The Australasian Metals Ltd (ASX: A8G) share price has had an explosive start to this Wednesday's trading session. At the time of writing, Australasian Metals shares are up a very pleasing 12.61% at 67 cents a share. But that comes after this small-cap mining company rocketed as high as 72 cents a share earlier this morning, a gain of more than 20%.
So what's behind this company's explosive share price gains so far today?
Well, Australasian metals is a rather interesting company. It used to be known by its primary resource focus with its old name of Australasian Gold. But as we covered late last year, the company announced plans back then to expand into the lithium space with the Mt Peake Pegmatite Field. Then, in mid-November, Australasian Metals announced that it had made a discovery of high-grade lithium deposits at Mt Peake.
Thus, Australasian Gold became Australasian Metals.
So that brings us to today's announcement that the company released before market open this morning.
Australasian Metals share price rockets on new lithium deal
Australasian Metals announced that it is to acquire a 90% interest in "a large package of highly prospective tenements" within the northern Arunta LCT pegmatite province in the Northern Territory. It will be acquiring this interest from Prodigy Gold NL (ASX: PRX). This package includes five tenements covering roughly 880 square kilometres located approximately 100 kilometres from its existing Mt Peake project.
This will set Australasian Metals back $150,000 in cash. Prodigy will retain the remaining 10% stake in the project until the completion of a pre-feasibility study. Following this completion, Prodigy will "have the ability to elect to convert their 10% interest into a 1% net smelter royalty over the project, or pro-rata fund their interest in the project".
Here's some of what Australasian Metals managing director, Dr Qingtao Zeng had to say on this development:
We are growing a dominant tenement position in the exciting Arunta pegmatite province which is prospective for LCT pegmatites and associated lithium-bearing mineralogy. Through this acquisition, A8G's landholding will increase to more than 1,500 [square kilometres] which places the company as one of the largest holders in the region, with great access to infrastructure, including railway access to Darwin port…
We look forward to being able to apply our experience and expertise across the joint-venture project area, with the aim of discovering more lithium mineralisation to support our development goals.
So it appears that this announcement has been the primary catalyst behind today's dramatic moves in the Australasian Metals share price. Australasian Metals shares are now up more than 290% over the past 12 months.
