Why the AVZ (ASX:AVZ) share price is jumping 10%

The AVZ Minerals Ltd (ASX:AVZ) share price is jumping 10% higher on Monday. Here’s why investors are buying the lithium explorer’s shares…

| More on:
jump in asx share price represented by man jumping in the air in celebration

Image source: Getty Images

The AVZ Minerals Ltd (ASX: AVZ) share price is storming higher on Monday.

In morning trade, the lithium explorer’s shares were up as much as 10% to 16.5 cents.

The AVZ share price has since eased back a touch but remains up almost 7% to 16 cents.

Why is the AVZ share price storming higher?

Investors have been buying the company’s shares today after it released an update on the Mineral Resource of the Manono Lithium and Tin Project in the Democratic Republic of Congo (DRC).

According to the release, geological modelling of the pit floor has confirmed the presence of high grade, fresh pegmatite in all nine resource holes drilled on sections 7100mN to 7300mN at the Roche Dure.

This has led to its Indicated Resources increasing by 12 million tonnes, leading to its combined Measured and Indicated Resources lifting to 274 million tonnes.

In addition to this, the depth of the Roche Dure pit was shallower than the company was anticipating.

As a result, this is expected to lead to lower strip ratio and increased ore mined over the optimised Life of Mine (LoM) plan, which is forecast to have a positive financial impact on the optimised definitive feasibility study (DFS). This bodes well for upcoming discussions with its financiers and explains much of the rise in the AVZ share price today.

AVZ Managing Director, Nigel Ferguson, commented: “This additional information has resulted in the upgrade of some 12 million tonnes of Inferred Resources to Indicated Resources. These additional tonnes, located at shallow depth in the existing pit, are expected to result in fundamental improvements to the mine design and mining schedule as the optimised mine model will treat the wedge material as ore, rather than waste.”

“The lower strip ratio resulting from the increase in ore mined over the optimised mine plan, coupled with lower LOM cost assumptions, is expected to have a positive impact on the optimised DFS to be completed next month which will greatly assist our discussions with prospective financiers,” he added.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of August 16th 2021

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. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Gainers