At the time of writing, shares of Six Sigma Metals Ltd [ASX:SI6] are up by 7.14%, to 1.5 cents, in today’s trading. Six Sigma Metals is a lithium and vanadium explorer on the ASX, with tenements in Zimbabwe.
Why did Six Sigma Metals Ltd shares do this?
The company announced that it started drilling at the Shamva lithium project last week. The market seems to be waking up to the story. The company plan to drill a minimum of three holes at the Bonnyvale target, with the option to drill more holes once it sees the initial results.
The area targeted shows a prominent lithium pegmatite (hard-rock) body, containing a long line of historic trenches and underground workings that display coarse-grained lithium host minerals such as spodumene (the best type of lithium), petalite and lepidolite.
What now for Six Sigma Metals Ltd?
Six Sigma Metals should finish the drilling program by month’s end, with assay results due in August. The aim of the drilling program is to determine whether the lithium mineralisation (assuming there is any below the ground) is thick.
Multiple surface rock samples returned lithium grades of over 2%.
Put differently, the company could be on the brink of making a world-class discovery. 2% lithium is considered ultra-high-grade by the market. If the company intersects thick lithium spodumene, grading 2%, the share price could skyrocket this month. On the other hand, if the company finds nothing, it can elect to walk away from the project.
It’s win, win…
Six Sigma Metals has a market capitalisation of roughly $8.8 million at 1.5 cents per share. The company held around $2.3 million in the bank at 31 March, with zero debt. In that case, the company’s enterprise valuation (market cap less cash) stands at around $6.5 million today. That’s cheap for an explorer drilling in a potentially high-grade region, well-known for lithium spodumene.
Indeed, it’s still early days for shareholders. But if the company can unlock the geological puzzle this month, shareholders could be significantly rewarded. Six Sigma Metals could turn into the biggest mining story on the ASX this year.
Resources Analyst, Markets & Money
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