Forrestania Resources back down 27% again - as we said would happen

Forrestania Resources (ASX: FRL) announced that they'd found the right kind of rock. The share price jumped 100% - we said that this was too much for just the right kind of rock. It took a day but the market has caught up - FRL is down 27%, or, given the way that percentages work, has given up half of that 100% rise. 

Yes, junior miners can indeed have significant price moves on the basis of new information but this was too much for Forrestania: “Forrestania Resources (ASX: FRS) shares are up 100% in Australia today on the back of their drilling results. It has to be said that this does look a touch excessive. In fact, the early response was obviously excessive for at sone point FRS shares were up 200% and that's faded back somewhat. The cause of this is an announcement about their drilling at the prospective lithium property. The reason this all seems a little excessive is that they've not, in fact, announced the finding of lithium. Rather, that about the right sort of rock that might host lithium has been found on the property.Well, yes, the right sort of rock is a necessary precursor to finding the right mineral but still, it does seem that bit excessive.”

Note that we're not claiming omniscience here, just a little bot of foresight powered by market experience.

Forrestania Resources share price from ASX

We do not exaggerate either. For the announcement really was just that they'd found pegmatites. The sort of rock which that could, with luck, host lithium. “63m pegmatite intersected at maiden Calypso drilling.”

Yes, of course, this is a useful stage. It's necessary to find the right type of rock before testing it to see if it contains the target metal. But a 100% Forrestania share price rise just on the rock finding did seem a touch excessive which is why it has all fallen back today.

Again, we're not claiming superior knowledge here. Not of the drilling results that is. But we have seen a lot of market reactions to junior miner announcements and that experience led us to thinking that 100% was too much - as turned out to be true.