Perpetual Resources (ASX: PEC) (OTCQX: PRESF) shares jumped another 60% today. PEC shares are up on the announcement of a further deal in the Brazilian lithium space. This could indeed be a great deal - if there’s a lot of lithium there. It could also be not so good - if there isn’t. The thing about this and about all exploration stage miners is that it depends. Before the exploration is done all values are, by definition, prospective.
The new deal: “Perpetual has entered into an additional binding option agreement to acquire a further three highly prospective exploration permits (Permits), covering approximately 5,000 hectares in Brazil’s “Lithium Valley” region, within Brazil’s the mining friendly state of Minas Gerais. These additional three Permits (known as the Ponte Nova Prospects) are situated in an interpreted extension of the modelled pegmatite corridor which runs from the Latin Resources Salinas Lithium Project, through the Colina deposit and potentially further Northeast into these Permits.” In one sense that’s all a bit hopeful. The folk next door have lithium so why doesn’t this patch? On the other hand that is how geology does work sometimes. That a deposit runs across the lines we’ve drawn on the map above it.
There’s also a modest share issue associated with this but of trivial value - it’s fees for having brokered the deal.
Perpetual Resources share price from Google Finance
We’ve talked before of the lithium ambitions of Perpetual Resources:
“Perpetual Resources (ASX: PEC) (OTC: PRESF) shares are currently up 40% today. PEC shares rose 90% at one point and fell back sharply after that surge. The initial reaction to the news was clearly too much. It's even possible that the current level of interest is too much in fact. For the announcement is only that they've now got some ground to search for lithium. True, it might be nice ground to search for lithium, there could be lithium there. But there's been little to no exploration to date, the idea that there is lithium there is that, well, there's some in the area. Which isn't usually regarded as grand proof.”
That’s not far away from where we stand now. Yes, obviously, new tenements to explore in a prospective area is good. But it is all hope value at present. What matters is what they find under the surface and we’re not going to know that for a good while yet. So this is all, as with the tenements themselves, highly prospective.