Asra Minerals (ASX: ASR) shares are up 75% today on the exercise of an option on tenements at Lake Jonston. OK, there may well be lithium there and that would have value if there is. But it’s worth thinking for a moment here, for we've also got that frenzy going on in TG Metals (ASX: TG6) shares - which is also about lithium at Lake Johnston. “Those are good results for this stage of exploration. We’ve achieved three of our four goals - pegmatites, which contain spodumene, the spodumene contains lithium. There’s still the fourth to go now, which is to prove that this is true in sufficient volume to be worth mining.”
Note though what has not been proven. That there is an economic lithium find at Lake Johnston. We think it’s likely that there is one there but it’s not been proven as yet. TG Metals announced today more findings: “TG Metals has conducted infill and extensional soil sampling (400m x 50m spacing) over the area immediately east of the Company’s recent discovery of a spodumene rich pegmatite at Burmeister (ASX announcement 30 October 2023). The results have defined a new area of lithium in soils anomalism, identified as the Jaegermeister Prospect, which is larger in scale than the Burmeister soil anomaly.” OK, that’s interesting and prospective and all that. But it’s still not actual proof of an economic lithium deposit.
Asra Minerals share price from Google Finance.
So Asra announces that they’ve now got property at Lake Johnston: “The Lake Johnston Lithium Project covers 410km2 of land in the southern Yilgarn region of Western Australia and consists of three exploration licences, situated 150km south-west of Kalgoorlie.
These tenements were selected by Asra due to their prime real estate, as they are located in fertile geological ground for LCT pegmatites and surrounded by multiple other lithium projects.” OK, that’s great. There are those early indications at those other projects, even if as yet no proof. But the valuation of the Asra tenements is being based upon those other projects: “Asra’s Lake Johnston tenure is 15km along strike of TG Metals’ (ASX:TG6) Burmeister discovery which recently delivered intersections of multiple lithium-bearing pegmatites, close to surface and between 8m and 12m thick.1 The districts potential is evidenced by the Earl Grey lithium mine (a Covalent Lithium JV between Wesfarmers and SQM) to the west (Figure 3) and numerous lithium pegmatite occurrences being revealed by other junior exploration companies in the immediate Lake Johnston area.”
D’ye see the problem? TG Metals has not proven their resource as yet. But that TG Metals is working on doing so is being used as supporting evidence that there’s likely lithium here on Asra’s ground.
And, well, yes, OK. But it’s not proof, it really isn’t. Now, it may well be that Lake Johnston is a grand new lithium province. We think it’s likely to be so in fact. But to an extent these valuations of the exploration companies are feeding off each other, not the objective evidence from the explorations themselves. Thus it’s good to be wary here. It’s entirely possible for that spiral to reverse itself - one set of bad results from one company could reverse the whole trend.