NickelX (ASX: NKL) shares are up 34% today. NKL shares have reacted to an option on a couple of historic Czech mineral properties - and nothing wrong with that at all. One is for nickel, the other is for lithium and again, nothing wrong with that either. We do have some experience in this particular field and we've no doubt at all that there's at least something interesting at both properties.
The Erzgebirge (Krusny Hory in Czech, Ore Mountains in English) has been mined for near a millennia now. It's well known that there's still all sorts of stuff in there and surrounding areas. Zinnwald Lithium is just one of those with interesting properties. It's also true that mining techniques advance over time - as with all technologies. But the Czech lands got stuck in that idiocy of existing socialism and so techniques simply didn't advance for 40 years. Near all mining enterprises then went bust after 1989. It's only now that the slide rule is being run over those again with the ability - the potential that is - to re-examine using more modern extraction techniques. The basic idea here we're fine with.
However, we do have a simple metric to evaluate lithium claims. It's nothing to do with the geology - we're entirely happy to believe that there's spodumene there and even that the spodumene is lithium bearing.
NickelX share price from ASX
Our point and problem is with this: “Nickel X has executed an exclusive option to acquire 100% of an advanced Nickel and advanced Hard Rock Lithium exploration project, in Central Europe, within proximity to where 27 lithium battery “Gigafactories” are planned for 2030.” This is true but to our minds entirely irrelevant.
Where either nickel or lithium are going to be used is an irrelevance. They're both expensive materials - both well over $20,000 a tonne these days. You can move pretty much anything from anywhere to anywhere on the planet for under $100 a tonne these days. Being in a specific location for a $20k a tonne item just isn't one of those relevant things given those transport costs.
Sure, the costs of moving rock around to get to a processing plant, that could be something that matters. Possibly even the costs of moving lithium or nickel concentrates around. But that would depend upon the location of the processing plants for them, not the end users in the battery plants. That is, mines near the gigafactories doesn't matter. But this is something that NickelX is touting, that proximity. And it's that last part that we take as evidence of non-seriousness.
Sorry, but that's just the way we roll. If people are claiming as some grand value addition something that is, in fact, an irrelevance then we take all their other claims less seriously.
