Westar Resources (ASX: WSR) shares are up 58% today. The cause of this leap in WSR shares is the announcement that they’re to drill again at Olga Rocks. They’re thinking that there might be some gold in one segment of the claim, lithium in another. So, they’re going to test that. And, well, yes, fine - for a company of the size of Westar finding reasonable amounts of either would be value additive. Their market capitalisation is around the $6 million mark after all. Doesn’t take much to boost such a share price - which is exactly what is happening today of course.
For the announcement: “Westar Resources Limited (ASX: WSR) (Westar or the Company) is pleased to announce that drilling has commenced at its Olga Rocks Project (Olga Rocks or the Project) located in Western Australia, to test the reinterpretation for potential pegmatite-hosted lithium and also target a prospective horizon for high grade gold mineralisation that is largely underexplored.” Effectively, maybe we missed something first time around and if we have another look then maybe we won’t miss it this time.
Well, has to be admitted, hope does sometimes triumph over experience.
Westar Resource share price from Google Finance
We have, however, already been here before. As we can see from that WSR share price chart. Back in May, when they first went drilling in fact, we said about Westar: “Westar Resources (ASX: WSR) shares are up 53% today on the announcement that they've hit thick bands of pegmatites at the Olga Rocks site. It's possible that this is us being excessively cynical when we describe this as hitting rock. You know, drill into the ground and hit rock? Well done lads. That is us being excessively cynical though. Much too much so. For every mining project does have to start with someone checking exactly what type of rocks underlie a particular piece of the scenery. That's what mining exploration actually is, checking the rocks.”
And a little later, about WSR: “As we know the world is terribly excited by lithium at present. Therefore near every minerals exploration company is off looking for lithium. It's not a particularly rare material so lots of it is being found. So, it's entirely believable that Westar has found a lithium deposit. But note that's not, in fact, what Westar is actually saying. The actual Westar claim is that they've found the sort of rock which often does contain lithium. This is, as should be obvious, a much weaker claim. “ The point then being that they didn’t find lithium. Which is why they’re back out there now, drilling again to see if they can find lithium.
Our point is not that they will - or will not - find lithium in those pegmatites. Rather, it’s that the current WSR share price rise is entirely based upon the hope that they might. Any trade is therefore based on what we think about the valuations of other peoples’ hopes. Which are a tricky thing to measure…..
