Larvotto Resources (ASX: LRV) is up another 50% today as the implications of that rare earths find in the ionic clay filter through. We should note that Larvotto is a tiny company, before this recent share price surge it was valued at a handful of millions of dollars. That's why the one find is having such a disproportionate effect upon that share price - up 250% on just the one announcement.
To a great extent this is justified too. We have, for decades, thought that ionic clays were a geology specific to South China and the Burmese border areas. The importance of this is that such ionic clays are an important source of the magnet rare earths, most especially the dysprosium and terbium required for the really high performance types. The world wants more of these and perhaps this would lock us into a dependence upon China? As it happens, no, we're finding that ionic clays are a common enough result of the weathering of granites in subtropical climes. As elsewhere, alleviating that concern about dependence upon China.
Larvotto Resources share price from ASX
As we've pointed out about Larvotto Resources before, the find for this specific company is indeed corporation changing. Whether it's quite worth this much is another matter. For this is very early days, very early days indeed. There're a number of years to even properly delineating the find, let alone revenues - and substantial expenses to get through those stages too. But then every mining adventure does have to start with that initial find.
What might be more worrying though is that the rare earths industry is still pretty small. A few hundred thousand tonnes a year, no more - yes even with all the new excitement about EVs and windmills. Larvotto is only one of six - and that's just those we ourselves know about reporting in this past few weeks - Australian miners reporting ionic clay deposits. And that's the longer term risk here, that this geology is so common that it becomes not worth very much. Whether it will actually pan out that way is an unknown, but it is a possible risk.