70% in a month: What’s put a rocket under the Lithium Energy (ASX:LEL) share price?

Shares in battery minerals company Lithium Energy Ltd (ASX: LEL) have outperformed all major benchmarks in the past month to climb 70% into the green.

Lithium Energy shares finished the session at $1.07 apiece, a further 25.15% gain from market open today.

Why don’t we take a walk through what’s been sending this ASX resource share northwards this past month.

Graphite project updates

Aside from its lithium exposure, the company also has a large stake in the Burke Graphite Project in Queensland.

The Burke project is dubbed as having one of the world’s highest grade graphite deposits, with a JORC inferred mineral resource grade of 16% total graphitic carbon (TGC).

For reference, TGC is a term used within the analysis side of the graphite industry, where the graphite content in ‘commercial graphite samples’ is reported as a percentage of carbon or ‘graphitic carbon’.

The company released an announcement last month updating investors on progress at the site.

Lithium Energy exclaims the deposits at Burke are of a high grade and low in impurities, making it “particularly attractive for use in lithium-ion batteries”.

The company also advised it has “commenced investigations into the establishment of a dedicated, environmentally sustainable manufacturing facility to purify and spheronise graphite” sourced from the site.

Lithium Energy intends to put the graphite to use as an anode material in lithium-ion batteries, per the release.

Investors piled into Lithium Energy shares in response to the announcement and sent prices soaring over 15% higher in the last few days of October.

What else is driving Lithium Energy shares lately?

In the absence of any other market-sensitive information to last month, it appears the approximate 10% gain in the spot price of lithium was a positive catalyst for the company’s share price.

For instance, shares in the lithium player first took off early in October, in a corresponding move to this jump in lithium prices.

Why is this important? Because Lithium Energy is an ASX resource share that produces the commodity, it is considered a price taker on sales of lithium.

In other words, it has no pricing power on the commodity it sells, and therefore must rely on what is offered in the market.

With that in mind, Lithium Energy’s share price can – and does – fluctuate with volatility in the broader commodity and/or lithium markets.

At the time of writing, lithium is commanding $41,092/tonne – also its all-time high – after making another 6% upward move towards the end of October.

It is therefore unsurprising to see Lithium Energy’s share price hit its all time high in late October, posting a further 15% in gains in just 8 days to finish the month.

In fact, after a gigantic few months of returns since listing, Lithium Energy shares have gained over 417% for the company’s early investors.

The post 70% in a month: What’s put a rocket under the Lithium Energy (ASX:LEL) share price? appeared first on The Motley Fool Australia.

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The author Zach Bristow has no positions 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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