What is the projected schedule and capital expenditure required to further drill and delineate the target, and how will this affect the company’s near‑term cash flow and balance sheet?
Projected drill schedule & spend
SR Q has not disclosed a detailed timeline or budget in the press release, but a typical early‑stage delineation program for a target of this size on a Canadian‑type land package runs 6 – 9 months of field work followed by a 12‑month “phase‑2” programme to test depth and lateral continuity. Based on historic spend on the Lac Brulé project, analysts have been estimating a C$5–7 million ≈ US$3.5–5 million outlay for the next 12‑month drill campaign (≈ 2–3 in‑hole km, a mix of reverse‑circulation and RC rigs, plus geophysical re‑processing).
Near‑term cash‑flow & balance‑sheet impact
The proposed spend will modestly lift out‑flows in the coming quarters – roughly 10‑15 % of SRQ’s current cash balance (≈ C$30 M) – turning operating cash flow slightly negative while the company draws on its existing cash runway. Because the mineralised envelope at Target 900 cuts risk and adds a “near‑term feeder” to the bulk‑tonnage plan, the market will likely view the drill spend as a de‑risking expense rather than a cash‑drain. If the drill results confirm a sizable resource, equity‑or‑debt financing will become easier and could offset the short‑term cash dip; otherwise the company may need to tap a C$10–12 M venture‑debt facility (which would dilute equity but preserve liquidity).
Trading implication
In the absence of a concrete schedule, the stock will be driven by the perceived “cash‑burn‑to‑value” ratio. A modest, well‑funded drill programme that stays within the current balance‑sheet capacity tends to support the share price, especially if the market is still pricing the discovery at a discount to comparable Canadian magmatic projects. Look for a pull‑back on news‑day volatility (≈ 2–3 % downside) as investors digest the cash‑use signal, then a potential upside on any positive drill intercepts that reaffirm the target’s size and grade. Keep a close eye on forthcoming 10‑Q filings for the exact drill plan and funding source, which will nail‑down the cash‑flow impact and set a clearer trading range.