The Lake Resources NL (ASX: LKE) share price is leaping today, just a day after being added to the S&P/ASX 200 Index (ASX: XJO).

The company’s shares are currently trading at $1.49, a 5.67 gain. For perspective, the S&P/ASX 200 Materials Index (ASX: XMJ) is up 0.04% at the time of writing.

Let’s take a look at why the Lake Resources share price could be jumping today.

Lithium prices in focus

The Lake Resources share price is rising today, but it is not alone. Core Lithium Ltd (ASX: CXO) is jumping 6.7% and was also an addition to the index as part of the June 2022 quarterly rebalance. The Allkem Ltd (ASX: AKE) share price is rising slightly, up 0.77%, while Mineral Resources Limited (ASX: MIN) is 0.12% in the green. In contrast, Liontown Resources Limited (ASX: LTR) is slipping 0.81% while Sayona Mining Ltd (ASX: SYA) is flat.

In news overnight, it has emerged a recent move by Argentina to set a reference value for lithium carbonate prices may not impact lithium prices as much as first thought.

ASX lithium shares plunged last Wednesday after news Argentina had set a reference price for lithium carbonate exports of US$53 per kilogram.

A report out of S&P Global Commodity Insights overnight quoted Chinese lithium carbonate producers stating “overseas prices won’t drop drastically following Argentina’s announcement”. A source said:

The aim of the reference value is actually to prevent sellers from avoiding tax evasion by declaring low prices with customs.

Hence, we don’t see any impact of this announcement on the spot market in the near term.

Lake Resources aims to produce lithium carbonate from the Kachi Lithium Brine Project in Argentina by 2024.

Share price snapshot

The Lake Resources share price has soared 451% in the past year while it has jumped 48% year to date.

For perspective, the ASX 200 has lost nearly 1% in a year.

Lake Resources has a market capitalisation of about $2 billion based on its current share price.

The post Why is the Lake Resources share price rising 6%? appeared first on The Motley Fool Australia.

More reading

• Appen and PolyNovo tumble after being kicked out of the ASX 200 along with these shares
• The Lake Resources share price has surged 11% today. Can it sustain the rally?
• Which ASX lithium shares are rebounding on Thursday, and which are not?
• Why did the Lake Resources share price tumble today?
• Here are the top 10 ASX shares today

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 Scott Phillips.

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The Megaport Ltd (ASX: MP1) share price has come under pressure on Tuesday.

So much so, this afternoon the network as a service company’s shares have dropped over 5% to a multi-year low of $5.96.

This means the Megaport share price is now down almost 70% since the start of the year.

Why is the Megaport share price falling today?

Investors have been selling down the company’s shares on Tuesday in response to weakness in the tech sector and the release of a mixed broker note out of Citi.

In respect to the latter, Citi has retained its buy rating but slashed its price target by 26% to $12.30.

Though, it is worth noting that even after this sizeable cut, Citi’s price target implies potential upside of over 100% for investors over the next 12 months.

Why did the broker cut its price target?

According to the note, the broker has reduced its valuation to reflect lower earnings estimates due to price reductions for Megaport’s services.

Citi acknowledges that some investors may interpret these price cuts as a sign of softening demand and sees potential for Megaport to fall short of consensus estimates in FY 2023 because of the softer pricing.

However, it believes the price cuts are being used to help the company increase adoption rather than being demand related.

Furthermore, it still expects Megaport to deliver very strong revenue growth despite these cuts. Based on this, it feels the Megaport share price is very attractively priced at the current level.

Citi explained:

While the reduction in MVE pricing could suggest softer demand, we see the new bandwidth options as positive as high IP transit costs was a barrier for MVE adoption in ANZ and it could also drive adoption among existing SDWAN customers.

While we see risk to consensus forecasts in FY23e, with the stock trading on 6x revenue, with 30%+ topline growth, we maintain our Buy call but lower our target price by 26% to reflect higher cost of capital and earnings downgrades.

The post Megaport share price hits multi-year low: Is this a buying opportunity? appeared first on The Motley Fool Australia.

More reading

• Goldman Sachs says beaten-up Megaport share price has 100% upside
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• 3 ASX growth shares brokers rate as buys right now
• ASX 200 midday update: BlueScope and Fortescue rise, Boral tumbles
• Warren Buffett’s been bargain hunting following the stock market sell-off. Here’s the sector he’s been buying (and selling)

Citigroup is an advertising partner of The Ascent, a Motley Fool company. Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended MEGAPORT FPO. 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 Scott Phillips.

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Lower iron ore prices are coming, it’s just a matter of when. But if you own BHP Group Ltd (ASX: BHP) shares, here’s how the mining giant is planning on meeting this challenge.

The head of BHP’s WA iron ore operations, Brandon Craig, warns that the strong prices for the commodity won’t last, reported The Age.

BHP shareholders may not want to hear this news as the price of the steel making ingredient stays stubbornly high.

Tailwinds for BHP shares may be waning

In fact, analysts have been left scrambling to upgrade their iron ore price forecasts over the past several months as the mineral stayed around US$140 a tonne.

This is in part due to stimulus spending by several countries to kick start their economy as we emerge from COVID-19.

More significantly, the world’s largest importer of iron ore, China, is said to be readying a new round of stimulus.

While the high prices may hold for a while yet, Craig said the good times won’t last as the effect from the stimulus support fades.

Oversupplied in the long-term

This is because the iron ore market is in a structural surplus. The laws of economics dictate that commodity products always revert to competing on cost in the long-term.

It’s a good thing that BHP and its peer Rio Tinto Limited (ASX: RIO) are among the lowest cost iron ore producers in the world.

But those who own BHP shares will be happy to hear that there’s an opportunity to squeeze more profits. Craig outlined ways he can cut more operating expenses to protect profits.

BHP shares supported at the margins

For instance, laser scanners are being installed at BHP’s eight ship loaders at Port Headland. This will automate the loading of vessels with little human intervention.

The project will cost $50 million over five years and is forecast to cut 30 minutes off the average ship loading time. That may not sound much, but it can help defer the need to build a new berth, which will ultimately cost a lot more.

Savings from automation can also be achieved through its 1,300 kilometres rail network and from using green energy.

BHP can’t offset the surge in fuel prices from its petroleum division since it divested that to Woodside Energy Group Ltd (ASX: WDS).

BHP still cautious on green energy

The cost of solar and wind power is dropping at a time when fossil fuel prices are surging. This could help justify the economics of green energy projects, although Craig is still working out where best to deploy capital.

That is a more conservative approach than the one taken by Rio Tinto, according to The Age. Rio Tinto committed $2 billion to replace 80% of the gas used for power with sustainable energy. It’s convinced that the project economics stacks up without applying a cost to emissions.

The BHP share price has fallen 5% over the past year while the Rio Tinto share price has dipped 7%.

The post Own BHP shares? Here’s how the miner plans to offset lower iron ore prices appeared first on The Motley Fool Australia.

More reading

• Why are the ASX 200 iron ore giants outperforming on Friday?
• ASX 200 midday update: Healius disappoints, BHP and Fortescue storm higher
• What is the BHP share price forecast for June?
• 2 top ASX dividend shares to buy according to analysts
• Top broker names 2 of the best ASX shares to buy in June

Motley Fool contributor Brendon Lau has positions in BHP Billiton Limited and Rio Tinto Ltd. 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 Scott Phillips.

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The Dogecoin (CRYPTO: DOGE) is down 5.6% over the past 24 hours, currently trading for 7.85 US cents.

That puts the popular meme coin, with a Shiba Inu as its mascot, down 55% so far in 2022. And it’s now down 89% since hitting all-time highs of 73.8 US cents precisely 13 months ago, on 8 May 2021.

Despite that retrace, and because the rest of the crypto market has been tumbling this year as well, Dogecoin remains the number 10 crypto in terms of market cap, with a total valuation just shy of US$11 billion.

Not bad for a token that initially was created in 2013 as a joke by Billy Markus from Portland, Oregon, and Jackson Palmer from Sydney, Australia.

Yet despite Dogecoin now being a household name, at least among the crypto-savvy, co-founder Palmer is one of its staunchest critics.

‘Wherever there’s smoke there’s probably crypto’

Palmer turned his back on the crypto world in 2016, when he became highly skeptical of the wider industry.

Now he’s launching a podcast called Griftonomics, which focuses on modern scams investors should be wary of. And cryptos, including Dogecoin, top the list.

According to Palmer (courtesy of The Sydney Morning Herald):

When I set out to do Griftonomics, I wanted the series to be mostly about things that weren’t crypto-related, like hustle culture, online gambling, carbon credits, things like that. But the interesting thing about crypto is, as you start to scratch the surface of the things I just mentioned, in every topic, you find a crypto angle.

There is some way that this parasitic thing has got its claws in every single kind of scam that is out there. It’s a facilitating technology. Crypto acts as an enabler of many groups of scams by providing an unregulated, harder to control system for scammers to perpetuate their scams.

Wherever there’s smoke there’s probably crypto.

Big names pump up Dogecoin and other cryptos

Palmer says that industry “grifters” use the idea that cryptos like Dogecoin and Bitcoin (CRYPTO: BTC) offer “some sort of cutting-edge new technology” along with much-hyped endorsements from billionaires and celebrities to lure in new investors.

“Elon [Musk] has had a big impact, especially on the Dogecoin market and making people believe that it is something, which I obviously don’t agree with,” he said.

And they’re always ready to spin a new angle.

According to Palmer (quoted by the SMH):

Every two or three years there’s a new narrative. In 2009, it was that Bitcoin was going to replace all these banks that just screwed you over. Then a few years later when that didn’t work out, the narrative was that it was just a store of value. Then it pivoted again to ICOs [initial coin offerings], democratising fundraising, and then recently we went through the DeFi [decentralised finance] narrative, which was just a total sham.

Now we have NFTs [non-fungible tokens], which are simply the latest in a long string of changing narratives, so the industry can get a bunch of new suckers in.

Even when it comes to Web 3.0 – which envisions remaking the global internet based on blockchain technology – Palmer is dismissive.

“I’m a huge proponent of decentralisation, I had a person on the podcast who was the creator of Mastodon, a decentralised social network a lot like Twitter,” he said. “Does it need a blockchain? Does it need cryptocurrency to function? Absolutely not.”

The post ‘Wherever there’s smoke there’s probably crypto,’ warns Dogecoin founder appeared first on The Motley Fool Australia.

More reading

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• What’s the outlook for crypto prices in June? Industry insiders weigh in
• 2 top cryptocurrencies to buy and hold for decades
• Why did crypto prices get massacred in May?
• Has the Bitcoin price bottomed?

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Bitcoin. The Motley Fool Australia has positions in and has recommended Bitcoin. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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The S&P/ASX 200 Index (ASX: XJO) is out of form again on Tuesday. In afternoon trade, the benchmark index is down 0.9% to 7,143.3 points.

Four ASX shares that are falling more than most today are listed below. Here’s why they are dropping:

Codan Limited (ASX: CDA)

The Codan share price is down 4% to $7.16. Investors have been selling this metal detector focused technology company’s shares this week after S&P Dow Jones Indices kicked it out of the ASX 200 index at the next quarterly rebalance.

Incitec Pivot Ltd (ASX: IPL)

The Incitec Pivot share price is down 2.5% to $3.51. This appears to have been driven by a broker note out of Ord Minnett this morning. According to the note, the broker has downgraded this industrial chemicals company’s shares to a hold rating with a $3.90 price target. Ord Minnett has a few concerns with the company’s plans to spin off its commercial explosives business.

Xero Limited (ASX: XRO)

The Xero share price is down 3% to $82.00. This follows broad weakness in the tech sector on Tuesday which has seen this side of the market become a sea of red. The S&P/ASX All Technology Index is down 1.8% at the time of writing.

Zip Co Ltd (ASX: ZIP)

The Zip share price is down 10% to 68.7 cents. Investors have been selling Zip and other buy now pay later (BNPL) shares after tech giant Apple announced the launch of its BNPL service. Apple Pay Later allows users to split the cost of an Apple Pay purchase into four equal payments with no interest. The service works with any merchant that already supports Apple Pay and does not require a new payments terminal.

The post Why Codan, Incitec Pivot, Xero, and Zip shares are dropping appeared first on The Motley Fool Australia.

More reading

• Down 13% in a month, fundie says Xero share price is ‘very reasonable’
• When will it end? Zip share price plummets again on Tuesday
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• Appen and PolyNovo tumble after being kicked out of the ASX 200 along with these shares

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Xero and ZIPCOLTD FPO. The Motley Fool Australia has positions in and has recommended Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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It’s been a pretty paltry month or so for the Xero Limited (ASX: XRO) share price, no way around it. Xero shares were going for $95.20 back on 5 May. Today, the online accounting software provider is asking just $82.20 a share at the time of writing.

Not only is that down a nasty 2.58% for the day thus far, but it also means Xero has lost more than 13% since 5 May.

But this is arguably just an extension of the pretty bleak year Xero has suffered through so far in 2022. Since the start of the year, the Xero share price is down by 44%.

So now that we’ve seen such a steep fall in the value of Xero shares, many investors might be wondering whether this is turning into a buying opportunity for this ASX tech share. So let’s see what the experts reckon.

Is the Xero share price a buy today?

One ASX broker who likes the look of Xero right now is Goldman Sachs. As we covered a few days ago, Goldman has maintained a buy rating on Xero shares, together with a 12-month share price target of $118.00. Goldman liked what it saw in Xero’s recent earnings report, and expects another strong increase in revenues in FY 2023 to almost NZ$1.4 billion.

But Goldman isn’t the only investor expecting big things from Xero. My Fool colleague Tony chatted to Tribeca Investment Partners’ Jun Bei Liu this week. Here’s some of what she said about Xero:

We love this company because, for many years, it’s demonstrated its execution in dislodging incumbents and growing its share and became a dominant player across the New Zealand, Australian markets. And now it’s gone to the UK. It’s demonstrated it’s gaining [market] share really well.

Share price, again, [is] being punished because of people rotating out of growth stocks into others. And I think the current share price is [at] very reasonable levels. It’s not something you buy for next month’s earnings. It is something you buy for the bottom drawer, for the longer term, for the next five years.

So we love Xero.

So that’s how two ASX investing experts view the Xero share price right now. They seem to be fairly unanimous on this tech company’s rosy future. But we shall have to wait and see how right they are.

In the meantime, the current Xero share price gives this ASX 200 tech share a market capitalisation of $12.44 billion.

The post Down 13% in a month, fundie says Xero share price is ‘very reasonable’ appeared first on The Motley Fool Australia.

More reading

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• 2 stellar ASX growth shares analysts are tipping as buys this month
• Why are ASX 200 tech shares having such a cracking Friday?
• Xero share price has 19% upside potential, top brokers say
• Why did the Xero share price go backwards in May?

Motley Fool contributor Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs and Xero. The Motley Fool Australia has positions in and has recommended Xero. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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In afternoon trade, the S&P/ASX 200 Index (ASX: XJO) is on course to record a disappointing decline. At the time of writing, the benchmark index is down 0.8% to 7,150.2 points.

Four ASX shares that are not letting that hold them back are listed below. Here’s why they are pushing higher:

Core Lithium Ltd (ASX: CXO)

The Core Lithium share price is up 6% to $1.27. This is despite there being no news out of the lithium developer today. However, a number of emerging lithium players are rising today. Investors appear to believe they have been oversold during recent market volatility.

Perenti Global Ltd (ASX: PRN)

The Perenti Global share price is up 15% to 79.8 cents. Investors have been buying this engineering company’s shares after it announced a major contract win. According to the release, Evolution Mining Ltd (ASX: EVN) has awarded Perenti a contract for all the underground development and production works for its Cowal Underground project. This contract is estimated to be worth $520 million.

Strandline Resources Ltd (ASX: STA)

The Strandline Resources share price is up 6% to 36 cents. This morning the minerals sands company revealed that construction of its 100%-owned Coburn mineral sands project in Western Australia is now 75% complete. This means the company remains on track for its first production of heavy mineral concentrate later this year.

Yancoal Australia Ltd (ASX: YAL)

The Yancoal share price is up 3% to $5.60. Investors have been buying this coal miner’s shares after an independent expert concluded that a low-ball takeover offer was not in the best interests of shareholders. Yankuang Energy Group – Yancoal’s parent company and controlling shareholder – was hoping to snag the company at a discount of $5.07 per share.

The post Why Core Lithium, Perenti, Strandline, and Yancoal shares are pushing higher appeared first on The Motley Fool Australia.

More reading

• Here’s why the Perenti share price is rocketing 18% today
• Yancoal share price lifts as potential takeover slammed
• Here are the best performing ASX dividend shares so far this year
• Could the Core Lithium share price be set to take off again in June?
• Appen and PolyNovo tumble after being kicked out of the ASX 200 along with these shares

Motley Fool contributor James Mickleboro 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 Scott Phillips.

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The Vanguard Australian Shares High Yield ETF (ASX: VHY) is one of the more popular exchange-traded funds (ETFs). The fund size is around $2.3 billion.

As the name suggests, it’s an investment that targets businesses with higher dividend yields from the ASX share market.

Vanguard is the provider of this investment. It’s one of the largest funds management organisations in the world. Vanguard tries to provide its investment options as cheaply as possible.

In Vanguard’s own words:

The ETF provides low-cost exposure to companies listed on the Australian Securities Exchange (ASX) that have higher forecast dividends relative to other ASX-listed companies. Security diversification is achieved by restricting the proportion invested in any one industry to 40% of the total ETF and 10% in any one company. Australian real estate investment trusts (A-REITs) are excluded from the index.

Let’s look at two of the key features of this ETF.

Low cost

Vanguard says this ETF is a low-cost investment.

Its annual management fee is 0.25% per annum. That is relatively low compared to many other investment options. However it’s not the cheapest way to invest in ASX shares.

Vanguard itself has an ETF that charges less than half this cost annually. The Vanguard Australian Shares Index ETF (ASX: VAS) charges an annual fee of just 0.10%.

Higher dividend yield

There are some businesses on the ASX where the dividends and distributions they provide make up a sizeable part of the total return over time.

The top 10 positions in the VHY ETF all pay relatively high dividends to shareholders. Those top 10 largest holdings are Commonwealth Bank of Australia (ASX: CBA), BHP Group Ltd (ASX: BHP), National Australia Bank Ltd (ASX: NAB), Wesfarmers Ltd (ASX: WES), Westpac Banking Corp (ASX: WBC), Telstra Corporation Ltd (ASX: TLS), Australia and New Zealand Banking Group Ltd (ASX: ANZ), Transurban Group (ASX: TCL), Macquarie Group Ltd (ASX: MQG) and Rio Tinto Limited (ASX: RIO).

Looking at the returns of the ETF, at the end April 2022, the distribution return had been an average of 5% per annum over the prior three years. That also doesn’t include the franking credits, which makes the income return even higher.

According to Vanguard, the forecast grossed-up dividend yield for the ETF is currently 7.3%.

Any downsides?

I think it’s important to remember that an investment isn’t a buy just because of a dividend.

In my opinion, the investment and valuation also have to make sense.

Businesses paying out most of their profit as a dividend aren’t generally known for displaying growth. They aren’t re-investing much profit back into the business for more growth. At the end of April 2022, Vanguard Australian Shares High Yield ETF had seen capital growth of an average of 2.1% per annum over the prior five years and 3.3% per annum over the previous 10 years.

Maybe that’s all investors are looking for — a little bit of long-term capital growth with strong dividend potential year to year.

For investors that aren’t seeking maximum income, I think other options could produce better total returns over the longer term as those (underlying) businesses re-invest more profit back into the business. For example, over the last five years to April 2022, the VAS ETF returned an average of 0.65% per annum more than the VHY ETF, showing that the excluded ASX growth shares made a difference to the overall picture.

The post Is the Vanguard Australian Shares High Yield ETF a good investment for dividends? appeared first on The Motley Fool Australia.

More reading

• Why Core Lithium, Perenti, Strandline, and Yancoal shares are pushing higher
• Guess which ASX mining share just exploded 50% on a ‘substantial discovery’
• Why is the Strike Energy share price popping on Tuesday?
• Why did the Dateline Resources share price just pop 34% then stop?
• 3 ASX 200 shares defying today’s sell-off to leap higher

Motley Fool contributor Tristan Harrison 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 positions in and has recommended Telstra Corporation Limited and Wesfarmers Limited. The Motley Fool Australia has recommended Macquarie Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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Shares of Lion One Metals Ltd (ASX: LLO) have surged to more than 48% higher in trade on Tuesday after a key company update.

Investors have rallied the stock to $2.06 at the time of writing, a shade off the intraday high of $2.45 in early trade.

The price action also marks a 52-week high for the company whose share price had flatlined up until today’s announcement.

What did Lion One release?

The company announced the discovery of a major new feeder structure at its Tuvatu Alkaline Gold Project in Fiji.

Specifically, Hole TUG-141 has encountered the longest high-grade intercept yet recorded at Tuvatu. The company was targeting a complex network of high-grade structures called the 500 Zone at the site.

It intersected 20.86 g/t Au over 75.9m, including 43.62 g/t Au over 30.0m which includes 90.35 g/t Au over 7.2m.

“The new discovery is located at depth beneath the current resource fully within the permit boundaries of the Tuvatu mining lease,” it remarked.

The company’s CEO, Walter Berukoff, said the find “represents a substantial discovery for Lion One”.

I have long encouraged our team to find that “gold room” at Tuvatu, and hole TUG-141 leads me to believe they have found it. We have only to look at other notable large alkaline Au deposits as direct
analogues to better understand what this latest discovery tells us, and it is clear that the discovery of a major high-grade feeder such as this should be viewed as very promising.

I am confident that Tuvatu will one day fall in the ranks of notable multi-million ounce Au deposits such as Porgera and Vatukoula.

The company says that further drilling is required to better understand the results, and that hole TUG-141 is still being drilled. Other mineralised structures are yet to be assayed.

Its immediate priority is to follow up with additional drilling in the Tuvatu system.

The post Guess which ASX mining share just exploded 50% on a ‘substantial discovery’ appeared first on The Motley Fool Australia.

More reading

• Why is the Strike Energy share price popping on Tuesday?
• Why did the Dateline Resources share price just pop 34% then stop?
• 3 ASX 200 shares defying today’s sell-off to leap higher
• When will it end? Zip share price plummets again on Tuesday
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The Strike Energy Ltd (ASX: STX) share price traced higher in early trade on Tuesday, nudging past a 5% gain before cooling off to 31 cents. That’s still up 3.33% on yesterday’s closing price.

Investors are bidding up the oil and gas explorer’s shares amid a company announcement regarding its Project Haber development strategy.

What did Strike Energy announce?

Strike has launched the Mid West Low Carbon Manufacturing Precinct via the acquisition of freehold farming land in the Three Springs Shire in Western Australia.

It has signed an unconditional binding contract to purchase the 3,500 hectares of freehold farming land on a $13.5 million valuation. Settlement is set to finalise in H2 FY22.

It also agreed to lease the farm back to the current owners on a periodic lease.

Strike hopes to open a mortgage facility “that takes into account the various income streams that will be produced from the land over the next three to five years” to finance the transaction.

The land sits above Strike’s 100%-owned South Erregulla gas fields. The company will use the land to create a low carbon integrated energy and industrial manufacturing centre.

Management commentary

CEO Stuart Nicholls said the precinct will produce “some of the lowest cost and lowest carbon fertiliser in the global market”. He added:

Strike continues to display sectoral leadership through its strategic development approach at Project Haber, in utilising its natural resource endowment in partnership with world class renewable energy in the Mid West to manufacture globally low carbon critical agricultural commodities.

Strike says the land contains natural resources and assets. These include the South Erregulla Kingia and Wagina low impurity gas fields, 103 metres of “excellent Jurassic aged carbon sequestration sandstone reservoir”, and wind resources.

“The land will now be referred to as the Mid West Low Carbon Manufacturing Precinct and it is planned that other proponents may join Strike in the development/expansion of the Precinct,” it remarked.

With regards to the fertiliser component, Strike says the emissions would result in “an estimated 50% carbon reduction against the current imported supplies”.

Strike Energy share price snapshot

In the last 12 months, the Strike Energy share price has slipped around 14% into the red. However, it has gained more than 40% this year to date (see below) amid surging energy markets.

The post Why is the Strike Energy share price popping on Tuesday? appeared first on The Motley Fool Australia.

More reading

• 3 ASX All Ordinaries shares defying the sell-off to surge higher
• Here’s why the Strike Energy share price is zipping 10% higher today
• Why Bubs, IGO, Strike Energy, and Woodside shares are pushing higher
• Why Aristocrat, Arafura, Calix, and Strike Energy shares are charging higher
• Here’s why the Strike Energy share price is avoiding the bloodshed today

Motley Fool contributor Zach Bristow 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 Scott Phillips.

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