TG Metals (ASX: TG6) shares are up 250% today. Turnover in the shares is around the $6 million mark which is actually larger than the starting market capitalisation for TG6. Which is a pretty good indication that TG Metals was a tiny, tiddler, exploration company before this. This is also what explains the 250% rise - sure, initial indications of a lithium find are valuable and that value could well be something like the $10 million or so that has been added to the market capitalisation. But the percentage change here is a function of that low starting point.
For the lithium find, while interesting, is not definitive as yet: “TG Metals Limited (TG Metals or the Company) (ASX:TG6) is pleased to provide this update on exploration drilling activities at the Lake Johnston Li-Ni-Au Project. Initial drilling of the Burmeister lithium soil anomaly within the Lake Johnson Project hasintersected spodumene bearing pegmatite with high grades up to 2.28% Li2O. Better results (provided in detail in Table A and Table C) include 9m @ 1.35% Li2O from 30m including 1m @ 2.03% Li2O from 32m and 1m @ 2.21% Li2O from 37m 9m @ 1.62% Li2O from 87m including 1m @ 2.28% Li2O from 87m”
Those are good results for this stage of exploration. We’ve achieved three of our four goals - pegmatites, which contain spodumene, the spodumene contains lithium. There’s still the fourth to go now, which is to prove that this is true in sufficient volume to be worth mining.
TG Metals share price from Google Finance
As is pointed out finding such in the first drilling is useful: “SHARES in TG Metals more than doubled in early trade today after the junior drilled high-grade lithium with first drilling at the Burmeister target in the Lake Johnston region of Western Australia.” If the first hole is successful then maybe that means that all will be? Which is a bit of a hope but still.
One thing we would say is that there seems to be an awful lot of lithium out there to find: Sabre Resources, Lithium Power, Bulletin Resources. The finds just keep coming which means that the scarcity value of any single find is going to decline. But here, with TG Metals, it started at such a low valuation that yes, even 250% on these results can be justified.
