Liontown (ASX:LTR) share price rises after gold update

The Liontown Resources Limited (ASX: LTR) share price is rising this morning as the mineral explorer provided an update on…

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The Liontown Resources Limited (ASX: LTR) share price is rising this morning as the mineral explorer provided an update on a potential gold discovery in Western Australia.

At the time of writing, Liontown shares were swapping hands for 44 cents each, up 2.33%. By comparison, the S&P/ASX 200 Index (ASX: XJO) is 0.15% higher.

Let’s take a closer look at today’s announcement and how it might affect the Liontown share price.

What might affect the Liontown share price?

In a statement to the ASX, Liontown declared preliminary results at its Moora Project in WA have been “outstanding”.

The company has drilled 264 holes since December 2020 and in that time Liontown has been able to identify 3 separate zones in its site. They are:

  • Angepena Zone – a 900m long gold zone with ore of 1.7grams of gold per tonne and even 21.2g/t.
  • Northern Zone – a 2km long and 150m wide copper and gold zone with ore of 2.1% copper and 1.2g/t of gold.
  • South Eastern Zone (SEZ) – an area consisting of 0.4g/t of gold and 0.2% copper.

The company says further testing in the SEZ is needed as the potential for more gold and copper reserves in the area is high.

Furthermore, at the Bindi Bindi prospect, Liontown believes it may have intersected an “anomalous” amount of nickel.

Work will continue at the site to assess the feasibility of further and deeper exploration. These announcements seem to be pushing up the Liontown share price. 

A look at gold and copper prices

The price of gold has been falling since it reached an all-time high of US$2,068.90 per troy ounce in August last year. At present, the price of the precious metal is US$1,732.93 per troy ounce.

Generally, the price of gold is seen as inversely related to the economy. This means as the prospect of an economic recovery post-pandemic grows, the price of gold is likely to continue to fall. This could be negative for the Liontown share price.

Copper, on the other hand, usually moves in the same direction as GDP growth. As of writing, the metal is trading for US$4.03 a pound. It’s only slightly below its 5-year peak of US$4.29 per pound.

The price of copper is also being affected by supply issues out of Chile, according to the Trading Economics website. This, on the other hand, could be more optimistic for the Liontown share price.

Liontown share price snapshot

Over the last 12-months, the Liontown share price has increased 458.44%. The company’s lithium division seems to be the main driver of this increase in value. A surge in demand for lithium is seeing many ASX lithium shares rise too.

Liontown has a market capitalisation of $771.6 million.

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Motley Fool contributor Marc Sidarous 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 Bruce Jackson.

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