Orofino Gold Corp. (OTCMKTS:ORFG) Struggles to Repeat Success

Sometimes, Orofino Gold Corp. (OTCMKTS:ORFG) provides amazing gains, but what it almost always provides is significant volatility. On Wednesday, ORFG slid down by nearly a fifth to $0.396, as dollar volumes were a slim $409,000. Nearly nine million shares changed hands, as in the last weeks buying and selling are almost in a balance. For ORFG, the latest run is an extreme success, but the question remains if the success can be repeated- and more importantly, if another gain would be followed by another deep cut. ORFG2703.png

ORFG is betting on another hot sector that has been forgotten in the past weeks, displaced by pot stocks. Many companies rose out of nothing based on promises of oil and gas revenues from the Bakken geological formation in parts of the USA and Canada. Now, ORFG has announced that it has sent out an offer to acquire Alberta Gas Co. of Utah, which is just a first preliminary step toward accessing the oil wells.FRMC2703.png

At first sight, ORFG looks like a company destined to rise, with a market cap of just above $10 million, a relatively small sum compared to other OTC firms. And this small company is on a buying spree, recently finalizing the deal for private oil and gas company Nations Oil and Gas LLC. Now, the latest acquisition will in fact happen through Nations Oil and Gas, as ORFG expands and complicates its structure.

The most remarkable promise is that ORFG will soon rename itself with the louder title Bakken Oil and Gas Corporation, in expectation of future concessions and contracts.

Unfortunately, we don’t have updated financial data for this pink sheet company, to see if its latest foray into gold mining was lucrative. Given that the business should have worked in years of exceptionally high gold prices, it is strange to discover that ORFG only managed to gather up:

  • $12,000 cash
  • $522,000 total assets
  • $2.14 million total current liabilities
  • $841,000 net loss for 2012

So instead of digging out gold, ORFG managed to dig itself into a financial hole of debt and accumulated losses. Now, there are two options for the acquisitions- either ORFG is offering up its ticker for already working companies, or this is fluff PR to boost the stock positions.

ORFG also got a boost from a couple of sporadic promotional emails in January and February, but it was the PR messages about corporate developments that lifted up the price. Epic Stocks sent away the latest message, on February 27th, causing the most dramatic spikes in price and volumes.

ORFG recalls the fate of other mining tickers that erupted at the beginning of the year. Formcap Corp. (OTCMKTS:FRMC) was getting ready to storm even above $2, but crashed suddenly, and now drags along at a mere $0.03.

Lithium, the other hot mining commodity, lifted up the price of Lithium Corp. (OTCMKTS:LTUM), taking it to 13 cents, only to have it lose 50% and drift sideways as the initial enthusiasm wore off.

In the case of ORFG, the frequent PR and the high expectations may serve up another spike, but it is still best to be prepared to absorb significant losses.

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