Blaze Minerals (ASX: BLZ) is up 100% on the announcement of a potentially transformative deal in Canada. BLZ has acquired a potential lithium property by taking over the North Spirit Lithium property in Ontario from Exiro. There are a number of share issues to fund all of this. In the one sense it is possible to say that this is entirely transformational for Blaze and the 100% jump is entirely justified. On the other it's also possible to say that this is entirely normal in junior mining and what we've really got here is an option. Both stories have their truths to them.
The deal is to take over claims in an area where there have been significant lithium finds. Frontier Lithium has a significant find not far away. The implication is that the mineralisation extends and at least so far as anyone knows there's the right sort of rock on this new Blaze property. Whether there's actually lithium in those rocks is the unknown. The next stage will be to drill on the new property, check the lithium contents of those mica bearing pegmatites and, well, find out basically. So, this is very early stages. Blaze has really bought into the opportunity to find out whether there's more lithium there. A substantial find would be truly transformative - but it's all very much up in the air as to whether there's anything, let alone an economic lithium deposit - there.
Blaze Minerals share price from ASXIt's possible to be a lot more cynical and suggest that this is the usual game of pass the parcel among junior mining stocks but that would be too cynical. Because at this level this sort of deal is pretty common. Someone stakes out a claim in a likely area. Rather than attempting to organise into being a development company that claim is then sold on. Sold to someone with a market quotation, the ability to raise money for the next stage and so on.
The real view here should probably be that Blaze is now an option on that lithium province. It might be that the mineralisation does run tens of km from the Frontier site. It might not be. Someone should perhaps go and find out - OK, so that's now going to be Blaze Minerals. But we are all still talking about option money. Blaze has a market capitalisation of perhaps $6 million (in USD). Is $6 million the right amount to be betting on whether there's another lithium find to be had? Quite probably yes. The odds of there being an economic find are fairly low. The costs of finding out will be tens of millions of $. The value if there is one there hundreds of millions of $. The option value is that value, minus the costs, times the odds of it all going right.
And that's the thing to really grasp about junior miners like Blaze Minerals. They're all about hopes and dreams and possibilities. Their share prices should be treated as options on there actually being anything in the ground where they're looking.
