Why the AVZ Minerals Ltd share price raced higher today

The market may have dropped lower in early trade but the same cannot be said for the AVZ Minerals Ltd (ASX: AVZ) share price.

In morning trade the lithium-focused mineral exploration company’s shares are up 7% to 23 cents.

Why are its shares racing higher today?

This morning the under-fire mineral exploration company provided the market with the results for the first resource drill holes at its Manono project in the Democratic Republic of the Congo.

According to the release, the assay results from the drill holes have confirmed the well-mineralised nature of the Roche Dure pegmatite. Further, the high-grade intercepts reported are similar to those from previous drill holes that were completed in 2017.

The company’s executive chairman, Klaus Eckhof, appeared pleased with the results and the progress that AVZ Minerals is making.

He stated that: “We are delighted with the progress of the resource drilling at Manono with four rigs now fully operational 24/7. With our resource consultants having visited site for independent reviews of the drilling program we are well placed to complete resource calculations as planned.”

Management also confirmed that the company is on course to deliver its initial JORC resource calculation by end of June quarter 2018. This should give investors an indication of the size of the mineral resource that the company is sitting on top of.

Should you invest?

There appears to be little doubt that AVZ Minerals’ Manono project has a significant mineral resource underground.

However, it is worth noting that this project is a significant distance from the coast in a country with poor infrastructure, high levels of corruption, and armed conflict. This has me doubting the viability of the operation somewhat.

Because of this, I still think investors would be better off gaining exposure to lithium through the likes of Kidman Resources Ltd (ASX: KDR) or Mineral Resources Limited (ASX: MIN) instead.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. 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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