Why Avz Minerals Ltd shares are in a trading halt

One of the best performers on the local share market today was the Avz Minerals Ltd (ASX: AVZ) share price.

The lithium-focused mineral exploration company’s shares rose 8.5% to 25.5 cents before they were placed a trading halt this morning.

Why are AVZ Minerals’ shares in a trading halt?

According to the release, AVZ Minerals requested the trading halt as it prepares to respond to a price query request from the ASX.

AVZ Minerals’ shares are expected to remain in the halt until the earlier of commencement of normal trading on April 4 or the release of the response.

At this stage there is no concrete information about what caused the spike in its share price and the subsequent price query request, but there is speculation floating around investment communities.

The speculation is that potentially market sensitive images of core holes at the company’s Manono project in the Democratic Republic of the Congo were leaked on Twitter and not released to the market in an announcement.

Judging by the share price reaction prior to the trading halt, these images were positive and demonstrated the strong potential that Manono’s mineral resources has.

Should you invest in AVZ Minerals?

While AVZ Minerals may be sitting on a world-class mineral resource, if images have leaked out then it doesn’t paint management in a great light.

In addition to this, there are concerns that Manono is too far inland in a dangerous country. This has some lithium bulls believing that it may not be a viable project despite the size of the resource.

Because of these points, I think investors would be better off avoiding AVZ Minerals for the time being and focusing on producers that are already pulling the metal out of the ground such as Galaxy Resources Limited (ASX: GXY) and Orocobre Limited (ASX: ORE). Especially after their sizeable declines this week.

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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 Scott Phillips.

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