Empire Metals (LON: EEE) shares are up 12% today on the announcement of further titanium finds. Or, to be rather more accurate, on indications that there might be a lot more there than initially thought. Injdications only at this stage though, for the proof needs to be checked: “Titanium mineralisation identified throughout the entire length of each of the three drillholes from logging of the diamond core, confirming that the titanium mineralisation previously intersected in the maiden reverse circulation ("RC") drill programme extends to over 350m vertically from surface. Geological mapping and rock chip sampling carried out across the large magnetics anomaly, including areas of coincident strong gravity anomalies, identified two new high-grade TiO2 drill targets covering 3km2 and 6km2 respectively. High-grade TiO2 values recorded from the surface rock chip sampling with many of the samples exceeding 10% TiO2, with the highest being 21.49% TiO2.The Company expects to have drill core geochemical analysis results available shortly…”
Note that we’ve got two different sets of information there. The first is that they’ve drilled their first target which - visually - indicates substantial Ti mineralisation. They’ve also done some very preliminary surface only work on other possible outcrops. Those then need to be drilled to be testde and so on.
Empire Metals share price from Google Finance
This is something of a change from our earlier report on Empire Metals: “Empire Metals (LON: EEE) share price is up 8% in London today and there's not much driving that if we're to be fair about it. Empire has released its final report but there's little there that we didn't already know.They're concentrating on Pitfield, they've enough cash to do that exploration work. There is, of course, no revenue so, well, what else is there to say? Well, we'd come back to what we said when that Pitfield titanium was last discussed. Which is that it's interesting, in a way, but not exactly value changing.”
The thing to grasp here about titanium. Yes, the metal costs a lot, $10s per kg. But near all of that is in the production of the metal from the oxide. Mining the base titanium oxide containing minerals doesn’t gain any of that value. This is an industrial mineral operation, the output is priced in the hundreds of $ per tonne range.
But then that’s what’s increasing the value of the Empire Metals find. The sheer volume of what they think they have is what is making it an interesting prospect. This ends up being all about economies of scale, not really the value of the material itself.Empire is finding scale, therefore the valuation is going up.