New World Gold Corp. (OTCMKTS:NWGC) Attracts Record Attention

Yesterday the gold mining and milling company New World Gold Corp. (OTCMKTS:NWGC) published a new PR article in which they discussed their financial results for the third quarter of the year. Apparently their operations in Ecuador and Peru have been so successful that the net profit for the period between July and September surpassed the net profit for the entire 2013 by over $200 thousand. For the nine months ending September 30 NWGC’s net profit reached $2.48 million.

The news sparked unprecedented levels of interest in the company. In a state of buying frenzy investors managed to trade more than 200 million shares, amount that is nearly 20 times higher than the average volume. The buying pressure pushed the stock to an intraday high of $0.0029 but right before the end of the session it took a big tumble and closed at $0.0022. Still a 15% gain on record volume is quite impressive.

But now you might start to wonder why is a company that generates millions in revenues and has a positive balance sheet sitting on the verge of the triple-zero price ranges? Well, NWGC may report financial results rarely seen in pennyland but almost no other aspect of the company reflects it.

Their official site has not been updated since April, 2012 and it even has a section about a mining project in Montana. The latest quarterly report doesn’t even mention such a thing. NWGC official headquarters also appear to be nothing more than a virtual office. The same address is also used by four other pennystock companies.

Although these red flags definitely hurt the credibility of the company investors have a far more serious issue to worry about – the crushing dilution of NWGC’s common stock. During the twelve months since March, 2013, the number of outstanding shares grew from 262 million to 527 million. As of June 30, this year, that number had already reached 627 million. Most of the issued shares have come into existence as debt conversion priced at just $0.0001. With over 4 million in notes payable the dilution is unlikely to stop. The company has 750 million authorized shares and if the issuance continue at the same rate they might be forced to increase them. The next financial report should be submitted by November 15 and it will show what the current share structure is.

Despite its operations NWGC remains a company surrounded by red flags. At the current price ranges the stock could make huge swings in either direction. Be sure to do extensive research before attempting any trades in order to minimize the chances of any unexpected losses.

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