Why Cohiba Minerals’ Share Price Jumped 110% Today

At the time of writing, shares of Cohiba Minerals Ltd [ASX:CHK] are up by 110%, to 2.1 cents per share.

Why did Cohiba Minerals Ltd shares do this?

The company announced that it would accelerate exploration at its Olympic Domain project following the discovery announced by BHP Group Ltd [ASX:BHP] on its exploration licence EL5941. The two projects are located next to each other:

Cohiba minerals

Source: Cohiba Minerals

Cohiba Minerals was pretty much a nearology play on the drilling program of BHP Billiton. If the world’s largest mining company hit pay dirt, Cohiba Minerals’ share price would have skyrocketed. That was the play and that’s exactly what happened. Here’s a preview of BHP’s drill results at its Oak Dam project:

BHP hit an extensive copper system, with one intersection coming up with 425.7 metres of copper grading 3.04%. That’s a world-class copper discovery, which you don’t really see much these days. It’s no shock that Cohiba Minerals’ share price surged on the news.

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What now for Cohiba Minerals Ltd?

The share price reacted strongly to the favourable news:chk commsec

Source: CommSec

Cohiba Minerals has been relatively flat all year, trading like a typical penny stock. That said, as it tends to happen with these type of stocks, good news can put a rocket under the share price. That’s exactly what happened today.

Long-term shareholders were rewarded.

Now, Cohiba Minerals needs to drill its land. That costs money ― lots of it. Unfortunately, when it comes to penny stocks, cash is often needed. That’s the case with Cohiba Minerals ― it’s running short of coin today:cohiba

Source: Cohiba Minerals

The bottom line: Shareholders should remain cautious. Cohiba Minerals needs to raise cash to drill a decent exploration program. There’s also no guarantee that BHP Billiton’s world-class mineralising will run into the company’s lease. But, if it does, shareholders should expect fireworks next year.

Regards,

Jason Stevenson,
Resources Analyst, Markets & Money

PS: Interested in mining stocks? My free new investor report, ‘A Detailed Look into Australia’s Top 10 Mining Stocks’, does exactly what it says in the name. I look at 10 companies that could make you huge money this year, and beyond. To download that report free, go here.


Jason Stevenson is Markets & Money’s resource analyst. He shares over a decade’s worth of investing and trading experience across resource stocks and commodity futures and options. He originally studied accounting and finance at Curtin University, where he was awarded a first-class honours degree. His professional background stems across high-net-worth, top tier accounting (corporate finance, tax and auditing), and sell-side equities research. Before joining the team at Markets and Money, Jason worked at boutique firms which advised fund managers and high-net-worth clients on where to invest. Whether it’s gold, crude oil, copper or an obscure metal like vanadium, you can rely on an in-depth analysis in Markets and Money. Jason also brings you extensive macro, political and geopolitical analysis from around the world. He leaves no stone unturned when it comes to telling the truth. Jason is also the lead analyst of Gold Stock Trader, a premium service for investors serious about precious metal stocks. Websites and financial e-letters Jason writes for:


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