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Dhaka Tribune

Errawarra Resources jumps 40% because the neighbours have lithium

Geology sorta works that way and sorta doesn’t - we’ll find out in the end

Update : 22 Jun 2023, 01:16 PM

Errawarra Resources (ASX: ERW) shares are up another 40% or so on Thursday in a delayed reaction to their announcments about lithium exploration. Lithium is, as we know - alongside rare earths - the mineral excitement of the day and those who claim to be exploring for it do tend to get a bounce. Those who have even a plausible claim to be likely to find some gain a further bounce. This is, to be unfair about it, what is happening with Errawarra. They're looking at the right sort of rock in the right sort of area, because lithium is exciting the share price jumps. That's rather cynical but perhaps not too cynical.

The bull case is that geology does work in areas. The sort of rock that produces lithium right here is also likely to produce lithium over there. And if we've some vast range of the same sort of rock then yes, if there's lithium in one bit of it then we're likely enough to find lithium in another part of it. Thus the Errawarra excitement: “Errawarra has a significant and strategic tenement land holding of 100km2 adjacent to Azure Minerals and their recent lithium discovery. This has given Errawarra confidence that its ongoing exploration work will

deliver further potential targets for testing. This region has been under-explored for battery metals including lithium.”

The Pilbara and Andover region continues to demonstrate its prospectivity for lithium and other battery metals. A strong endorsement for the lithium potential of the area was given by SQM (Sociedad Quimica y Minera) in early 2023 when they invested $20m into Azure to fast-track greenfield lithium exploration” The next field over has lithium so maybe our field has lithium too?

Errawarra Resources share price from ASX

Of course, this argument by implication isn't enough, which is why Errawarra is spending all that money on further exploration and drilling. At which point there are two further things to say about lithium exploration. 

As is obvious from the results being reported by many companies lithium is actually pretty common out there. So there's going to be no long term shortage. There's a lack of people currently producing that is, but not a lack of places where production can take place. This will mean that those late to the party aren't going to share in the bonanza of high prices.

However, good finds will remain good fins, so if Errawarra really does have substantial lithium in their area it will be worth something - just not as much as the same material at a currently producing mine would be.

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