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Why the Lepidico Ltd share price is up 173% in a month

The Lepidico Ltd (ASX: LPD) share price has had a stunning start to the week and is up 20% in early afternoon trade to 4.3 cents.

This brings its 30-day return to an impressive 173%.

What does Lepdico do?

Lepidico is another fledgling Australian company focused on the exploration, development, and production of lithium.

The company owns the technology behind a metallurgical process that has successfully produced lithium carbonate from non-conventional sources, specifically lithium-rich mica minerals including lepidolite and zinnwaldite.

Management believes that the L-Max process has the potential to disrupt the lithium market by providing additional lithium supply from alternative sources.

It is currently conducting a Feasibility Study for a Phase 1 L-Max plant and has targeted production for late 2019.

Why are its shares on a tear?

As well as been exposed to the hottest commodity in the resources sector right now, the company has been attracting some of the biggest players in the industry.

The company recently completed a heavily oversubscribed entitlement offer which raised approximately $4 million. According to the release, Lepidico saw subscriptions from shareholders for over $8 million, almost 200% of the total available shares on offer.

Furthermore, a private placement of shares was made with lithium mining giant Galaxy Resources Limited (ASX: GXY). As a result, Galaxy holds an 11.9% stake in the company worth around $14.6 million.

Should you invest?

I believe the investment by Galaxy is a testament to the potential of Lepidico. However, given its rich valuation I plan to watch on with a keen interest from the safety of the sidelines for the time being and suggest fellow investors do the same.

If you like small-caps with heaps of potential like Lepidico then I think you'll love these top small-cap shares.

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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.

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