The Arcadia Minerals Ltd (ASX: AM7) share price has had a remarkable day on Wednesday. In fact, its incredible performance places it as the fourth-highest gaining share on the ASX today.
At market close, shares in the battery-focused metals explorer finished at 25.5 cents apiece, up 27.5%. At one point, the Arcadia Minerals share price rocketed 57.5% higher, reaching 31.5 cents per share, setting an all-time high for the company.
Let’s take a look at what all the fuss is about.
Why is the Arcadia Minerals share price soaring today?
The story begins with the Arcadia Minerals share price being placed in a trading halt at the request of the company on Monday. At that time, details were sparse with the request simply stating it was in relation to an announcement of a proposed lithium acquisition. Fast forward to the present and we now know the magnitude of the news.
According to the release, the company’s 50% owned subsidiary known as Brines Mining Exploration Namibia Ltd has conditionally agreed to acquire 100% of three licenses containing an inferred JORC (joint ore reserves committee) mineral resource.
Additionally, the inferred mineral resource contains lithium, potassium, and boron. The company is predominantly interested in the potential for lithium extraction. The licenses to be acquired indicate a resource of 15.1 million tons at 828 parts per million of lithium.
Moreover, the resource area covers only 6% of the acquired exposed clay pans. As such, the company believes there could be potential for further exploration that may result in the expansion of the resource. At this stage, Arcadia plans to commence exploratory drilling in November 2021.
It was noted the resource holds potential for lithium-in-brine aquifers. In response, investors are bidding up the Arcadia share price today.
Terms of the deal
The details of the license acquisitions are a little complex, but here they are for perusal:
- The right to acquire 25% for a consideration of ~A$87,000 by May 2022
- ~A$176,000 for the right to acquire 100% within 2 years following initial acquisition
- A further ~A$615,000 payable following the completion of a definitive feasibility study showing over 500,000 tons of lithium carbonate equivalent from the brines.
Additionally, the three mining licenses are adjacent to the company’s existing Bitterwasser lithium project. This existing project covers an area of 3,438 square kilometres. Granting shareholders approve the acquisition, Arcadia’s landholding will increase to 4,031 square kilometres.
The Arcadia Minerals share price is up 31% since its listing in June this year.
The post Arcadia Minerals (ASX:AM7) share price rockets 27% on lithium project update appeared first on The Motley Fool Australia.
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Motley Fool contributor Mitchell Lawler has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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