into a modest share price loss.

Hole 5 cut 37 metres of coal starting 78 metres downhole. The company says the coal appears to be much like the sub-bitumous to bitumous coal it found in its discovery hole 4.5 km to the southeast.

Likewise hole 3, punched-in 50 metres east of the discovery hole, intercepted 25 metres of coal starting 80 metres below the surface.

Hole 7 appears to have found the southwestern margin of the coal basin. Drilled 4.5 km to the southwest of the discovery hole, it intersected 3 metres of mudstone and sandstone with coal between 52.5 and 55.5 metres.

Unlike in the past, news of the positive drill results didn’t impress the markets, with Goldsource’s share price falling 66 to close at $8.00. Still, it was good news for the company that has been riding quite the coal-lercoaster over the past two weeks.

After distributing a news release July 21 with the headline “Goldsource drilling fails to confirm hoped-for deposit” and the news that it hadn’t backed-up its discovery hole’s 25 metres of coal with exploration drilling, its share price plummeted $6.75 in a single day of trading to close at $6.00. In the subsequent three days it fell another $1.85 to close at $4.15.

But not down for long, on July 25 without releasing any news – it leapt $4.74 to close at $8.89. And then the news came. July 28 it announced hitting 23.2 metres of coal at its Border property in southeastern Saskatchewan. On the actual news its share price climbed a further $1.06.

In a statement the next day Goldsource spokesman Fred Cooper said the July 28 share jump was the result of “investor perceptions (that) the company’s stock was oversold after losing more than half its value earlier in the week” and he denied any suggestion that the market heard about the drill results beforehand.