Galileo Mining (ASX: GAL) shares were up 25% on Friday (the ASX is closed today, King's Birthday) and that wsa a rather unexpected price move. Simply because there was no news released. Nothing that would or should change valuations of the stock. So, the puzzle is to work out why the price did change? For only if we work out why a price has changed can we even begging to work out whether it's going to go further, sink back to where it was or, possibly, sit at this new and elevated level. A good idea at such times is to have a look at the shareholding structure.
The background here is that Galileo has a JORC compliant nickel laterite resource. OK, it's well known how to mine nickel laterites, they contain nickel and cobalt, if there's enough there to cover the overheads of mining and a processing plant then that's a thing of value. Of course, as a resource, not a reserve, this hasn't been fully proven as yet. There's considerable work still to be done to do that proving. So Galileo's valuation is not settled - we cannot say here's the metals prices, subtract the costs of mining and there we are, the value. There is still uncertainty that is - because not all resources do then get proved up to reserves which are then really worth mining.
Galileo Mining share price from ASX
The most recent news is that more potential ore has been found. “Latest drill results show disseminated sulphide mineralisation continuing north of the Callisto discovery along the prospective five kilometre target horizon.” OK, that's interesting, but of course this is even further away from being a certainty, this is not even resources yet, this is just drill results.
But here's the thing. That news was two weeks back. So why is the price moving now? After all, we do expect share prices to already contain all known information and something announced two weeks back is known information.
Which is why having a look at the share register is a good idea. To some extent the speed with which prices react to news is a function of how sophisticated the investors in the company are. Big investment funds are likely to react faster than retail investors for example. And Galileo's register is rather dominated by retail investors. This does mean there can be a lag between news and reaction.
Another way to say much the same thing is that institutional investors, where they dominate, will react near immediately to news. Retail, well, often enough it requires a change in sentiment among those investors. This can take time to brew. The little lesson from this being that stocks where retail investors dominate might well move to objectively accurate prices, but they can take their time in doing so. Which gives us an opportunity of course, front-running those changes in sentiment to those objectively more accurate prices.
