American West Metals (ASX: AW1) (OTCQB: AWMLF) shares are down 38% this morning. AW1 shares dropping really isn’t what we’d expect from the announcement that has been made about the copper mineralisation at Storm in Greenland. There’s no particular explanation of this result either. They’ve not used the announcement to try to issue more stock - that was a couple of weeks back - and they have locked in ownership of the prospect already.
So, the announcement was: “Diamond exploration drill holes ST23-01, ST23-02 and ST23-03 were part of four holes completed during the 2023 season to confirm the sediment-hosted copper model, with each of the holes designed to test different geophysical and structural targets (Figure 2). The drill holes are widely spaced between 600m and 2km apart. Significantly, all drill holes have intersected copper sulphide mineralisation at the same stratigraphic level, with grades up to 2.7% Cu (ST23-02) indicating the potential of the system to host high-grade mineralisation. The copper mineralisation and geology within the drill holes is very similar and suggests that the stratigraphy of the deeper mineralised system is laterally very extensive.” At this very early stage of the game those are good results.
This confirms - in part at least - the earlier news from American West: “AW1 shares have jumped on the announcement of their copper find at Storm. This is good news, no doubt about that, but it’s worth noting that as yet this is all very preliminary. On the other hand we - humanity - have been looking at copper ores for several thousand years now, so folk do know what they look like. A visual is therefore a useful guide, even if not proof as yet.”
American West Metals share price from Google Finance
As to why the fall on objectively good results we might have to go back to this about American West Metals: “There’s nothing objectively wrong with any of those results. In fact they’re rather good. So, we might wonder, why has the AW1 share price declined, not risen, on this news? The answer is in the past American West share price rise.”
A share price always contains the expected future value. So, if new finds and announcements are being made then it’s entirely possible for a share price to get ahead of itself - to incorporate too much hope about what might be true. This can lead to a certain deflation of that hope value even as the objective results themselves are fairly good.
This is what leads to that old stock market saw, buy the rumour sell the fact. For facts often don;t quite live up to that hope value engendered by the rumour.
