Category: Stock Market

New ASX stocks are beating the old in 2020 and some experts are predicting that this will trigger an IPO revival this year.

Initial public offering (IPO) platform OnMarket found that year-end IPOs outperformed the  S&P/ASX 200 Index (Index:^AXJO) by more than 48%, reported the Australian Financial Review.

The average return for all newly minted ASX stocks in 2020 was 46.9% compared with the 1.5% drop in the top 200 stock benchmark.

Best ASX IPOs of 2020

The Nuix Ltd (ASX: NXL) share price, 4DMedical Ltd (ASX: 4DX) share price and Aroa Biosurgery Ltd (ASX: ARX) share price are some examples of stocks that surged on the first day of trade.

The IPOs that delivered the best returns last year are the Tesoro Resources Ltd (ASX: TSO) share price, Cosol Ltd (ASX: COS) share price and 4DX share price.

The TSO share price surged over 800% in the period, while the COS share price and 4DX share price gained over 200% each.

Capital raisings crowded out IPOs in 2020

Nearly 70% of the newbies listed in the fourth quarter as capital raisings by established ASX stocks sucked all the oxygen in the earlier part of the year.

The turmoil caused by COVID-19 prompted many ASX companies to go cap in hand to shareholders to shore up their balance sheets.

If investors can buy discounted shares in a capital raising from established stocks, they would typically shun new unproven companies.

Number of new ASX listings expected to rebound

So, while OnMarket claimed that the December quarter proved to be the best quarter for ASX floats in at least five years, the number of IPOs in 2020 are still lower than most years.

But OnMarket managing director Nick Motteram told the AFR that the momentum in the closing months of 2020 is expected to continue into this year.

“It’ll continue to be strong until there’s an event where market confidence goes out the window or there are some big ones that don’t do well,” The AFR quoted Motteram as saying.

“The difficulty with any IPO is picking a winner and what’s come out of this report is that getting access to as many as possible, putting in a consistent amount and holding for a consistent period is a winning strategy.”

ASX gold stocks to lead IPO recovery

While tech is a hot space and could very well continue to be in demand by IPO investors, the sector that could dominate new ASX listings are gold explorers and miners.

Professional services group HLB Mann Judd was also quoted in the report as saying that it expected gold IPOs to feature heavily.

This is despite the recent pullback in the gold price from record highs of over US$2,000 an ounce. Given that economic uncertainty is likely to remain a big feature in 2021, you can’t write-off the safe haven asset just yet.

More reading

• The latest ASX stocks to be hit by broker downgrades
• ASX 200 up 0.6%: ResMed Q2 update, Kogan sinks, NAB acquires 86 400
• Why the Novonix (ASX:NVX) share price is down 10% today
• The BlueScope (ASX:BSL) share price surges on a profit upgrade today
• Here’s why the Origin Energy (ASX:ORG) share price is climbing today

Motley Fool contributor Brendon Lau has no position in any of the stocks mentioned. Connect with me on Twitter @brenlau.

The Motley Fool Australia has recommended Nuix Pty Ltd. 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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Are you a fan of growth shares? If you are, you may want to take a look at the two listed below.

Here’s what you need to know about them:

Altium Limited (ASX: ALU)

The first growth share to look at is Altium. It is an electronic design software provider which has been growing strongly over the last few years. And while the pandemic is stifling its performance this year, management remains confident that it still has a long runway for growth.

This is thanks to its exposure to the growing Internet of Things and Artificial Intelligence markets, which are underpinning solid demand for subscriptions. So much so, Altium is aiming to almost double its subscriber numbers to 100,000 and its revenue by ~150% to US$500 million by 2025/26.

Analysts at Credit Suisse remain positive on its outlook despite its current headwinds. They have recently put an outperform rating and $35.00 price target on its shares.

Megaport Ltd (ASX: MP1)

Megaport is a provider of elastic interconnection services across data centres globally. Its clever service allows its users to increase and decrease their available bandwidth in response to their own demand requirements.

This is proving to be a popular alternative to fixed service levels on long-term and expensive contracts. So much so, Megaport has been growing its monthly recurring revenue (MRR) at a strong rate over the last few years.

This has continued in FY 2021, with Megaport recording a 10% increase in second quarter growth underlying MRR to $6.3 million.

Analysts at Goldman Sachs were pleased with its update and have just upgraded its shares to a buy rating with a $15.00 price target. Goldman believes Megaport will benefit from growing demand for public cloud infrastructure and the broadening of its product suite. Its analysts also have increased confidence on its path to generating positive free cash flow.

More reading

• The Megaport (ASX:MP1) share price is down 25% since August
• These ASX 200 shares have been smashed in 2021
• 2 ASX 200 growth shares to buy
• 3 extraordinary ASX shares to buy right now
• Why Aussie Broadband, Fisher & Paykel Healthcare, Lynas, & Megaport are charging higher

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends MEGAPORT FPO. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Altium. The Motley Fool Australia owns shares of Altium. The Motley Fool Australia has recommended MEGAPORT FPO. 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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The Zoono Group Ltd (ASX:ZNO) share price has tanked more than 17% today after the company released its report for the second quarter of FY21. The fall brings the Zoono share price below the $1.0 mark.

How has Zoono performed?

Zoono’s quarterly report highlighted continued sales momentum. For the second quarter ending 31 December 2020, the biotech company reported invoiced sales of NZ$14.1 million.

Unaudited inventories of NZ$14.4 million continue to meet current demand. The company noted that stock was being held in several global locations in order to enable timely delivery.

In addition, the company reported a bank balance of NZ$9.1 million, which included NZ$1.8 million in positive net receivables/payables. For the six months to date, Zoono also reported total cash receipts from customers of NZ$20.5 million.

The company also highlighted the launch of its triple layer, re-usable face mask in Australia and New Zealand during the quarter.

What does Zoono do?

Zoono is a biotechnology company that develops, manufactures and distributes various antimicrobial solutions. The company’s products are based on the ‘zoono molecule’ which is a unique antimicrobial molecule used to combat a variety of pathogens.

Various regulatory agencies have already approved Zoono’s products for distribution. In a recent update, Zoono announced that the company had entered into a supply agreement in the United Arab Emirates.

What is Zoono focussing on?

In providing the market with an overview of its operations around the world, Zoono noted that the company continues to aggressively pursue new businesses globally. As a result, the company is confident on delivering an improved year-end revenue result for FY21.

The company highlighted that the B2B markets in the UK/EU, China, the Middle East and Africa will be the main focus moving forward given their large volume requirements. In addition, Zoono acknowledged the importance of its home markets in Australia and New Zealand.

Zoono also highlighted animal health as being a significant segment that the company will continue to pursue.

About the Zoono share price

The Zoono share price opened today’s trading session at $1.18 and then headed south in early afternoon trade. At the time of writing, shares in Zoono are trading 17.2% lower at 98 cents.

More reading

• Here’s why the Calix (ASX:CXL) share price shot 15% higher today
• Brace for an IPO resurgence as new floats beat the ASX 200 by ~50%
• 2 ASX growth shares to buy
• GameStop frenzy: 3 shorted ASX shares that could shoot up
• What’s happening with the Freedom Foods (ASX:FNP) share price?

Motley Fool contributor Nikhil Gangaram 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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The GameStop Corp (NYSE: GME) share market chaos seen in the US could spill over to the ASX in a serious way, according to one investor behaviour academic.

Finance headlines this week have been dominated by the phenomenal rise in the price of GameStop stocks. The surge was triggered with a coordinated buying effort from activist retail investors to send institutional short sellers broke.

The electronic games retailer started the year at US$17.25 but shot up to as high as US$483 before moderating last night Australian time. It’s still sitting at US$193.60.

There is much debate in the United States as to whether this is legitimate activism against Wall Street shorting, immoral market manipulation, amateurs playing with fire, or all of the above.

Discussions about the short squeeze were reportedly had on Reddit then much of it was executed on popular trading app Robinhood, which provides $0 brokerage trading.

GameStop implications for Australia and ASX

The most direct impact of the GameStop frenzy has been on the share price of GME Resources Limited (ASX: GME).

Sharing the same ticker code as the US retailer has meant it was the accidental beneficiary of some confused investors. The mining company was forced to put its stocks in a trading halt on Friday after it shot up 53% in less than 48 hours.

But aside from hilarious ticker confusion, RMIT University senior lecturer Angel Zhong reckons there could be serious downstream impacts in Australia.

Similar to Robinhood, low-cost gamified trading platforms like Superhero and eToro are now available for local investors.

“Copy trading is offered by some of the platforms, which is a form of social trading, and similar to the way Reddit traders have bought up GameStop this time,” she said.

“In Australia, ASIC is concerned about social trading and has warned retail investors to be cautious about copy trading offered by low-cost trading platforms.”

Social and copy trading could prompt a short squeeze attack in Australia similar to what’s happened in America this week, warned Zhong.

“The GameStop Saga has also alarmed the short-sellers in Australia who may face a battle from retail investors,” she said. 

“There could be a price surge in the most-shorted Australian stocks such as Webjet Limited (ASX: WEB), A2 Milk Company Ltd (ASX: A2M), and Flight Centre Travel Group Ltd (ASX: FLT).”

How did it come to this?

Zhong said that the fact that this is even possible points to the rise of a uniquely modern phenomenon in the investment world.

“It… reflects the power of social trading, which refers to unmoderated investment advice provided via social platforms — such as the Reddit army in this case, investment channels on YouTube, share trading groups on Facebook, and influencers offering financial advice via TikTok.”

“What are the hottest stocks among social traders in Australia as seen on Reddit and HotCopper? The buy now, pay later stocks are definitely among the hottest and the large surge in their price is partly related to retail trading.”

ASIC scrutiny has somewhat scared off the local version of the US Reddit group that prompted the GameStop surge.

A moderator on r/ASX_Bets posted the following message on Thursday, according to the Australian Financial Review:

“As I’m sure you’re all aware, there has been some minor business going on in the big daddy sub r/wallstreetbets… They were clearly incensed by a hedge fund… then it escalated. Then it escalated again. Now it’s something else entirely,” the admin wrote.

“A lot of people have decided to make posts here indicating they want to arrange a short squeeze … any post or comment attempting to co-ordinate or organize any type of ‘market play’ via the sub will be deleted and the user subject to a three-month ban.”

More reading

• GameStop (NYSE:GME) stock insanity: Here are 4 things you need to know
• The Reddit-GameStop-Robinhood saga is heating up
• 53% share price jump lands GME Resources (ASX: GME) in trading halt
• What Is a Gamma Squeeze?
• Short squeezes: Everything you need to know about the recent investing movement

Motley Fool contributor Tony Yoo owns shares of A2 Milk and Webjet Ltd. The Motley Fool Australia owns shares of and has recommended A2 Milk and Webjet Ltd. The Motley Fool Australia has recommended Flight Centre Travel Group Limited. 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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The Freedom Foods Group Ltd (ASX: FNP) share price has been suspended for over seven months but could soon be returning to the ASX boards.

This morning the embattled food company released an update on its recapitalisation.

What did Freedom Foods announce?

According to the release, Freedom Foods has reached an in-principle agreement with its majority shareholder, Arrovest, for a recapitalisation of the business. This will involve the issue of secured convertible notes.

Arrovest, which is owned by the Perich family, has stepped in after advanced talks between another new investor collapsed.

In addition to this, the company advised that the in-principle agreement with Arrovest has the non-binding indicative, in-principle support of the company’s senior lenders, National Australia Bank Ltd (ASX: NAB) and HSBC.

Management notes that the funding from the recapitalisation will enable the company to materially repay its senior term and revolving secured debt. It will also provide Freedom Foods with sufficient working capital and a stable capital structure to enable it to continue its financial and operational turnaround.

Under the terms of the new in-principle agreement, Arrovest has agreed to invest up to $200 million, with the company having the capacity to raise further capital. Though, it will not be a condition for it to do so for the transaction to complete.

Interim Chief Executive Officer Michael Perich said: “Despite the challenges of the past 10 months, there remains a fundamentally strong business at the heart of Freedom Foods – a market-leading dairy and plantbased beverages and nutritionals business. With the ongoing support of Arrovest, our banks and other shareholders, we have the opportunity to rebuild the business and enable it to meet its full potential.”

Tony Perich AM said: “We have been committed supporters of Freedom Foods for 15 years and, despite the difficulties of the past year, we continue to believe in its potential to be one of Australia’s great food and beverages companies.”

Freedom Foods’ shares will remain in voluntary suspension pending further details of the recapitalisation.

More reading

• What’s with the Vulcan (ASX:VUL) share price today?
• Renergen (ASX:RLT) share price explodes 71% today
• Brokers name 3 ASX shares to buy right now
• Chamath Palihapitiya defends WallStreetBets GameStop short squeeze
• European Lithium (ASX:EUR) share price drops despite positive update

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Freedom Foods Group Limited. 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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The Vulcan Energy Resources Ltd (ASX: VUL) share price is falling in afternoon trading, down 3.78% to $7.89 despite a flying start out of the blocks this morning.

The ASX miner announced its quarterly activities and cash flow report for the period ending 31 December 2020 to the ASX market today. Let’s take a closer look.

What is in the report?

In today’s release, Vulcan advised that its first zero carbon lithium pre-feasibility study demonstrated strong potential. The combined renewable energy and lithium hydroxide project, in the centre of Europe, has a positive net present value of €2.25 billion (AUD$3.56 billion). As such it is projected to be one of the cheapest lithium producers globally.

Vulcan also announced upgrades to a number of its resource estimations during the quarter. The company upgraded its estimation at its Taro site from 0.83 Mega tonnes (Mt) of lithium carbonate to 1.44 Mt.

More spectacularly, the company updated its resource estimation at its Ortenau resource in North Germany from 2.06 Mt to 15.85 Mt. This places it as the largest lithium resource in Europe. The project has since been integrated into the zero carbon lithium project mentioned above.

What’s more, Vulcan claims proposed new regulations by the EU on carbon footprint rules and responsibly sourced materials may be poised to help the company.

About the Vulcan share price

The Vulcan share price has gained an astounding 4,344% in the last year alone. It shares tore up the charts last week on the back of its announcement on plans to become the world’s first zero carbon lithium producer. 

To do this, Vulcan will use its unique lithium process to produce both renewable geothermal energy, and lithium hydroxide, from the same source. In doing so, the company aims to address EU market requirements by reducing the high carbon and water footprint of production. At the same time it creates a wider global marketplace for lithium with less reliance on imports from China.

The small cap ASX miner was among was among the most traded shares on the ASX last week as a result. The Vulcan share price is currently trading 1.95% higher.

More reading

• The Piedmont Lithium (ASX:PLL) share price just rocketed 32% to a record high
• Zip and Vulcan were among the most traded ASX shares last week
• Why Booktopia, Nitro, Reliance, & Vulcan shares are charging higher
• Why the Vulcan (ASX:VUL) share price is storming 12% higher today
• 5 lithium shares that are fast-charging up in 2021

Motley Fool contributor Daniel Ewing 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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Renergen CDI (ASX: RLT) shares are on fire today. At the time of writing, the Renergen share price is trading at $2.62, up by 71%.

Renergen is an alternative and renewable energy business concentrating on helium and LNG. The company invests in early stage projects across Africa and emerging markets.

The company’s key focus, the Virginia Gas Project, is located in Free State, South Africa and contains one of the richest helium concentrations recorded in the world.

Let’s take a look at what the company has been up to recently and try to piece together the path that led to the Renergen share price soaring today.

Phase 2 of the Virginia Gas Project

This is the second time in the past two days that the Renergen share price has blasted off. On Wednesday, we were talking about Renergen shooting 24% higher following an announcement pertaining to phase 2 of the Virginia Gas Project.

The announcement revealed Renergen had contracted three companies to support the engineering studies of the project.

Saipem SpA is now responsible for the front-end engineering design (FEED) contract to develop the liquid natural gas and liquid helium processing facilities. EPCM Holdings will develop the phase 2 gas gathering pipeline, and Sproule will evaluate and certify the reserves.

The appointment of these three contracts will finalise the feasibility studies for the phase 2 development of the Virginia Gas Project.

With no new announcement today and the three new contract appointments having only come to light two days back, it looks like investors are still processing the news.

As mentioned in Renergen’s latest announcement, under the guidance of the three appointed companies Renergen expects the Virginia Gas Project feasibility studies to be completed “on or around” the second quarter or 2021.

After this is complete, the Renergen board will present its final investment decision.

What has the Renergen share price done over the past 12 months?

The Renergen share price has a 52-week range of 84 cents to $2.90, a touch away from where it’s trading today

Similar to many other companies, Renergen took a hit from the coronavirus and operations came to a dramatic halt, which sent the share price for a nose dive.

From 3 March to 24 March 2020, Renergen shares tumbled 88.5%, falling from $1.64 to 87 cents.

All in all, the Renergen share price has climbed around 140% over the previous 12-month period.

More reading

• The Renergen (ASX:RLT) share price is soaring 24% higher today. Here’s why

Motley Fool contributor Gretchen Kennedy 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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Australia’s top brokers have been busy adjusting their estimates and recommendations again, leading to the release of a number of broker notes.

Three broker buy ratings that have caught my eye are summarised below. Here’s why brokers think these ASX shares are in the buy zone:

Booktopia Group Ltd (ASX: BKG)

According to a note out of Morgans, its analysts have retained their add rating and lifted the price target on this online book retailer’s shares to $3.48. This follows the release of a first half trading update earlier this week. Morgans was pleased with Booktopia’s update and notes that it delivered very strong growth during the half. It also feels that management’s guidance is conservative and the company can outperform it. Looking ahead, Morgans believes the company is well-placed for growth thanks to market share gains and the growing online book market. The Booktopia share price is trading at $2.86.

ELMO Software Ltd (ASX: ELO)

Analysts at Morgan Stanley have retained their overweight rating and $9.70 price target on this cloud-based HR and payroll company’s shares following its second quarter update. ELMO delivered a result in line with the broker’s expectations and notes that management has reaffirmed its guidance for FY 2021. It appears confident the company will achieve its guidance and remains positive on the investment opportunity. The ELMO share price is trading at $6.79 today.

TechnologyOne Ltd (ASX: TNE)

A note out of UBS reveals that its analysts have upgraded this enterprise software company’s shares to a buy rating with an improved price target of $9.15. According to the note, the broker believes recent weakness in the TechnologyOne share price is a buying opportunity for investors. Especially given the potential for a quicker than expected conversion of its revenues to software-as-a-service revenue. Overall, it believes its shares offer a lot of value in comparison to its tech peers. The TechnologyOne share price is trading at $8.68 this afternoon.

More reading

• Here’s why the ELMO (ASX:ELO) share price is sinking lower today
• ASX 200 falls 0.6%
• 2 exciting mid cap ASX shares to buy and hold
• Why Booktopia, Nitro, Reliance, & Vulcan shares are charging higher
• Why the Booktopia (ASX:BKG) share price is rocketing 15% to a record high

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Elmo Software. The Motley Fool Australia owns shares of and has recommended Elmo Software. 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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The GameStop Corp (NYSE: GME) saga has brought the world’s attention to the ethics of hedge funds and their ability to short businesses into oblivion. On the other hand, it has also awoken Wall Street to the immense power communities like WallStreetBets on Reddit can wield. The debate continues to heat up over whether retail investors or hedge funds are in the wrong.

Don’t hate the player, hate the game

Hedge funds, Melvin Capital Management, and Citron Research have experienced substantial losses over the last few days as they covered their losing Gamestop short bets. As reported in Business Insider, Melvin Capital required an injection of capital from other hedge funds, totalling US$2.75 billion, to bail out the fund. Melvin will now have an obligation to share its future revenue with those that have supported it.

Some people are infuriated that a small community of ‘inexperienced investors’ could be allowed to conduct this level of price manipulation. However, there are many that have the polar opposite opinion – and instead, see this as hedge funds getting a taste of their own medicine.

Successful venture capitalist Chamath Palihapitiya appeared in an interview on CNBC this week. Host, Scott Wapner suggested that companies should exist based on their earnings. Chamath seemed to be in disbelief of this ‘right price’ notion, commenting:

Who says that? Do you want to make the same argument for Tesla? It’s gone 10X in a few months. You don’t know what it’s worth, let’s be honest. I have my own model for the company – I’m allowed to underwrite however I want to own it.

Chamath continued to outline the hypocrisy between the case being made for Wall Street hedge funds versus retail investors:

Everyone who bought that stock is also underwriting how they want to own it – and the point is, just because you’re wrong, doesn’t mean you get to change the rules. Especially when you [hedge funds] were wrong, you got bailed out the last time. That’s not fair.

Don’t discount GameStop retail investors

There has been this notion that people in the WallStreetBets community, and retail investors in general for that matter, are unequipped to make sound investing decisions. Chamath wanted to dismantle this idea after Mr Wapner made this statement:

It will be a retail investor who gets screwed because they think that this is the way this game works – that this is the new Wall Street. They’re new to this game, maybe they haven’t been in the game that long.

Chamath rebutted this, cautioning not to discount how smart a lot of these people are. The case being made is that the stock market is a free market. The rules are defined, and retail investors citing an opportunity in an over-leveraged short position and playing against that in no way lessens the professionalism of the strategy.

Could the free market become not so free?

This whole situation has become a contentious topic, amplified by a couple of significant recent developments. The first being brokers, including Robinhood and Interactive brokers, have imposed restrictions on trading some of these short-squeezed shares. The stipulation only allows positions to be exited.

Secondly, Discord, a chat platform used by WallStreetBets, temporarily removed the group; effectively eliminating the community’s ability to coordinate.

Since these actions, the GameStop share price has sunk 59%, from $469 to $193 in one day. This begs the question, could this be market manipulation in itself? It is worth noting that the brokerage fee-free Robinhood makes revenue from selling its customers’ order flows to hedge funds like Citadel (which funded Melvin Capital).

More reading

• Brokers name 3 ASX shares to buy right now
• European Lithium (ASX:EUR) share price drops despite positive update
• 2 excellent ETFs for ASX investors in February
• What to expect from the Wesfarmers (ASX:WES) first half result
• Here’s why the Sezzle (ASX:SZL) share price is dropping lower

Mitchell Lawler owns shares of Tesla. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and recommends Tesla. 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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The European Lithium Ltd (ASX: EUR) share price is dropping today, despite releasing a positive update to the market.

During early trade, the lithium miner’s shares were in positive territory, reaching an intraday high of 8.4 cents. However, the European Lithium share price has since fallen to 7.2 cents at the time of writing, down 6.9%.

What did European Lithium announce?

The European Lithium share price is seesawing today after providing a progress update of its flagship asset.

In its release, European Lithium advised it’s on track with the definitive feasibility study of its Wolfsberg Lithium Project.

Dorfner, selected to undertake metallurgical test-work at the mine, received samples from the company’s 1500 tonne bulk sample stockpile. Currently, the raw materials are being carefully analysed, with leading engineering group DRA Global overseeing the process.

European Lithium it would receive a full and final report oN the metallurgical results within the coming months. Together, along with other works completed by the company, the report will be used for a final definitive feasibility study.

European Lithium highlighted that completing the metallurgical test-work will allow it to optimise the design for its hydrometallurgical production facility. In turn, this will save significant costs and time in fine-tuning the plant to maximise efficiency for future production lines.

Quick take on the Wolfsberg Project

Located 270km south of Vienna in Austria, the Wolfsberg Project aims to become first local lithium supplier for European batteries. The company believes that its late-stage project is well placed to target the largest lithium import markets in the European Union.

Most notably, the European automobile industry is rapidly transitioning to electric vehicles, thus requiring lithium to power its batteries. With an existing mining permit, and strategically placed in the heart of Europe, the company is poised to take advantage of the growing market. It expects that the Wolfsberg Project mine will be in production in 2023.

Management commentary

European Lithium chair Tony Sage highlighted the company’s assets to move into production, saying:

European Lithium has the major advantage of an existing permitted working mine in central Europe, to provide Dorfner with the tonnage needed to build a pilot plant and produce samples for met testing.

Successful metallurgical testwork progresses our strategy toward the DFS that will see the company advance towards becoming a near term, high quality battery-grade lithium hydroxide (LiOH) producer.

About the European Lithium share price

The European Lithium share price has gone on a rollercoaster ride over the past 12 months. Its shares fell heavily in March after reaching highs of around 8.6 cents the month before. During May, the company’s share rocketed to 9 cents, and again nosedived to COVID-19 lows.

Since hitting a 52-week low of 3.5 cents in October, the European Lithium share price accelerated to 13 cents this month. Currently, its shares are swapping hands for 7.3 cents.

More reading

• Why the European Lithium (ASX:EUR) share price is rocketing 50% today

Motley Fool contributor Aaron Teboneras 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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