Barry FitzGerald: The lithium bandwagon is overflowing - time to look ahead to the next big thing?

There was a time back in the late 1990s during the dot-com bubble when all a small-cap exploration company in need of a share price kick had to do was announce to the ASX that it was investigating internet-related opportunities.

It didn’t matter whether or not the exploration company followed through or not. What was important was the immediate 20-40% share price uplift, such was the mania at the time for the possibilities of internet.

When the bubble burst in 2000 on the realisation that sustainable cashflow was hard to come by, the dot-com sector as measured by the Nasdaq Composite lost close to 80% of its value in the space of six months.

The ever fleet of foot small-cap explorer that might have raised some cash on the back of its investigation of a dot-com opportunity simply reverted to mineral exploration activities. Crisis averted.

Garimpeiro looks back fondly on the dot-com days. A pub whisper that company X would be putting out an “investigating internet-related opportunities’’ provided sport the next day watching how big the share price reaction was.

And who would have thought that here we are in 2022 and we have a similar situation in the lithium space.

A multitude of juniors with no history of exploring for lithium are announcing they have decided to check out the spodumene-bearing pegmatites they have been tripping over to get to their base and precious metals projects.

At the current pace, it won’t be long before the majority of junior explorers will have found reason to add lithium to their exploration portfolio. It is currently as close to a guaranteed share price kick an explorer could hope for because let’s face it, there just isn’t any interest in anything else at the moment.

Fair enough, prices for spodumene concentrate and the end battery products of lithium carbonate/hydroxide are at record levels and look like staying at elevated levels for the foreseeable future. But the prices will come back and the mania will die down.

Garimpeiro will enjoy the ride along with everybody else for as long as it lasts. But he also senses an opportunity in that the current lithium mania has left decent explorers looking for anything but lithium trading at depressed levels.

So he went looking during the week for a junior in the gold space that had an exciting looking project on its hands, with some serious growth potential possible from a twisting drill bit.

Gold was chosen because of its current price weakness, and the assumption that the price will bounce back once the US dollar weakens, as it must at some point, doesn’t it?

The search has taken Garimpeiro all the way to Côte d’Ivoire, or the Ivory Coast as the colonialists at the BBC still call the West African nation. The company is African Gold (ASX:A1G). It was trading mid-week at 8.4c for a market cap of $10m.

The current price compares with a 52-week high of 28c and 52-week low of 6.4c. That the stock is just above its 52-week low shows just how tough things are for the gold explorers because recent exploration news from A1G’s Didievi gold project deserves some attention.

Early in the week the company reported another batch of high-grade gold hits from both the Blaffo Gueto and Pranoi prospects at Didievi (10m at 123/g/t from 66m, and 12m at 5.6g/t up from 24m respectively).

More to the point, an independent review of the results has allowed the company to release a compliant “Exploration Target’’ of 600,000ozs to 1.9mozs depending on the cut-off grade used in the calculation.

So the company has a large and underexplored gold system on its hands with the potential for multi-million ounces, all for a $10m market cap.

Now it sets out to confirm the big-time upside with the drill bit, knowing that at the end of the day, there will be a market for the gold.

That can’t be said about all the lithium projects out there.

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