Ozaurum Resources (ASX: OZM) shares are up 1190% on Friday. OZM shares are up on the basis that a gold miner has now bought into a lithium operation in Brazil. That’s the way that fashion works in mining. Demand for a mineral rises, so everyone starts looking for that specific mineral. Here’s it’s spodumene, from which you can make lithium concentrate which is then made into EV batteries. Then territories become fashionable. Here it’s perhaps not so much fashion as someone makes a find and then the area around that then gets looked at. So Azure Minerals has found lithium at Andover, Sabre Minerals has the next bit over, maybe they’ve got lithium too?
There’s excitement about what might be available in Brazil, thus Friday’s announcement: “The Linopolis Jaime Project is located on a strategically held area of over 20 Lithium – Cesium - Tantalum (LCT) bearing pegmatites that have been mined intermittently for tantalite, beryl, tourmaline, brazilianite and feldspar intermittently by the Pacheco family and other artisanal miners for over 50 years. Linopolis Jaime Project spodumene grades of up to 7.36% LiO2 with an average spodumene grade of 6.94% LiO2 confirmed within a +7m wide spodumene zone consisting of at least 20% volume coarse spodumene crystals up to 1m in length mapped over +7m in true width at the Sito do Estevinho underground mine workings.”
Ozaurum Resources share price from Google Finance
The issue to grasp here is that the past artisanal mining shows that there is indeed a deposit there. Which is great - that’s the first step in the necessary proof. But we then need to go the one step further - how big is that deposit? An actual - mechanical, not two blokes with a solve, which is what artisanal means - lithium mine needs to be of a certain minimum size in order to pay for the capital necessary to have a mechanical mine.
This is the part that is as yet unproven and what will need to be proven. Which will cost money because exploration simply does cost money.
We would expect some of this excitement to recede therefore. Simply because that first reaction does seem a little excessive. In the long term what will matter here is how large the deposit is - something that is as yet unknown.
