Battery Metals

Battery metal fever: Lithium Energy spikes 40% on rich brine intersection before assays even received

Wed 05 Oct 22, 3:42pm (AEST)
A row of lithium brine ponds extend into the distance in a straight line from the photographer; mountains cover the horizon in the distance.
Source: iStock

Key Points

  • Proof of endearing enthusiasm for lithium stocks clear in Lithium Energy’s price movements today
  • Company has reported hitting rich brines at its Argentina play, sending the share price up 40%, but no lithium assay data yet
  • Office of the Chief Economist expects a record battery metals export earnings boom to be posted by the end of this financial year

If you need evidence lithium fever continues to define the share market zeitgeist, look no further than Lithium Energy’s (ASX:LEL) movements on the bourse today. 

In late afternoon trades, the company is up 40% on its discovery of rich brine at its Solaroz lithium project in Argentina. The kicker?: samples indicating lithium grades haven’t even come back from the lab yet. 

It’s not like there’s no reason to be bullish. 

The latest Resources and Energy quarterly from Australia's Office of the Chief Economist released this week predicts earnings from battery metals exports will more than double this financial year compared to last. 

Broad earnings are boosted by an increase in energy prices for energy exporters and also a weaker Australian dollar compared to the USD; but these two factors are largely independent of endearing enthusiasm for battery metal stocks, as far as traders are concerned.

Regardless, the company reports 105m of highly conductive brines in its maiden drillhole at Solaroz. The basic rundown is that high conductivity of brine is coincident with lithium mineralisation. 

Bullish on brine 

Lithium brine projects are common in South America where the battery metal can be found in certain types of lakes, which are often expanded by operators. 

From a nearology perspective, it’s worth noting the company’s acreage sits nearby acreage owned by Allkem Limited (ASX:AKE), and also the New York Stock Exchange listed Lithium Americas Corporation. 

Allkem’s Olaroz lithium bore field is located some 10km away, and another Allkem asset, Maria Victoria, sits only 3km away. Of course, lab results indicating lithium concentrations are pending.

Strong investor enthusiasm in Lithium Energy’s initial results today are likely backed up by the fact the company’s discovery of rich brines thought to contain lithium are hit in the first of 10 planned diamond drillholes. 

A further 9 drillholes at Solaroz are to be completed in the company’s first-ever exploration run on-site. The first drill hole hasn’t exactly gone off without a hitch, either. After hitting carbonate some 170m down-hole, drilling has been suspended. 

This could stand to be a recurring pattern across the remaining 9 drillholes, but this hasn’t done anything to dampen sentiment. 

Confirms geological modelling: management

“The confirmation of highly conductive brines at our first drill hole in Solaroz confirms our geological model,” Lithium Energy MD William Johnson said. 

“Whilst works are occurring to allow for the continuation in drilling to reach the target depth of 300m, suspension of drilling has given us the opportunity to take some early samples down to approximately 150m.”

The rich brines intersected and reported today occur at roughly 65m depth and continue through to 170m. Brines are contained in loose sandstone and gravels, which geotechs are confident suggests an easy mining process moving forward. 

Whether that thesis proves true remains to be seen, but clearly traders are bullish on Lithium Energy. For today, anyway. 

Bouncing back: a look at Lithium Energy's three month charts
Bouncing back: a look at Lithium Energy's three month charts


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Written By

Jonathon Davidson

Finance Writer

Jonathon is a journalism graduate and avid market watcher with exposure to governance, NGO and mining environments. He was most recently hired as an oil and gas specialist for a trade publication.

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