Why the Avz Minerals Ltd share price rocketed 16% higher

The Avz Minerals Ltd (ASX:AVZ) share price has had a stunning start to the week. Here's why…

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

One of the biggest movers on the market this morning has been the Avz Minerals Ltd (ASX: AVZ) share price.

In morning trade the lithium hopeful was up as much as 16% at one stage before dropping back a touch. At the time of writing AVZ Minerals' shares are up 12% to 32 cents.

What happened?

This morning the company advised that the first drill hole of its 20,000 metre phase 1 drilling program has intersected 295 metres of pegmatite from 62 metres down-hole depth.

According to the release, the results suggest that the Roche Dure Pegmatite is thicker than anticipated in this particular area, reaffirming management's view that the Manono Lithium Project in southern Democratic Republic of Congo is a world-class lithium asset.

Should you invest?

Whilst this is definitely a very promising development for the company, I still wouldn't be in a rush to invest in its shares just yet.

The Manono Project undoubtedly appears to have a lot of potential, but until the full extent of the mineral resource underground is known I would suggest investors keep their powder.

Especially given how one lithium expert has previously been very sceptical on the project's future. According to an interviews with News Limited earlier this month, Global Lithium's Joe Lowry believes that there's a strong possibility that the Manono lithium project may never be built.

Lowry appears to believe that the project is too far from the coast in a high risk nation. This could potentially make transporting raw materials difficult for the company.

So for now, I think investors would be better off considering other lithium miners that are already producing the metal such as Galaxy Resources Limited (ASX: GXY) and Orocobre Limited (ASX: ORE).

Both of these producers are currently benefitting from high lithium prices and are likely to deliver significant free cash flow this year. But like AVZ Minerals, let's not forget that they are still high risk investments themselves.

Motley Fool contributor James Mickleboro owns shares of Galaxy Resources Limited. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on ⏸️ Investing

A white and black robot in the form of a human being stands in front of a green graphic holding a laptop and discussing robotics and automation ASX shares
Technology Shares

Joining the revolution: How I'd invest in ASX AI shares right now

Advances in artificial intelligence (AI) could usher in a new industrial revolution. Here’s how you can invest in it.

Read more »

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »