The S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) fell 6.9 points yesterday, essentially a flat day.
It was a mixed bag all over the market with six sectors in positive territory and seven sectors down.
The Utilities and Energy sectors fell the most, both falling by 1%. Many resource stocks are currently releasing their quarterly reports, so no real surprise that three out of the five stocks that fell by more than five per cent are resources companies.
Energy World Corporation Limited (ASX: EWC) was down 12.5% to 49 cents, continuing its tumble from 82 cents on the 26th March 2012. An ASX speeding ticket yesterday, querying the company as to why the share price had fallen so far, failed to shed any light on the reasons for the fall. This comes less than a month since the company received another query from the ASX on 11th April 2012.
I wrote about the company in this article that day, mentioning a couple of newspaper reports that questioned the viability of the company. Since then, no news has been interpreted by the market as "bad news" for the company. EWC has yet to provide any evidence to contradict the newspaper's claims, suggesting where there's smoke, there's fire. EWC remains a stock strictly for gamblers only.
Coalspur Mines Limited (ASX: CPL) fell 13 cents – 7.85% to $1.525, after advising the market that it was planning to acquire 14,432 hectares of coal bearing leases in Alberta, Canada for C$13m. The company is developing the Vista Coal project, which has the potential to be the largest export thermal coal mine in Canada.
The biggest issue for Coalspur and possibly the main reason for the share price fall, is that development costs for the mine are expected to be more than C$1bn, with C$860m to develop the mine, and then C$370m to reach full capacity. For a company that currently has just C$22m in cash in the bank at the end of March 2012, that suggests a lot of capital (debt and/or equity) raisings to come.
IRESS Market Technology Limited (ASX: IRE) fell 35 cents or 5.27% to close at $6.29, after the Chairman's AGM address, and no doubt also from ASX Limited's (ASX: ASX) report that earnings were falling.
At the IRESS AGM, the company advised it was seeing "challenging" conditions in all segments, and softening financial markets. Given IRESS's main products are software used by financial markets, it's no wonder the company expects to report 2012 profits around 10% lower than the prior year. The company also said that another reason for the decline in profit was due to investments in future growth in the UK and Asian markets.
Alacer Gold Corp. (ASX: AQG) – fell 40 cents, or 5.1% to $7.45 as the company announced on the 1st May 2012 it had converted debentures worth C$53.6m into common shares, meaning close to 7 million new shares have been issued. Given the price fall it appears that some investors, who received shares for their debentures, changed their minds and decided cash was better, and sold out of their shares.
The company is due to pay out the remaining debentures totalling C$46.4m, plus interest of around C$1m. Alacer is a gold miner with interests in several producing mines in Australia and Turkey.
And finally, Silver Lake Resources Limited (ASX: SLR) fell 15 cents or 5.02% to close at $2.84. Another gold miner releasing a quarterly production report, Silver Lake reported falling production, gold sales and revenue for the March quarter. Prior to March it had reported 3 straight rising quarters. Much of the fall can be attributed to mining through lower grade ore to access higher grade ore sources. Cash operating costs were also higher for the quarter at A$741 per ounce.
The company is still making a healthy margin, selling gold at an average price of A$1,608 per ounce. Production is still on target to exceed 100,000 ounces for the year to June 2012.
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Motley Fool contributor Mike King owns shares in ASX Limited.The Motley Fool's purpose is to help the world invest, better. Take Stock is The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Click here now to request your free subscription, whilst it's still available. This article contains general investment advice only (under AFSL 400691).
