American West Metals (ASX: AW1) (OTCQB: AWMLF) shares are up 29% today. AW1 shares seem to be rising upon hopes about the likely results from Copper Warrior. This is reasonable enough - after all, we’d never fund any mineral exploration at all if we weren’t hopeful about what the results were going to be. It’s also true that there’s a repeat of the general muttering about how short copper supply is going to be in the near future so that pushes up the value of copper explorers. But we’d suggest that a look at recent American West share price performance is going to be instructive about what’s happening now.
So, the actual most recent news: “Maiden drilling campaign at the Project has commenced to test near-surface copper targets. Induced Polarisation (IP) survey at Copper Warrior has identified several large target areas interpreted to have a geophysical signature consistent with copper mineralisation. High-grade copper returned from geochemical sampling of outcrop over the IP anomalies including 3.3% Cu at Anomaly 1 which covers an area measuring 850m x 550m. Copper Warrior is located immediately adjacent to the historical Big Indian Copper Mine and only 15km from Utah’s second largest operating copper mine at Lisbon Valley.”
There’s definitely copper there, the question now is how much? And locally there are some large deposits. So, hopes are high. Share prices rise when hopes get higher.
American West Metals share price from Google Finance
But as we can see from that share price chart, we’ve been here before. That August climb was the result of a copper find at Storm for American West: “American West (ASX: AW1) (OTCQB: AWMLF) shares are up 35% this morning. 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.”
And then we got the confirmation of that copper for AW1: “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.”
The hope about what the drilling results would be propelled the shares up, the initial results did so again, then the full details led to the price fall above through September and October. Now it is too much to try to insist that matters will repeat here. That’s not the way history works but it does echo. The new drilling at the new site is now underway, there’s excitement and hope about what the results might be. We could therefore expect some bidding up of AW1 shares on the hope of how they’re going to turn out. However, absent a truly massive Tier 1 find it’s possible to also expect that the hope value will exceed the real value of any find.
That is, after all, what happened last time around.
American West Metals share price from Google Finance
But as we can see from that share price chart, we’ve been here before. That August climb was the result of a copper find at Storm for American West: “American West (ASX: AW1) (OTCQB: AWMLF) shares are up 35% this morning. 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.”
And then we got the confirmation of that copper for AW1: “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.”
The hope about what the drilling results would be propelled the shares up, the initial results did so again, then the full details led to the price fall above through September and October. Now it is too much to try to insist that matters will repeat here. That’s not the way history works but it does echo. The new drilling at the new site is now underway, there’s excitement and hope about what the results might be. We could therefore expect some bidding up of AW1 shares on the hope of how they’re going to turn out. However, absent a truly massive Tier 1 find it’s possible to also expect that the hope value will exceed the real value of any find.
That is, after all, what happened last time around.
