Here’s why the Lake Resources (ASX:LKE) share price is charging 5% higher

It’s Christmas in July for Lake Resources shareholders…

| More on:
happy person clenching fists in celebration sitting at computer

Image source: Getty Images

The Lake Resources N.L. (ASX: LKE) share price is pushing higher on Wednesday.

In afternoon trade, the lithium developer’s shares are up 5% to 42 cents.

This means the Lake Resources share price is now up over 420% since the start of the year.

Why is the Lake Resources share price pushing higher today?

Investors have been bidding the Lake Resources share price today following a positive announcement.

In fact, that announcement might make Lake Resources shareholders feel like it’s Christmas in July.

According to the release, in recognition of the support received from its shareholders, Lake Resources revealed that it intends to undertake a bonus issue of options to all shareholders with an address in Australia or New Zealand.

These options will be granted to eligible shareholders that are holding Lake Resources shares at 5pm on the record date of 10 August.

What are the options?

The release explains that all eligible shareholders will be granted one free bonus option for every 10 Lake Resources shares they own on the record date.

These options will be exercisable at 35 cents before their expiration date of 15 October, resulting in 1 new share per option. This represents a 16.5% discount to the current Lake Resources share price.

But it doesn’t stop there! For every option that is exercised, Lake Resources will issue a second option to the shareholder. On this occasion, those options will be exercisable at 75 cents each, with an expiration date of 15 June 2022.

Once again, if exercised, this will result in the shareholder being allotted one new Lake Resources share for every option.

Given that the second option represents a 79% premium to the current Lake Resources share price, management appears confident in the company’s prospects over the next 12 months.

Lake Resources’ Managing Director, Steve Promnitz, commented: “The intent of the offer is to thank supportive shareholders as Lake enters a major development phase through financing, construction and into production. Shareholders appreciated the benefits from a similar bonus option offer in 2019 and the company seeks to repeat that success.”

Should you invest $1,000 in Lake Resources right now?

Before you consider Lake Resources, you'll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Lake Resources wasn't one of them.

The online investing service he’s run for nearly a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of August 16th 2021

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. 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