This morning’s news that Continental Gold (CNL.TO) has made the decision to not continue waiting for the regional authority to grant its final environmental permits and instead go straight to the national government of Colombia sent CNL shares tumbling more than 20%. While this certainly doesn’t make existing shareholders happy, this could be a tremendous opportunity to get into CNL shares at an attractive price level:
C$2.00 represents important long-term support/resistance – despite the negative news CNL did not breach April’s low
Due to an impressive run higher in a short period of time and anticipated seasonal summer weakness, in June we suggested that it was time to take some money off the table in CNL and wait for an attractive re-entry point. This morning’s tumble is just such an opportunity. We added shares at C$2.01 and view the risk (~20%) to be relatively modest compared to what we view as the reasonable upside (C$4.00) in the event the government of Colombia grants CNL its final Environmental Impact Assessment.