Lithium Energy confirms 'major lithium discovery': Investors sell the news

Wed 19 Oct 22, 2:51pm (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

  • Assay results confirm a major lithium brine discovery at Lithium Energy's Solaroz project in Argentina
  • Lithium Energy shares rallied 26% as the market opened but investors seem to be more focused on taking profits, with the stock now up just ~3%
  • A 'buy the rumor and sell the news' narrative appears to be taking place following a 50% share price spike two weeks ago

Lithium Energy (ASX: LEL) on Wednesday confirmed a 'major new lithium discovery' at its Solaroz Brine Project in Argentina. The company's shares rallied as much as 26% in early trade.

Initial assay samples from the company's maiden drilling programme returned lithium brine concentrations in excess of 400 mg/l hosted in sandstones encountered between depths of 55 to 228 metres.

"To confirm the discovery of high concentrations of lithium in the brines in the upper aquifer of our first drill hole at Solaroz is a watershed moment for Lithium Energy," said Executive Chairman, William Johnson.

"It further confirms the potential for the Solaroz Project to host a significant resource of lithium brines in what is probably the best location globally to have a lithium discovery," he added.

Surrounded by giants

The Solaroz project sits adjacent to lithium heavyweights Allkem (ASX: AKE) and Lithium Americas, a $3bn miner listed on the US market.

To add some perspective, Allkem's Olaroz Brine Project sits at inferred grades of 718 mg/l.

The positive result could be a factor that's driving some positive flow for Allkem shares, currently trading 4.3% higher, close to a one month high of $15.25.

Next steps

"With assay results showing that lithium concentrations in this first hole increase at depth, the Company is now looking forward to assay results from sampling the target lower aquifer, as drilling continues to its target depth of 400 metres," notes Johnson.

The initial assay results observed higher 'lithium concentration, conductivity and density at depth', which the company views as "encouraging as it indicates a hydraulically linked system with heavier brines sinking to the bottom of the aquifer."

The maiden drilling program comprises of 10 holes for 5,000 metres in total. Drilling is expected to take approximately 4 weeks per hole, which should give the company enough data to begin developing a maiden JORC Mineral Resource for Solaroz.

An ugly fade

Two weeks ago, Lithium Energy shares rallied 52% after announcing that drilling had resumed at the Solaroz project.

The price action on Tuesday would suggest that a 'buy the rumor and sell the news' narrative has taken place in anticipation of good assay results. Lithium Energy shares surged 26.8% as the market opened but currently trading around 3-4% higher.

While Lithium Energy expects more assay results and drilling activities in the near-term, investors seem to be more focused on taking profits. At least for today.

LEL share price chart
Lithium Energy intraday price chart (Source: TradingView)


Written By

Kerry Sun

Content Strategist

Kerry holds a Bachelor of Commerce from Monash University. He is an avid swing trader, focused on technical set ups and breakouts. Outside of writing and trading, Kerry is a big UFC fan, loves poker and training Muay Thai. Connect via LinkedIn or email.

Get the latest news and insights direct to your inbox

Subscribe free