Spanish Mountain Gold Ltd. (CVE:SPA) (PINK:SPAZF) share price continues to cling higher and started to form a dangerous pattern that often leads to large scale corrections.
SPA stock price added another 1.25% on Thursday following an extended price rally that’s been active since mid-August. The trading volume was nearly 1.8 million, which was more than 6 times the average of 277 thousand.
Technically, such situations generally lead to expiration of the rally, particularly when trading volumes begin to ramp up. The extensive price gains, especially after a gap up, can only be supported by strong positive material news. In this case, the news that caused the intense buying wave included resignation of Chief Operating Officer, which is of questionable nature.
The resignation of Ron Halas was reported on September 6, 2011 with Morris Beattie taking over to deal with a pre-feasibility study for the Spanish Mountain Gold Project. The COO vacancy was left unfilled.
The start of this study was announced on August 31, 2011 and is based on a preliminary economic assessment completed in December 2010. The pre-feasibility study should be completed in around six months. Feasibility study that is expected to follow will take another year to complete.
