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By Martin Tsvetkov
Feb 02, 2011

A Signed MOU Pushes Western Sierra Mining Corp. (WSRA.PK) Stock Up

WSRA chart.pngNews of a signed Memorandum of Understanding between WESTRN SIERRA NEW (PINK:WSRA) and Enviroxtract, Inc. (OTC: EVXA) pushed the stock of the former significantly up. As a consequence, not only did it double its value closing at $0.01 per share, but also its trading volume soared high, hitting a 52-week record. What is more, of the 14.12 million shares that changed hands yesterday, over 3 million were generated in short sales.

The MOU is supposed to precede a mining project to be developed on a joint-venture basis in both Arizona and Nevada. While this corporate update might have had a strong impact on the sudden surge in price, the promotion behind it turned up faster than the speed of light. The ongoing advertising campaign, which was organized in favour of Enviroxtract, was reported to have cost a third party as many as 20 million shares. Nevertheless, it appears to have had a positive influence on WSRA stock, as well.

Western Sierra Mining Corp. specializes in exploring mineral properties in Arizona and Nevada. It has already acquired interests in a number of mines.

WSRA unregistered with the SEC in April, 2009. Since then, it has adopted the alternative reporting standard and has duly submitted its regular reports. The latest Q3 report covering the period ended Sept. 30, 2010 revealed:

  • $123 thousand in current assets, over 90% of which unspecified and only 9K in cash;
  • $127 thousand in current liabilities, all comprised of notes payable
  • long-term notes payable amounting to more than $1.4 million;
  • a 9-month net income of $173K, which marks a significant improvement over the net loss of $106 thousand for the first nine months of 2009.

What seems to be the Achilles' heel in the company's financial state is its long-term debt. From $290 thousand as of Dec. 31, 2007, it had soared by 330% to $1.22 million by December, 2009. The latter is due to mature this year. Very soon WSRA management will have to explain to shareholders how it is going to finance its long-term debt without adversely affecting their best interests. 

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