The trading frenzy in Epsilon Energy continued this morning when the mineral sands explorer returned to the boards after a two-day trading halt.
Epsilon, which on Wednesday announced a 1 billion tonne Pilbara iron ore target for its Mardie project in the Pilbara, soared from 17 cents to 87 cents on the news.
It was trading at 68 cents when directors finally called a trading halt.
But the Epsilon share price was pummelled in early trading today. It opened at 44 cents, down 34%, and was holding around 36 cents by mid-morning - down 58% from its peak on Wednesday.
The surge in the company's share price this week came on the back of a bullish 1 million tonne iron ore target for Mardie. That estimate is based on computer modelling of a "magnetic anomaly'' in the region. No drilling has been done to define or confirm the existence of a mineral resource.
Also, Epsilon is yet to be granted rights to the Mardie tenement, and has an application pending.
Before the release of the controversial investor briefing, Epsilon had just $1.4 million of cash in the bank, a market capitalisation of $16 million and 42 million shares on issue.
Just over an hour before returning to the boards this morning, Epsilon issued a statement confirming the ore target, revising the estimate to between 0.96 billion and $1.2 billion tonnes of iron ore.
Managing director Matthew Gauci said the target was based on "geophysical data, geological mapping and computer modelling'' of the tenement.
He also confirmed that Epsilon was yet to obtain the rights to the Mardie tenement.
While many who bought into Epsilon during Wednesday's trading frenzy may be burned by today's collapse, the overall rise in the company's share price is certainly good news for Epsilon's founders, directors and associates.
Together they hold 30% of the company's 42 million shares on issue - shares that were trading at 17 before the investor briefing.
Epsilon was spun out of nickel explorer Heron Resources in 2006, floated at 20 cents a share and holds a portfolio of seven projects across four Australian states. Gauci is a former Scimitar Resources director, while former Rio Tinto executive Bruce Larson is the chairman.
EPS Price at posting:
0.0¢ Sentiment: None Disclosure: Not Held
