Sabre Resources (ASX: SBR) shares are up 41% on the company’s doubling down on there being substantial lithium at their Andover site - sites now. SBR shares have risen on the issue of more of them to pick up another exploration licence in the area. This is, of course it is, something of a risk. For while the geology at Andover looks good that’s no proof at all that there’s going to be an economic concentration of lithium there. We’re back in that maybe there’s the right sort of mineral in the right sort of rock - maybe - level of proof here. #
As we’ve said before about Sabre Resources: “Sabre Resources (ASX: SBR) shares are up 18%. SBR shares are up that because they’ve announced that there might be lithium at their Andover prospect. Well, that there seems to be the right kind of rock for there to be lithium in that is. The excitement is because Azure Minerals is perhaps a little further along in the process of proving lithium - and Azure is also a little further along the same geological features with their claim. It is entirely possible that there’s some vast lithium field out there which is just being uncovered across multiple claims. That area did turn out to be packed with iron ore for example. But, well, it’s also possible to be a bit more cynical about what might be happening.”
This is the thing to grasp here. If we’re looking for hard rock lithium then we need to find spodumene which contains lithium - not all spodumene does contain lithium. To find spodumene you’ve got to find pegmatite rocks - not all pegmatites contain spodumene. So, running the exploration back in real time, finding pegmatites is only the first stage in finding spodumene which contains lithium.
Sabre Resources share price from Google Finance
The announcement today: “Sabre has acquired two additional tenement applications directly along strike - and just 5km northeast - of the major Andover lithium (spodumene) pegmatite discovery of Azure Minerals Ltd (ASX:AZS) which has produced drilling intersections of up to 209.4m @ 1.42% Li2O.” This all is still at the level of proof that if the guys next door have some then so will we. And while geology does often enough work that way it also doesn’t all the time.
#It’s also true that buying up this exploration license - for that’s what it is - is pretty cheap: “Number of +securities proposed to be issued 2,949,853” and the price is “0.033900”. $90,000 or thereabouts. A near $6 million addition to market capitalisation for a spend of $90k? That looks like a good deal but so much of a good deal that we’d expect the effect to fade ourselves.