Aya Gold & Silver's Stock Plunge: Short-Selling Pressure and Resource Reporting Scrutiny

The recent 2.6% decline in Aya Gold & Silver's (AYASF) share price has sparked intense debate among investors, with short-selling pressure and allegations of resource inflation emerging as central themes. According to a report by Investing.com, activist short seller Blue Orca Capital accused the company of inflating its silver reserves by over 100%, claiming that as many as 50 million ounces of silver were fabricated in a 2021 resource update Aya Gold & Silver falls after short seller alleges resource inflation^[1]. This report, coupled with a surge in short interest, has cast a shadow over Aya's credibility and operational transparency.

Short-Selling Pressure: A Bearish Sentiment Amplified

Short interest in Aya Gold & Silver's stock has risen sharply, reaching 18,103,700 shares as of August 31, 2025—a 3.7% increase from the prior month Aya Gold & Silver (AYASF) Short Interest Ratio and Volume 2025^[2]. This level of short interest corresponds to a short interest ratio (SIR) of 66.0, far exceeding the typical 1–4 range associated with positive investor sentiment. A high SIR indicates that short sellers would need 66 days to cover their positions at the current trading volume, a metric that signals extreme pessimism. Data from FINRA further underscores this trend: on August 27, 2025, nearly half (52.88%) of off-exchange trades for AYASF were short sales Aya Gold & Silver (AYASF) Short Interest Ratio and Volume 2025^[2]. Such activity suggests a coordinated bearish stance, likely driven by the Blue Orca report and broader skepticism about Aya's resource claims.

Resource Reporting Credibility: A Fractured Narrative

Blue Orca Capital's allegations have directly challenged Aya's operational and financial integrity. The firm accused the company of fabricating silver reserves at its Zgounder mine in Morocco and questioned the independence of the 2021 resource estimate, which it claims was conducted by a close associate of Aya's CEO Aya Gold & Silver falls after short seller alleges resource inflation^[1]. These accusations are particularly damaging because they imply a lack of due diligence in Aya's exploration and reporting processes. For a junior miner like Aya, whose valuation hinges on the credibility of its resource models, such doubts can erode investor confidence and trigger sell-offs.

Compounding the issue is the disparity between Aya's projected production and actual performance. Blue Orca highlighted that the feasibility study for Zgounder envisioned a much higher silver yield than what has been achieved in practice Aya Gold & Silver falls after short seller alleges resource inflation^[1]. This gap raises concerns about the company's ability to convert exploration discoveries into commercially viable production—a critical risk for gold and silver miners.

Aya's Counterarguments and Exploration Optimism

Despite the bearish narrative, Aya has responded with a series of positive developments. In late 2025, the company announced new drilling results showing high-grade silver discoveries at Zgounder and additional gold mineralization at Asirem, alongside the acquisition of two new mining licenses in Morocco How Investors Are Reacting To Aya Gold & Silver (TSX:AYA) …^[3]. These findings are framed as evidence of Aya's exploration prowess and growth potential. However, skeptics argue that such results may not offset the reputational damage caused by the Blue Orca report.

Implications: Short Squeeze Risks and Broader Challenges

The current short interest of 18.1 million shares poses a double-edged sword for Aya. If the stock price rises—perhaps due to positive drilling results or improved commodity prices—short sellers may be forced to cover their positions, triggering a short squeeze that could further inflate the share price. This dynamic is a classic feature of high short interest environments.

Yet, Aya's challenges extend beyond short-selling. The company faces execution risks in converting exploration discoveries into production, geopolitical uncertainties in Morocco, and the inherent volatility of gold and silver prices How Investors Are Reacting To Aya Gold & Silver (TSX:AYA) …^[3]. For investors, the key question is whether Aya can rebuild credibility through transparent reporting and consistent operational performance.

Conclusion

Aya Gold & Silver's stock decline reflects a confluence of short-selling pressure and resource reporting skepticism. While the company's exploration successes offer a potential catalyst for recovery, the allegations from Blue Orca Capital have created a credibility crisis that may take years to resolve. Investors must weigh the risks of a short squeeze against the company's ability to deliver on its resource claims and navigate geopolitical and commodity price headwinds. For now, Aya remains a high-risk, high-reward proposition.