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Why the Avz Minerals Ltd share price rocketed higher today

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

The mineral exploration company’s shares were up as much as 19% in early trade. At the time of writing they have dropped back a touch and are 14% higher at 12 cents.

Why are its shares rocketing higher?

This morning Avz Minerals announced that it has signed a memorandum of understanding with Shanghai Greatpower for a potential investment and off-take opportunities from its Manono Lithium Project.

Furthermore, management has advised that discussions with other groups are also on-going.

It appears as though the recent drilling results at Manono have caught the eye of many would-be suitors and I can’t say I’m surprised.

Thus far the drilling results that have been revealed have been outstanding and appear to show that Avz Minerals has a world-class lithium asset on its hands.

Which is exactly what you want when global lithium demand is tipped to increase exponentially over the next couple of decades.

Because of this, I suspect this won’t be the only memorandum of understanding the company signs in the coming months.

Should you invest?

While I do think that Avz Minerals has a world-class asset on its hands that makes it a very attractive takeover target, it is still very early days.

For this reason I continue to believe the best way to gain exposure to the lithium boom is through an established miner with world-class assets such as Galaxy Resources Limited (ASX: GXY).

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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.