The Lassonde CurveI've read some pretty good comments on here regarding the Lassonde Curve. I myself also rely on the Lassonde curve to help construct my investment framework (why I've got it as my profile pic). As far as I see it, the Lassonde Curve is crude and somewhat incomplete... I think I could draw it a bit better. Really the curve needs to be broken down into several "sub-curves" for the discovery phase which occurs within the main discovery curve. Exploration is incremental, not linear. It's the reason there are several programs carried out and not just one big non-stop program. You need to tick boxes as you go to make further investment justifiable, adjust strategy as you go and as more information comes in. As far as I see it there are three stages:
Stage 1 - "This is the next XYZ!" stage: There is the initial discovery euphoria/mania followed by the waning attention span of short term traders and casual investors. Price gots ballistic, the discovery and stock get compared to some major past discoveries. It then peaks and starts falling back significantly, even though nothings really changed. This stage usually lasts for around one month.
Stage 2 - "What the hell is going on?" stage: Then there is usually a lull period where the share price stagnates even though the company is ramping up drilling and the discovery is still in very early stage (this has played out text book with GAL so far and where we're at now). Lots of people sell here.
The discovery then proceeds to one of the following two stages:
Stage 3a - The discovery "death" stage: After a few months if the company can't follow up the from the initial exciting results you get the share price falling well back to where it started after 6-12 months. This unfortunately is the fate of most potentially major discoveries. Major discoveries are extremely rare. They are geological anomalies of significant scale globally. The stars really had to align for something as rare as a major discovery to occur.
But with a bit of luck you get...
Stage 3b - The real Major Discovery stage: You then either get a breakthrough where the high-grade, economic mineralisation is discovered. Not only does this take the share price to new highs well in excess of previous highs but it also gets the attention of bigger institutional investors, which further pushes price up. PDI's Bankan discovery is a classic example of this - it took them 15 months from initial discovery to find the high grade core. This tripled the share price once they made the discovery.
Look at the Chalice chart below during the early discovery phase - after the capital raising it languished for 3 months! It was only when they discovered the really juicy stuff that it stepped up a gear and away it went. All three phases...
(20min delay)