X-Terra Resources To Conduct One For Seven Consolidation Despite Recent Run-up

X-Terra Resources (TSXV: XTT) is looking to tighten up its share structure despite recent positive momentum in the name. The firm this morning disclosed that it will be implementing a share consolidation that investors approved last August at the firms shareholder meeting.

The consolidation will see the company issue one post consolidation share for every seven pre-consolidation shares held by investors. The ratio of the consolidation is near the upper limit of the range approved by shareholders, with the company eligible to conduct the consolidation at as much as a 1 for 10 basis.

Slated to be implemented after the close of markets on February 7, the company will see its 114.7 million shares outstanding reduced down to 16.4 million. No fractional shares are to be issued in connection with the consolidation, with any fractional shares to be rounded to the nearest whole number.

X-Terra indicated that it intends to conduct the consolidation as a means of obtaining a share structure that “will better attract capital financing and that will provide for future growth opportunities.” This is despite the firm raising $1.2 million in flow through funds in December.

X-Terra’s recent run-up

The announcement of the consolidation comes on the heels of the firm seeing a recent spike in its share price. After trading at $0.02 for months, the company in November saw its share price begin to rise after commenting on exploration being conducted by Winsome Resources on a property contiguous to the firms Liberty Lithium property in the James Bay region of Quebec.

Rather than invest heavily in its own exploration dollars, the company has instead focused primarily on moving on Winsome’s coattails.

That’s not to say that the company has spent no exploration dollars however. On November 16, the firm revealed that it had mobilized a technical team to its property to conduct a “helicopter-assisted reconnaissance prospecting program,” which was completed within days. Six days later, the firm announced that it had concluded the exploration program, which “completed some reconnaissance via helicopter at low altitude.”

The company went as far as to say that it also conducted “sporadic field verifications,” to confirm that the mineralization found on Winsome’s Adina property might continue onto the Liberty project.

The effortless push to drive X-Terra’s price higher then continued in January, when the company “congratulated” Winsome on its recent discovery at the Adina project, which included an intercept of 1.34% Li2O over 107.6 metres. In an effort to show it was doing something, X-Terra at the same time announced that it had signed a contract for a heliborne magnetic survey to be conducted on the Liberty project.

While minimal effort has been put in by management on the project, that effort appears to be working – even if it’s at the expense of Winsome’s actual effort.

The company has seen its share price rise from $0.02 in November to $0.155 as of yesterday’s close – a 675% increase in a matter of months, while riding off of someone else’s coattails.

X-Terra Resources last traded at $0.155 on the TSX Venture.

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Information for this briefing was found via Sedar and X-Terra Resources. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.