Ozaurum Resources (ASX: OZM) shares are up another 54% today. The rise in OZM shares is about their lithium prospects. The lithium market, as we know, being one prone to excitements. It is - obviously - true that there’s a considerable rise in demand coming down the pike. All those EVs are going to need batteries after all. We’re always hesitant in these minor metals markets though. For we know there’s an awful lot more out there of most things than people generally realise. So, yes, demand is rising - but it’s entirely possible that supply will rise further and faster. The lithium price has dropped 75% this year after all.
We have looked at Ozaurum Resources: “Ozaurum Resources (ASX: OZM) shares are down 22% today. OZM shares are down not because of any announcement, nor some newly revealed problem. Rather, the weekend has produced a chance to have a think about the value of their Brazilian lithium deal. And the answer seems to be that yes, while that’s good it’s perhaps not quite that good. As we’ve been known to note the shares of exploration miners can be a bit too reactive to the announcements of deals and news. Initial surges can often enough unwind at least in part upon more mature consideration.
As to what’s been happening at Ozaurum Resources: “Ozaurum Resources (ASX: OZM) shares are up 190% on Friday. OZM shares are up on the basis that a gold miner has now bought into a lithium operation in Brazil. That’s the way that fashion works in mining.”
Ozaurum Resources share price from Google Finance
We’ve not got much news from Ozaurum, the last corporate missive simply tells the exchange that they don’t know why the share price has gone ballistic - there’s no inside information to be revealed.
The way we need to think of this. We can divide lithium miners into two groups. Those currently producing - their prices depend upon the lithium price, Albemarle, Pilbara and so on. Then there are those much, much, smaller companies still exploring. Yes, major Li price changes will affect them. But the real price determinant for something valued at $30 million - like OZM - is speculation about the size of the deposit they have or have not.
So, what determines the Ozaurum price is that speculation over how much lithium they do or do not have in Brazil. Something which will likely drive the share price too far one way or the other - hope tends to do that. But given that we - and nor do they - know the size of the deposit yet it’s very difficult to know what the substantive valuation is, shorn of that hope. It’s a gamble, basically, a gamble upon geology.