Cannindah Resources (ASX:CAE) share price just tanked 42%. What on earth happened?

The market responded more than poorly to the company's update…

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Shares in Cannindah Resources Ltd (ASX: CAE) charged down today to finish 42.11% in the red.

In somewhat surprising fashion, the mineral explorer's share price plummeted following a company update outlining progress at its Mt Cannindah site.

While the company reported positive assay results from its exploration program, the market responded otherwise, sending its shares southwards.

So what happened? Analysing market trade data and the company's announcement, we uncover what went down for Cannindah's share price today.

What did Cannindah announce?

Cannindah advised it had obtained assay results from a drillhole at its Mt Cannindah site in Queensland. The results now indicate a major expansion in known copper, gold, and silver mineralisation.

The company notes the mineralised zones are divided into three subsections.

These are labelled as a "surface oxide zone" of up to 14 metres from the surface. This is followed by a "supergene zone" from 14-33 metres in depth. Each zone contains copper, according to the company's update.

There is also a supergene zone from 14 metres to 177 metres with a number of different grades and concentrations of resource.

All in all, the company intersected copper in hole 3 of its drilling program "aggregating to 493m @ 1.17% copper equivalent (0.89% Cu, 0.26g/t Au, 15.2g/t Ag)" from the surface.

For reference, 'copper equivalent' is the combined value of all economic metals in the intersected zone, with their value adjusted to an equivalent grade of copper, usually in US dollars.

It is widely accepted that anything over 100 metres and 1% copper equivalent or better is considered to be high grade.

Curiously, the release notes that Cannindah is drilling existing holes to examine the deep plunge of the copper mineralised zone at Mt Cannindah.

With this effort, it has "pushed on further down plunge to the west and discovered previously unknown or poorly delineated copper zones".

So what happened with the Cannindah share price today?

The market responded poorly to the company's announcement today, sending its shares well into negative territory.

Examining trade tickets from a trade summary provided by Bloomberg market data, we see a dump of almost 20 million Cannindah shares that occurred on Australian exchanges today.

A particularly large bloc trade of 225,000 shares in two lots was also executed through broker Credit-Suisse First Boston (CSFB).

In addition, there were 11 trades of more than 100,000 shares today for Cannindah's float with more than 60% of these occurring within the first hour of trading.

Overall, there were a total of 2,482 trades completed today for Cannindah shares. That's around 256% higher than yesterday and more than 570% above last Friday's session.

With this scurry of trading activity where large volumes of the company's shares exchanged hands, the picture starts to form as to what pulled the rug beneath Cannindah investors on Tuesday.

Aside from the project update and ensuing trading activity, there was no other remarkable market news out of Cannindah's camp today.

At the close, the Cannindah share price finished at 33 cents apiece, down from 57 cents on Monday.

Cannindah share price snapshot

In the past 12 months, the Cannindah share price has soared more than 1,078%, rallying 965% this year to date.

These returns are light years away from the benchmark S&P/ASX 200 Index (ASX: XJO)'s return of just 20% over the same time.

The author Zach Bristow has no positions in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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