What on earth went on with the Lake Resources share price today?

Lake Resources shares delighted investors this Monday…

| More on:
A businessman on a rowing boat marooned on parched land, indicating rocky share price movements on the ASX and better options offshore

Image source: Getty Images

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 Lake Resources N.L. (ASX: LKE) share price had a very strange day today.

On Friday, this ASX lithium stock closed at 17 cents a share. This morning, Lake Resources shares started climbing and reached as high as 17.5 cents a share just before lunchtime (up more than 6% at the time). By the end of trading, the lithium producer ended up closing at 17 cents, up a decent 3.03%.

Now a 6% jump isn't too uncommon with ASX lithium shares, as investors that are familiar with this corner of the stock market could be all too aware of.

However, what is strange about this move today is its isolation. See, most ASX lithium shares actually had a pretty shoddy Monday. Take Pilbara Minerals Ltd (ASX: PLS) shares. Pilbara is now nursing a loss of 4.6% after market close.

Core Lithium Ltd (ASX: CXO) shares were down 2.86% to 34 cents, while Liontown Resources Ltd (ASX: LTR) shares were flat at $2.99 each.

Yet Lake Resources shares surged more than 6% at one point today. A response to an ASX enquiry could well be responsible.

Lake Resources share price bats away ASX query

In a letter released to investors this morning, Lake Resources responded to an apparent letter from the stock market operator, which requested the company clarify some public statements it had made last month in relation to testing at its Argentinian Kachi project.

As we covered at the time, Lake Resources described the testing work at Kachi as "successful", with four million litres of brine processed and 200,000 litres of eluate produced for testing.

The original ASX letter to Lake Resources hasn't been publicly released by Lake Resources. But it appears the ASX had a problem with Lake Resources labelling this announcement as 'price sensitive'. Lake responded to an ASX query that asked the following:

  • Please define what LKE considered to be 'successful' completion of the test program, and explain the basis for LKE's view that the test was 'successful'.
  • If the answer to question 2 is "yes" [which Lake affirmed] please explain the basis for that view, commenting specifically on how LKE considered the contents of the Announcement to be sufficiently definite to require disclosure under Listing Rule 3.1 in the absence of any JORC compliant test results.

Lake Resources responded by stating the following on why it believes the announcement was indeed appropriately designated as price sensitive:

The Company considers successful completion of the testing program as market sensitive as it
de-risks the Kachi Project, including by independently verifying LKE's flowsheet.

A reasonable investor in LKE, which is a pre-revenue, early-development resource company, would expect that information confirming the Company's designed lithium chemical manufacturing process has the ability to produce battery grade lithium carbonate at scale (which directly impacts the Kachi Project's commercialisation) to be market sensitive and should be released.

So perhaps Lake Resources' response today delighted investors enough to send its share price up so significantly. Whatever the cause, no doubt investors are feeling quite chuffed after this stellar start to the trading week.

Motley Fool contributor Sebastian Bowen 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 Scott Phillips.

More on Materials Shares

smiling worker stands before power generator technology
Materials Shares

Fortescue shares jump 5% on record performance

This mining giant was in fine form during the quarter.

Read more »

A man casually dressed looks to the side in a pensive, thoughtful manner with one hand under his chin, holding a mobile phone in his hand while thinking about something.
Materials Shares

Should you buy Pilbara Minerals shares today?

Let's see if analysts think investors should be buying the lithium giant's shares.

Read more »

Image of young successful engineer, with blueprints, notepad and digital tablet, observing the project implementation on construction site and in mine.
Materials Shares

Expert says this ASX mining stock could rise almost 30%

Let's see which miner is being tipped as a buy for investors right now.

Read more »

a mine worker holds his phone in one hand and a tablet in the other as he stands in front of heavy machinery at a mine site.
Materials Shares

BHP shares charge higher on record copper and iron ore production

Let's see how the miner performed during the fourth quarter.

Read more »

A man stands with hands on hips surveying construction of three high-rise buildings.
Materials Shares

Building activity on the rise – will ASX materials shares benefit?

New data from the March quarter shows a sharp rise in building activity. 

Read more »

Man smiling at a laptop because of a rising share price.
Materials Shares

Macquarie predicts 11% upside for this ASX materials stock

Here's why the broker is positive on the stock.

Read more »

Miner and company person analysing results of a mining company.
Materials Shares

Rio Tinto share price falls on Q2 update

Let's see what the mining giant reported for the second quarter.

Read more »

a man in a hard hat and high visibility vest smiles as he stands in the foreground of heavy mining equipment on a mine site.
Materials Shares

Could these 3 ASX materials shares be set to double?

This broker has buy ratings and aggressive price targets for these holdings. 

Read more »