Friday, April 19, 2024


Dhaka Tribune

Errawarra Resources (ASX: ERW) up 45% - again on that excitement over Azure Minerals

It doesn’t always work but the right mineral in the field next door can be a guide to what’s in this field

Update : 08 Aug 2023, 02:20 PM

Errawarra Resources (ASX: ERW) shares are up 45% today. ERW shares have done this before of course - a month ago in fact. After their soaring that one month back they then fell back to their starting point. It seems that here we go again. The issue is that there are indications - indications only - that there could be a good lithium find on the land that Errawarra owns. But the problem with mere indications is the uncertainty. Thus, as opinions vary then so does that ERW share price.

As we’ve noted before about Errawarra: “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.””

We’ve also got to note that Errawarra is still pretty small - it’s an exploration junior, the value is all hope value. There could be something there, might be, the share price bounces around dependent upon those hopes about what could, might, be there.

Errawarra Resources share price from Google Finance 

As we can see that hope value bounces around. The share price has halved and doubled again in just one month.

What seems to be driving this latest rise is the results from those guys right next door, Azure: “Azure Minerals (ASX: AZS) shares are up another 23% this morning. AZS shares are now up some 730% on the six months which is pretty impressive for an exploration miner. For, by definition, what we’ve got at present is indicative of an interesting and economic lithium deposit, not proof of it. Sure, the indications are looking very good but we still don’t have that proof. Proof only comes with the definitive feasibility study (DFS), everything before that is another brick in the wall of evidence that leads to it. Which means that as each brick is cooked and presented we have to add it to the collection and then see whether that wall is being properly built.”

Note what that hope value is. The guys operating next door, Azure Minerals, are getting the indications that they might have an economic lithium deposit there. In fact, a large one. So, some of that value is being ascribed to Errawarra who have the property next door. Yes, often enough geology does work that way. But most certainly not always - any and every geologic feature has to end at some point after all. 

What is needed here, to settle the price, is firm proof one way or the other.

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