Tuesday, June 18, 2024


Dhaka Tribune

Foremost Lithium up 5,000% - no, they’ve not found lithium

This is a purely nominal price change, not some welcome reaction to a massive lithium find

Update : 05 Jul 2023, 04:16 PM

Foremost Lithium (OTCQB: FRRSF) stock should be up 5,000% at the open today. FRRSF stock actually fell 5% on the announcement though. For what happened was not the announcement of some massive lithium find, it was instead a purely nominal price change that took effect over this last very slow weekend. Monday was a half day for the US markets, yesterday they were closed. 

The greater proof we might want to take from this is that while, clearly, lithium is a zooming and booming market not everyone is actually profiting from that zoom and boom. Foremost: “Foremost Lithium Resource & Technology Ltd., an exploration stage company, engages in the identification and development of mineral properties in Canada and the United States. It explores for lithium, silver, and gold properties. The company has 100% interests in the Zoro Lithium project that consists of 16 claims covering an area of approximately 3,003 hectares located in the Snow Lake, Manitoba; the Winston property that consists of 140 unpatented mining claims” and so on. Lots of claims and very little proven. Which, in one sense, is fine. Every successful mining adventure starts with a claim that is then investigated. The problem is that so also do a lot of unsuccessful mining adventures start that way.

Foremost Lithium stock price from NASDAQ

Note the previous close at 8 cents, then the open at $4.25. This is what gives us that 5,000% rise. And the fall to $4.07 or so is also what gives us the 5% fall in the real price. 

The reason for this is pure fashion. An entirely cultural response to the beliefs of others. Varied stock markets around the world have an idea of what a stock price “should be”. In London it tends to be £1 to £10. In New York $10 to $100 - that's why US ADRs of London stocks are so often 10 pieces of the London instrument. 

A corollary of this is that something in that $1 to $10 range can seem, in NY, as being a young and thrusting up and comer. So, stock promoters might like to get their stock price into that range. The other corollary is that under $1 is a penny stock - obviously enough. But that comes with all sorts of connotations of not being quite right, of being around conmen and stock manipulators. So much so that you cannot be on the two major exchanges, NASDAQ and the NYSE, as a penny stock.

That last doesn't apply to Foremost Lithium of course as it's OTCQB already. But the cultural influence is still there, must be. For they've just done that usual solution for a penny stock price, the reverse stock split. In FRRSF's case it was 1 for 50. One new share in return for every 50 of the old - the stock price then mechanically moves up by that 50x, or 5,000%.

The reason for this was to prepare for the uplisting to NASDAQ.

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