Pumpers Struggle With Homeland Resources Ltd. (OTCMKTS:HMLA)
It’s been almost a week since Trader TV sent us their first email on Homeland Resources Ltd. (OTCMKTS:HMLA). The compensation disclosed in the fine print is $200 thousand, and with that colossal amount in mind, you’d be forgiven for thinking that HMLA have skyrocketed during the last couple of days. Is that the case, though?
In a word, no. While the number of shares changing hands during last week’s trading sessions were indeed higher than the usual ones, the ticker hardly moved with the biggest potential profit registered last Wednesday when it closed just 4% above its previous value. On Friday, however, HMLA upset quite a lot of people when the shares lost around 14%, finishing the week at just under $0.19.
Indeed, this figure is the result of just one week of trading, but it’s still quite a long way off the “near target” of $1.25 set by Trader TV at the beginning of last week. We can’t say that we’re shocked, though. In July 2012 they promoted Digital Development Group Corp (OTCMKTS:DIDG), a company dealing with the production of DVD players, tablets, smartphones and similar devices. In their emails Trader TV predicted that DIDG will be bought by Google, which in turn would drive the ticker up to $33 per share. Currently, it’s at $0.08.
Mineral exploration picks? Trader TV have had some of those as well. In February they sent out their alerts on Graphite Corp (OTCMKTS:GRPH) and they said that the stock could go all the way up to $7 per share. Now, a few months later, it stands at $0.22 or 50% below the pre-pump value. Could HMLA be any different, though?
Truth be told, HMLA are dissimilar from most of the exploration companies that we deal with here every day. What makes them so special is the fact that they have registered revenues. That’s right, a penny stock mineral exploration company that is actually digging something out of the ground. They have the figures to prove it, as well. Here are the most important ones as of January 31:
- cash: 45 thousand
- current assets: $79 thousand
- current liabilities: $1 million
- quarterly revenue: $45 thousand
- quarterly net loss: $118 thousand
Since 2010 they have closed several agreements for working interests in oil wells all over the US and apparently, they’ve been working at one of the properties for quite some time. Furthermore, they said back in January that drilling at another multi-well project is about to start, but unfortunately, we will need to wait for the next financial statement to see how this one has been doing.
Right now, we can only concentrate on the working wells in Garvin County, Oklahoma and, unfortunately, we have to report that there are some problems. When you compare the 10-Q for the period that ended on January 31 with HMLA‘s previous reports, you will see that the revenues coming from the oil and gas production are significantly lower for this quarter. You will also see that while last year they managed to end the period with a net income, this time there are some substantial losses. Of course, we were interested to see why is that.
It turns out that a production limit was imposed on the oil wells last year which put a spoke in HMLA‘s wheel. The 10-Q states that the barriers are now lifted but they are still not able to reach the figures they did before the government stepped in and restrained the operations. More worryingly though, HMLA say that the decreased revenues is partly due to the “natural decline curves in the wells”. In other words, the properties are running out of oil.
This means that the future is entirely dependent on the success of the other projects. Will HMLA be able to do it? Only time will tell. One thing is for sure – it’s not easy to trust a company that promises to make you very rich and at the same time has its corporate headquarters located in a residential house.
It’s also not easy to trust promoters that have failed with so many of their alerts. That’s why, we reckon that doing your due diligence and weighing the risks carefully is absolutely crucial before investing in HMLA.