The performance of the Orocobre Ltd (ASX: ORE) share price has been a highlight on Monday.
At lunch the lithium miner's shares are almost 8% higher to $6.34, putting them within sight of their all-time high.
Why are its shares higher today?
Orocobre and fellow lithium miners Galaxy Resources Limited (ASX: GXY), Kidman Resources Ltd (ASX: KDR), and Pilbara Minerals Ltd (ASX: PLS) are all notably higher today following the release of a positive announcement.
This morning Orocobre announced the latest lithium prices it has contracted. According to the release, lithium carbonate delivery quantities and pricing have now been finalised for approximately 85% of its June half 2018 production.
Due to tight market conditions, contracted prices have risen approximately 25% since the December 2017 half. Orocobre noted that its expects to receive US$11,000 per tonne for its product in the December quarter.
Furthermore, CEO Richard Seville appears confident that the trend will continue for the foreseeable future as new demand for lithium exceeds new supply.
Should you invest?
While my preference in the industry remains Galaxy due to its diverse and world class assets, I do think that Orocobre is a great option as well for investors that have a higher than average tolerance for risk.
With prices continuing to climb higher, both companies are in a great position to deliver high levels of free cash flow in FY 2018.
I would, however, suggest investors look to get in on a pull back. As one of the more volatile groups of shares on the market, there's a good chance that investors will be able to get in at a better price in the coming weeks as profit taking sets it.
