Kairos Minerals (ASX: KAI) shares are up 50% today. KAI stock rose on the back of Global Lithium Resources buying into a 10% position in Kairos. This is, of course, a validation of the very early finds that Kairos is making - it's also a protection of the GLR position in the adjacent tenements. All of this does depend, of course it does, upon the viability of any lithium finds in the area. This is best thought of as jockeying for position on the basis that there will be economic lithium there.
The immediate cause of the jump in Kairos is this: Global Lithium Resources has bought in as a 10% and change shareholder in Kairos Minerals. That shouldn't - or normally wouldn't - spark a 50% rise in the target stock. 10% is one of those neither here nor there numbers, it's not the base for a takeover for example, even as it's more than just a little trading position in the shares. However, there's more between the two companies than just that they're both looking for lithium. They're looking for lithium in much the same place, from Kairos: “Management says its Black Cat discovery bore striking similarities to Global Lithium Resources' renowned Manna lithium prospect, in terms of orientation, interpreted geology and geochemistry. That find opened the Eastern Goldfields up as a new spodumene-bearing pegmatite province. The Manna lithium-tantalum project, which has a 32.7-million-tonne JORC resource grading 1 per cent lithium oxide, sits just 10km north of Roe Hills.” The current geological assumption is that the one potential deposit is simply an extension of the other. It thus makes sense that at least some cooperation takes place across both deposits.
Kairos Minerals share price from ASX
Note that none of this means there is actually an economic lithium deposit there. We've not proof of that, are at a much earlier stage. Our own belief - and please note, belief - is that there probably is but that's because we think there's lots of lithium all over the place. It's simply not a rare element. That has obvious implications for the long term value of any specific find of course - we expect the lithium price to decline over time from its current highs.
The way we should really think about this share purchase thought. Global Lithium Resources is exploring that tenement right next door. They've got more information about the likely geology than anyone outside Kairos. They've just bought int - that should be taken as a validation of the potential of the project.
Note, again, that insistence on the “potential”. No one has proven anything very much here yet, it's all potential.