Torque Metals (ASX: TOR) shares are down 58% today. TOR shares have fallen just as fast as they rose 6 weeks back - and on the same deal too. What was - that 6 weeks ago - thought to be a very interesting and opportunistic deal now turns out to not be all that exciting. So, the excitement value of the deal from 6 weeks about vanishes. That’s just the way it happens sometimes.
As we said before about Torque Metals: “Torque Metals (ASX: TOR) shares are up 172% today. The TOR share price leaping this much is the result of a deal announced for an option on a prospective lithium property. It has to be said that the prospects for this package of tenements are good - but they are, still, only prospects. There’s a great deal of proof that still needs to go into showing that this is going to be economic to mine.” 172% might seem a lot but it was from a very low starting point of a market capitalisation of a handful of millions of those bijou Australian dollars. The hope value that there might be something interesting there really was worth that double a handful of millions of Australian dollars.
The unfortunate thing is that this didn’t last.
Torque Metals share price from Google Finance
The announcement today: “Assays from all four of the initial shallow diamond drill holes successfully confirmed spodumene at New Dawn. The first four holes were each less than 90 metres depth, within a tight zone, completed at the central lode area where rock chips were collected for sampling, and confined to the vicinity of the historic Tantalum pit area. Lithium confirmed in multiple pegmatite intercepts, with peak individual grade of 2.79% Li2O, and best intersection of: 3.57m @ 1.25% Li2O, from 26.73m within 8m @ 0.71% Li2O from 22.3m (23NDDD003). Multiple stacked pegmatites intersected in subsequent holes (NDDD006 and NDDD007) drilled slightly north of the central lode, and one deep hole at the eastern lode (NDDD005) (Table 1). Assays pending for these holes.”#
These are not terrible results. Not abjectly terrible at least. We’d generally say that 1.25% LiO2 is worth mining - if there’s the volume of it. 0.71% LiO2 is very much less interesting.
Or as one source put it: “While surface sampling at New Dawn returned up to 6% lithium oxide, due diligence diamond drilling results reported today included 8m at 0.71% lithium from 22m, including 3.6m at 1.”
It’s not that the results are objectively terrible - they’re pretty mid-market to not so good to be fair. It’s that the results are so different from what was hoped. The Torque valuation went up on hope and has come down again on the lack of it.
