Given this grade, you would think that Channel would rocket up. The stock did rocket - but not up. Before the announcement, it closed at 30.5 cents; it opened at 30. An hour later, though, it had sunk to 23. Futher sinkage brought it down to as low as 19.5, but it rebounded to 23 again. Those who got out at 30 and 28 cents right after the open were the lucky ones, if you don't count the buyers of the 12,500 shares sold at 19.5.
Evidently, something was wrong with that ostensibly great drill result - something that took some time to figure out.
That hole was one of several, and the others didn't return any results to write home about. Most of them were in another zone. The strike length of the discovery for the good hole is only 50 metres long: in other words, it and the other drill holes along the line where the drill rigs were set is only 50 metres. Since another drill hole along that 50 metres didn't show much, it looks like the ostensible pay hole intersected a deposit that's much too small to mine.
As the one-year chart of Channel shows, it was caving in already:
The Moral Of The Story: Speculating in junior exploration stocks is a skill like any other. One of the skills needed is the ability to do a due diligence on the fly as a new announcement comes out. The people who grasped the implications of that not-so-good news release (despite its one exciting hole) saved themselves some money by getting out right away. The ones who waited for the market to give its verdict, lost more.
It's possible that the 50-metre strike length will be extended considerably as time goes on, but foreseeing that possibility takes a lot more than good due-diligence skills. It takes expertise in exploration geology.
Disclosure: None.
I think It's possible that the 50-metre strike length will be extended considerably as time goes on..
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