The shares of Tinka Resources Limited (CVE:TK), (PINK:TKRFF) performed a “drilling” move on the price chart yesterday. Luckily, it was in the right direction – upwards, unlike the real drilling. TK bounced significantly up, aided by the large volume too. This came the same day when the public was informed that Tinka commenced a diamond drilling program in Peru.
As a result of the news, the stock hit a tremendous gain of 28% in just one session. The closing price of $0.64 is quite near the 13-year high of $0.73, noted in early April. Tuesday’s turnover was also remarkable and made quite an impression too. The volume reached 1.44M shares, beating five times the average.
Yesterday, Tinka announced about commencing diamond drilling at its Colquipucro silver deposit in Peru. A total of ten holes are planned to be drilled. Now traders are on the wait for the first assay results.
The stock has been doing well in the recent months. This impression, as a whole, cannot be spoiled by the decline witnessed since April. This is not hard to explain, looking at the figures. TK started the year at $0.30 per share, now it is worth more than double this value.
The past, however, cannot take responsibility for the future. It is far from certain that the progress of the stock will continue, especially with the same large pace. The enthusiasm from the drilling news will, most probably, fade away soon. Unless the company provides another huge development that might impress investors, it is hard to expect a further substantial rise in the share price.
As Tinka has not advanced to the production stage yet, it continues to incur losses. For the last quarter of 2010, the negative net income was about $0.15M. Additionally, the company looks overvalued by traders. The current market cap of $33M is considerably higher than the net tangible worth of the business.
The recent decline in the silver price is hardly a very pleasant factor for Tinka’s directors too. In such a case, does the company have the potential to support a significant climb of the stock?
Well, some people could argue that Tinka perhaps has this potential. In its latest presentation for March 2011, the company claims that silver recovery at Colquipucro ranged from 90% to 97% after leaching for two hours.
