The stock of Cerro Resources NL (CVE:CJO, CJO message board), which enjoys a rather humble interest by investors on the Canadian Market, became finally in greater demand during the last sessions. By far, the peak in the recent trading activity was yesterday, when the turnover was seven times the average. The volume surge was perhaps driven by the announced yesterday estimates of resources and reserves contained on one of the company’s Mexican projects.
In the last session, precisely 475 thousand shares changed hands on the TSX Venture Exchange. This seems a lot, taking into consideration that the average volume for the last month is a little above 65 thousand. At the same time, the stock moved 7% up and finished the day at $0.31. As a whole, the shares have been on the rise lately – on Monday they noted a record high of $0.37 and slipped a bit after that.
Yesterday, Cerro disclosed “positive” results from a feasibility study and a preliminary assessment on the Cerro Del Gallo Gold/ Silver heap leach project. The estimates reveal 32.2Mt of proven and probable reserves, additional 45Mt of measured and indicated resources and average annual production of 90 800 AuEq (gold equivalent).
The news had much greater effect on the trading volume than on the share price. Actually, the company stock is relatively new to the Canadian market – it has been listed on the CVE since the end of last September or for about 6 months. CJO is much more active on the Australian Securities Exchange, where only a week ago a turnover of almost 10M shares was registered.
It is very hard to predict the future behavior of the shares. On the one hand, the company is fundamentally stable with a cash position of $5.4M and a working capital of $5.3M i at the end of 2010. These figures do not include the $17.8M placement completed in February.
On the other hand, there is negative data too. Cerro has not recorded any revenue yet; the net loss for the second half of the past year was over $3.7M.
Moreover, the company is overestimated by investors – at present, it is evaluated by traders at about $222M, while the financial reports indicate it should be worth no more than $36M.
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