Sabre Resources (ASX: SBR) shares are up 18%. SBR shares are up that because they’ve announced that there might be lithium at their Andover prospect. Well, that there seems to be the right kind of rock for there to be lithium in that is. The excitement is because Azure Minerals is perhaps a little further along in the process of proving lithium - and Azure is also a little further along the same geological features with their claim. It is entirely possible that there’s some vast lithium field out there which is just being uncovered across multiple claims. That area did turn out to be packed with iron ore for example. But, well, it’s also possible to be a bit more cynical about what might be happening.
The announcement: “Sabre’s tenement footprint at the Sherlock Bay Project has more than doubled, including a major new tenement application at “Andover East” that covers Andover Lithium Project “look-a-like” targets on a northeast trending magnetic low (Figure 1). The Azure Minerals Ltd (ASX:AZS) Andover Project lies 50km west of Sherlock Bay and recently produced intersections of up to 209.4m @ 1.42% Li2O1 from pegmatites in a similar northeast trending magnetic low - structural corridor”
We can tell this story in two different ways. The first, the one the company would like us to run with. Lithium is often contained in spodumene, which is in pegmatites. We’ve got pegmatites, the pegamatites 30 miles away have lithium in them, maybe ours do as well. It is, we think, a continuation of the same geology after all. We can also tell this the other way, which is that they’ve got some rock which might contain lithium. There’s not a great deal of difference between those two stories, they really only vary in their emphasis.
Sabre Resources share price from Google Finance
No one knows how much lithium there is there. It is entirely possible that there is that major new field that the varied different companies are all picking up a piece of. It’s also possible, as we said yesterday about Errawarra Resources: “The problem for us is that there’s a great deal of circularity about the varied announcements here. As we can see above part of the argument is that if there’s lithium next door, at Azure Minerals: “Azure Minerals (ASX: AZS) is up 34% today on very preliminary news of a lithium find. Actually, it's so preliminary that the board has had to release a second information sheet pointing out how preliminary it is. They've got the right mineral but aren't sure how much lithium there is in it. This is value additive, the information so far, but those pesky little details do matter as to how valuable it actually is.” And if they’ve got some then so might we. But this is also the argument being used by Raiden Resources. And Artemis Resources: “The point for us to understand here is that this is still at a very early stage. Yes, the right rocks (pegmatites) have been found. Also, some interesting lithium values have been found in some of those rocks. It's even true that this seems to be an extension of a mineral deposit from the claims next door. But that's all we've got to so far. This is not proof that there is indeed a lithium deposit there worth mining.”
“But do you see how this argument is developing now? All of the different mining companies are pointing to each others’ results - very preliminary results too - to insist that as they might have something then so might we too. But given the very preliminary nature of all of these finds then each new claim is being built on the shaky foundations of the very preliminary claim.
“The difficult thing is that this is proof of absolutely nothing. For if there were a major new lithium resource out there in that Andover area then this is exactly what the different mining companies would be reporting at this point. But it’s also what they’d be reporting if Andover was an entire miss. Interesting rock which turns out to be less interesting on closer examination.”
It’s simply not possible to know which is the true story at this point. But it is necessary to realise that either of them could be true.
