Pacton Gold (TSX.V: PAC.V) (OTC: PACXF) has had a stellar run of almost 350% over the past year, and the stock seems to be holding its ground firm. Despite the recent drop, investors might still stand to unlock potential value in the stock given the company’s efforts towards expansion and string of other developments.
Reason to invest in Pacton Gold
Pacton has acquired several key properties in the Pilbara Gold Rush of Western Australia. The company believes that the region offers ample and encouraging exploration opportunities. Just last week, Pacton finalized and entered into a Share Sale Agreement to acquire 100% of the shares in Drummond East Pty Ltd.
Acquisition of Drummond would let the company access seven licenses in the Pilbara region totaling 1,126 sq km. Pacton is now the third largest conglomerate-hosted gold property portfolio in Pilbara totaling in excess of 2,500 km.
The Pilbara Gold Rush started just last year after Novo Resources and Artemis Resources discovered near-surface conglomerate-hosted gold nuggets. Since then, over two dozen resource companies have flocked to the area.
Experts say that even though the Pilbara is one of the most resource rich areas, it has seen little exploration. However, investors might be a little skeptic as junior gold exploration companies come with their own set of challenges.
When a new discovery is made, the investors’ expectations push the stock up. However, as they come face-to-face with the challenges that such areas throw, the expectations take a downward spiral and stock cools down. Even in such a scenario, investors can make a right decision by following the smart money.
And, there is no one smarter than Eric Sprott when it comes to gold. Pacton’s host of acquisitions has made the company good enough to be included in Sprott’s portfolio. Sprott, who is seen as a Kingmaker, holds around 10% stake in Pacton, giving him 18.4% control over the company. Presence of a name such as Sprott should be enough to encourage investors to go bullish on Pacton
Technical’s – what they say?
After a breakout from the level of 0.394 in May this year, the stock has touched the high of 0.984, but witnessed a healthy correction from that level. The trend lines indicate that the falling wedge pattern is in the formation with the price trading in a very narrow area signaling a breakout. Presently, the stock is trading at a level of 0.34, suggesting a good opportunity for the investors to take a position at the current levels to participate in the next run up in the stock.
The price movement is also being supported by the Relative strength indicator (RSI) suggesting no negative divergence. RSI has gone below its lower signal line suggesting that the stock is oversold. There could be another up move in the stock in the near future. Immediate resistance is seen around 0.629 and above that 0.71.
Overall, the stock is poised to take another flight from the current levels. With a host of expansion activities and confidence shown by big names such as Sprott, Pacton looks set to unlock more value for the investors in the long-run along with decent returns in the near future.
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