Yesterday, Cypress Development Corp. (CVE:CYP), (PINK:CYDVF) stock maybe impressed a lot of investors with its strong price explosion.
And maybe a lot of investors today may realize that the price spike was just to maintain the shares’ good shape within the known form of the trading range.
On the TSX Venture Exchange (CVE), being neither oversold nor overbought since the beginning of the year, CYP opened the market quiet as it usually does.
Seems like the company’s press release from December 21 for a non-brokered private placement devoted to the company’s Twenty One Silver-Gold Mineral Claims in Nevada and to the company’s general working capital needs inspired investors as much as it was to be expected.
The impossibly huge demand for CYP stock resulted in a trading volume of not twenty one, but almost six million shares, while the average for the company is less than half a million.
This was not the whole story about the surging up of CYP. The shares closed the market at $0.06 per share, not with a twenty one but with an exactly 20% price increase.
As opposed to the optimistic, it is difficult to name it bullish, mood of investors on the CVE, on the Pink Sheets market the price of CYDVF returned back with 5.26% yesterday after the surging this Monday.
Referring to the above mentioned recent company’s news, the non-brokered private placement is for up to 20,000,000 units at an offering price of $0.05 per unit. Looks like for its Twenty One Silver-Gold Mineral Claims the company plans to receive $1 million in gross proceeds.
At the same time, the last company’s financials show that as of September 30, 2010 the company spent 82K in consulting and management fees for related party transactions, and also additional $467K for the so called administrative agreement. It is related to the fact that CYP operates under the premises of a private company controlled by a shareholder that provides office and administrative services to the company.[BANNER]
So, the further calculations are simple. For a nine-month period, “keeping the trend” the company will need $549K, which is more than half of the above mentioned gross proceeds from the private placement. And if CYP spent $1.6 million only for drilling on its Ontario claims, looks like for the “not yet drilled” company’s Nevada claims the remaining amount of the proceeds will really not be enough.
Following this row of thoughts and observing CYP stock performance this year and these months, it looks like yesterday CYP stock surged just to maintain its good shape within the known form of its trading range.
