Power Metal Resources (LON: POW) shares depend upon the prospecting results from the widely varied operations the company is undertaking. This should seem obvious for a junior miner in the initial prospecting stage but it is worth still pointing out.
For there are those many stages that any junior miner – defined as one not producing yet – must go through. First, finding something that might be worth mining, then proving that it is. Then comes the capital to be able to do it and then finally the doing and the sale into the market of the time of the production. It’s also possible to opt-out of the next stage at any time by selling on the property to another operator. Perhaps someone better capitalised, or more expert in that particular stage. The value is added by completing a stage that is, it’s not necessary for the one company to walk through each stage.
Power Metal is deliberately focused on that very first stage. The identification of significant deposits that are worth taking to that next stage, proving the size and concentration that make a proven resource or reserve.
The minerals being sought cover a wide range too. Power Metal is checking rare earths in Botswana, copper in Nevada and so on. The latest information release is concerning the uranium prospects in the Athabasca Basin in Canada. Specifically about the Reitenbach property. Power Metals has extensive prospecting rights to 400 square km up there and more.
There are advantages here. The area is known to have uranium occurrences, the geology is correct, and so on. Canada is a stable country to mine in and they’ve not had the environmentalist problems that some other countries – Australia say – have had over uranium mining. There’s also that long-term point that uranium is becoming more interesting as a target metal, finally people are realising that it’s a useful part, nuclear power is, of the battle against climate change.
On the other hand there is that problem Power Metal faces, common to all prospecting operations, of find mineable concentrations of the target mineral. Which is what this announcement is about.
No, not that there definitely is something worth mining there, we’re at an earlier stage than that. Rather, that things of interest which might indicate a decent deposit have been found. High uranium concentrations in lake sediment might well indicate a significant local deposit they have come from for example. These so-called “alluvial” (although we tend not to say that about uranium, but do about tin or gold for example) findings often do indicate the presence in local rock that the metals have come from.
These findings are interesting, they surely are. But there’s a long way to go as yet before there’s proof of a deposit worth mining. On the other hand, a proof of a deposit worth mining would make Power Metal shares jump – near all of the capital value of the find would near immediately be in that market capitalisation.
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Tim Worstall is a freelance writer specialising in economics and the financial markets.