Positive announcements one after another. The business – expanding. The shares – rising. This is not a dream. For Silver Quest Resources Ltd. (CVE:SQI), (PINK:SQIFF) it is a reality. Surely, the company’s managers hope this could last as long as possible.
The stock has been progressing continuously since mid-March, with few exceptions. On Monday, the rise was even more evident and was reinforced by the large trading volume too. SQI marched 14.3% up, on a turnover of more than 3.7M shares. The stock ended the trade at $0.73, or 46% higher than three weeks ago.
The rise has probably been driven by a series of positive developments announced by Silver Quest recently. The company increased its properties by acquiring new deposits in central Yukon (Canada) and by expanding some of its existing projects.
New encouraging developments were released over the last two days. Yesterday, Silver informed about commencing a 20,000 meter drill program on the Davidson Property. Today, the company disclosed “significant gold-in-soil anomaly” at its Capoose Project in British Columbia.
It looks Silver Quest is expanding its projects and its business. Not surprisingly, the stock seems to follow suit and has been advancing steadily over the last weeks. Perhaps, the positive announcements led to the accumulation of some bullish energy, which supported the shares for a rise. Now, the question is whether SQI has the potential to continue its upward march, or the bullish energy has already dried out.
To answer this question, we should probably look at the company’s fundamentals. As mentioned in an earlier article, Silver Quest has a relatively stable financial position with $6.2M in cash and a working capital of $6.35M at the end of last November.
Now it is time for the negative side of the story. Silver Quest has not earned any revenue as yet and continues to incur losses – the net loss for the quarter ended Nov. 31, 2010 was $1.6M. Besides, the company has not declared any proven reserves on its properties – all previously disclosed estimated resources are in the inferred category and are, therefore, still probable.
That is why acquiring new properties is not always and not necessarily such a wonderful thing as it seems at first glance.
