Why Avz Minerals Ltd shares are sinking into the red

The Avz Minerals Ltd (ASX:AVZ) share price is back from its voluntary suspension and sinking into the red…

| 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

The Avz Minerals Ltd (ASX: AVZ) share price has returned to trade on Friday following its voluntary suspension and fallen into the red.

At the time of writing the lithium-focused mineral exploration company's shares are down 2% to 25 cents.

Why are its shares sinking lower?

This morning AVZ Minerals made two announcements to the market. One was related to its drill intercepts and the other was a further response to an ASX price query.

The drill intercepts have once again been very positive and appear to support management's belief that the Manono project in the Democratic Republic of the Congo is a world-class asset with a significant mineral resource.

With its drilling program going to plan, management expects to be able to confirm its initial mineral resource estimate by the end of June.

The positive nature of these drill intercept results will come as no surprise to many shareholders given that images of drill core were recently circulated on social media by Michael Langford of Airguide International Pte Limited, AVZ's strategic advisor regarding Chinese relationships, without the company's authorisation.

However, according to its ASX price query response, the company does not consider the images from these Twitter posts to have contained material information.

While this may be the case with the images, I would suggest that the post's accompanying statement made them material. Mr Langford talked up the core holes and said that their "Spodumeme size is clearly obvious."

At the very least the reaction to the posts was material, with its shares rocketing higher upon their release.

Should you invest?

While AVZ Minerals itself may not be to blame for this mishap, unless the company were to end its relationship with Airguide International, I would suggest investors stay well clear of the company and focus elsewhere in the industry. Until then, I think the company lacks the credibility to be considered investment grade.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. 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 Scott Phillips.

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 »