It is normal to be exhausted after achieving something big. Likewise, stocks usually tend to calm down after setting new highs.
The shares of Sienna Gold Inc. (CVE:SGP), (PINK:SNNGF) are not exception to the rule. Having noted a new year-high at $0.75 on Thursday, they seem to calm down now. Last Friday, SGP pulled 6.7% back to close exactly at $0.70 per share. The turnover was significant too – almost 1.29M shares were traded, or 2.4 times the average volume.
Is the stock really exhausted after reaching its new high? Is it ready to jump up again? Is it in danger of falling deep down? These questions are not easy to answer.
Still, there are some considerations we could mention. Since the start of the year, the shares have been firmly and steadily moving up. This noticeably rose the market value of the company. At present, it is about $52M, while the net worth of the business is $17M.
The conclusion: investors seem to have overvalued the company. They have quite positive attitude towards Sienna Gold, but this looks somewhat unsupported by the company’s fundamentals.
At the same time, Sienna released several very encouraging announcements over the last month. They might come in support of the stock in the future.
Maybe, among the most important company developments were: a $7M private placement was completed in late February; the company listed its shares on the Lima stock exchange in Peru in early March; last Thursday, Sienna disclosed promising assay results from its ongoing drill program at the Igor project in Peru.
Nevertheless, the company’s managers have a lot of work ahead of them. Sienna has not managed to record any profit from its activities as yet. The Igor property is a formerly producing mine; at present, however, it is not yielding any production for Sienna. Accordingly, the company continues to incur losses.
