NEW YORK (ResourceInvestor.com) -- When it comes to buying exploration-stage mining companies, timing truly is everything.

Investors who paid up for Kodiak Exploration [TSXv:KXL] learned this lesson the hard way yesterday, when the stock dropped some 56% on less-than-stellar assay results. Don’t say we didn’t warn you. Just three weeks ago, Resource Investor said the company’s stock had gotten far ahead of its fundamentals.

The Next Voisey’s Bay?

For those who haven’t been following the story, Kodiak’s been in the news lately for its Caribou Lake project. Located in Canada’s remote Northwest Territories, the project has been touted by many as “the next Voisey’s Bay,” and has been responsible for driving the stock from C$0.20 at the start of the year to its early March high of C$3.54.

Although Caribou Lake might have potential, Kodiak’s stock has clearly fallen into the hands of pure speculators, with valuation thrown out the window. While the intersection of massive sulphides on its first drill hole sparked excitement, the assay results released yesterday brought investors back down to earth.

The assays indicated a zone of 1.41 metres grading 1.11% copper, 0.9% nickel and 0.12% cobalt. However, the entire 5.4-metre intersection graded only 0.5% copper, 0.36% nickel, and 0.05% cobalt, clearly below investor expectations.

Shares of Kodiak Exploration slipped C$1.50 to close at C$1.19 on massive volume of 4 million shares (equal to about 14% of all outstanding shares). While the stock had bounced back to C$1.55 by mid-day Tuesday, the initial assay results show that investors have gotten ahead of themselves.

After this news, Kodiak’s drill results will need to encounter significantly higher grades to move the stock higher again. The company is continuing on with a 16-hole program to see if it can’t uncover the promise that’s been so highly touted by media pundits and company executives.

Could Caribou Lake be the next Voisey’s Bay? Nobody knows. While the project still holds promise, the stock’s landslide shows the danger of placing a bet on a drill-hole play that’s already been more than ‘discovered’ by the market. The smart money with their ears to the ground were probably in this stock under C$1, and out of it above C$3.