Native Mineral Resources (ASX: NMR) shares are up 100%. NMR shares rise on a deal on a lithium project in Canada. Of course, this is all very prospective, very speculative. There are some outcrops on the property of the correct rock type that have been sampled to show some lithium content. But someone has to get out there and explore properly – and that’s what NMR has to do to complete the purchase here.
The terms of the transaction read: “Native Mineral Resources Holdings Limited (ASX: NMR) or (“NMR” or “the Company”) is pleased to announce that it has entered into an agreement (Agreement to Acquire) to acquire 51% of the McLaughlin Lake Lithium Project from New Age Metals Inc (TSXV: NAM) for A$200,000 in NMR stock, $75,000 in cash and $500,000 to fund exploration for 18 months.” This is a combination of purchase and earnings. The earn-in is the requirement to spend the money on exploration. The specific property is prospective: “Previous work on MEL 1028A has mapped a 400m long outcropping pegmatite vein up to 2.2m wide. A 1.5m channel sample from the other side of the dike returned 1.32% Li2O. Grab samples from a second dyke returned values of 0.98% and 2.87% Li2O.” As we say, the right type of rock with some proven lithium content. The challenge now is to determine how much lithium-bearing material is on the property.
There is also a related stock offering: “NMR has received commitments in a placement to sophisticated and institutional investors to raise $640,913 through the issuance of 21,363,767 fully paid common shares (New Shares) at $0.03 (March 3). cent) per new share
(Placement)” That they were able to do this at a premium to the market price of $0.025 shows that institutional investors think this is a good bet. It’s no more than a bet at this point, of course, but a good enough one.
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Native Mineral Resources share price from Google Finance
As we’ve been saying for some time, we expect lithium to become oversupplied. That would mean that the rarity value of lithium deposits would disappear. However, the better deposits (bigger, higher content, even better located) will still have value. So it’s still worth exploring like here. Who knows, maybe there will be a much larger deposit there?
Over the longer term, for lithium, we expect fringe activity to decline over time as the price declines.
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