Why is the Eastern Iron (ASX:EFE) share price in recess

The company's shares are taking a break for now…

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The Eastern Iron Limited (ASX: EFE) share price rocketed again today before being temporarily paused by the ASX.

The iron ore exploration company's shares pounced 20.69% higher to 3.5 cents apiece. It's worth noting that yesterday, its shares registered a mammoth 123% gain following a positive release to the market.

In comparison, the All Ordinaires Index (ASX: XAO) has lost 0.17% this week alone.

Why are Eastern Iron shares paused?

The details surrounding the temporary pause is sketchy with the company only stating that a release is pending.

With no information in regards to what this could be, we take a look back at yesterday's announcement. This could provide some clarity on what to expect in the near future from Eastern Iron.

A non-binding Memorandum of Understanding (MOU) was executed with Ya Hua International Investment and Development Co. Ltd to form a strategic partnership. The Chinese companies are wholly-owned subsidiaries of Sichuan Yahua Industrial Group Co. Ltd (Yahua Group).

The collaboration between Eastern Iron and Yahua Group will lead to a joint venture in acquiring and developing lithium projects.

Furthermore, the parties will work together in bringing the Trigg Hill Lithium Tantalum Project online. However, this will come after the completion of Eastern Iron's acquisition of Trigg Hill and an initial exploration target.

The company entered into a binding Heads of Agreement with Amery Holdings for an option to acquire a 100% interest in the Trigg Hill Project.

Under the terms, Yahua Group has first right of refusal for product offtake from any projects with Eastern Iron.

About the Eastern Iron share price

The past 12 months has been nothing special for Eastern Iron shares when not factoring in this week's gain. Investors will be licking their lips with the company's shares zooming close to 150% over the last 2 days.

On valuation metrics, Eastern Iron has doubled in value to $26.4 million, whilst maintaining approximately 745 million shares on issue.

Motley Fool contributor Aaron Teboneras 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 Bruce Jackson.

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