Lotus Resources (ASX:LOT) share price plunges 5% but is still up 26% this week

The minerals exploration company's shares are on the move again today. Here are the details

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The Lotus Resources Ltd (ASX: LOT) share price has been one to watch these past few days.

Lotus Resources shares are now changing hands at 30.2 cents each. That's a 5.47% drop from the market open. At one stage they were down 12% to 28 cents.

Yet, shares in the minerals exploration company have soared 26% into the green over the past week. In contrast, the S&P/ASX 200 index (ASX: XJO) has only edged 0.5% higher.

Let's take a look at what's fuelling the Lotus Resources share price lately.

What's happening with Lotus Resources?

Lotus Resources shares have been on the move since the company made two distinct announcements over the past few days.

Earlier this week, Lotus advised its mining and exploration licence at the Kayelekera uranium project in Malawai was successfully renewed.

This grants Lotus an additional 15 years of tenure at the site. This "provides certainty and confidence to (its) investors" that the company has the "full backing of the Government" to develop Kayelekera.

In further news that could have boosted the Lotus Resources share price, the company announced it has commenced exploration activities at its Milenje Hills rare earths project, also in Malawi.

Lotus announced that from 22 mineralised samples, high-grade rare earth oxides (REOs) came up to 16%, with "critical" REOs up to 3.4%.

As such, several planned works are set to commence at the site, comprised mainly of testing and drilling schedules.

And let's not forget the recent rally in uranium prices that has taken place over the last month. The price of uranium has soared from US$30 per pound to more than US$49 per pound since 16 August. That's a 63% increase in just 1 month.

Lotus Resources share price snapshot

As Lotus is an ASX resources share that produces a commodity – in this case uranium – it is considered a price taker. As such, its share price is expected to fluctuate with volatility in the broader commodity markets.

The price of uranium has shot up vertically like a hockey stick on the chart, gaining 23% over the past week alone.

Given Lotus' position as a price taker, and this rally in uranium prices, it starts to make sense why the Lotus Resources share price has soared over the last week.

As to today's slump, there is no market-sensitive news from the company. Therefore, the dip could be a result of profit-taking from investors or a large sell order that was completed by a large institution.

The Lotus Resources share price has climbed around 140% this year to date, and almost 200% in the past 12 months.

Both of these results have far outpaced the broad index's return of around 25% over the past year.

The author Zach Bristow has no positions 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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