How has the Australian Vanadium (ASX:AVL) share price exploded 160% in a month?

Australian Vanadium shares have delivered some eye-watering returns. Here's the tea!

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Key points

  • Green metals have been all the rage with ASX investors lately
  • One of the biggest beneficiaries has been the Australian Vanadium share price
  • So what has helped Australian Vanadium rocket more than 160% in under a month?

The ASX boards have been dominated by resources shares that have shot up in value over the past month or two. If you stick to the green metals space, you don't need to look too far to find some stellar short-term performers.

Investors seem to be extremely bullish on this market niche right now. Take Pilbara Minerals Ltd (ASX: PLS). It's up close to 30% over the past month. Or AVZ Minerals Ltd (ASX: AVZ), which has given investors a return of more than 52%. But the Australian Vanadium Ltd (ASX: AVL) share price is a standout performer.

Australian Vanadium shares gained an extraordinary 16.67% just today, closing at 10.5 cents a share. But it was less than a month ago that this company was trading at just 4 cents a share. That means the Australian Vanadium share price has rocketed 162.5% in under a month.

So what's behind this eye-watering move? Well, it's hard to say for sure. But some developments have likely pushed investors towards this small-cap vanadium share.

Australian Vanadium share price rockets higher

The first is a general appetite for companies involved in green metals, battery materials and technologies and renewable energy that we have been seeing from investors lately. Vanadium is a metal that has been identified as a potentially game-changing ingredient in a new generation of batteries known as redox flow batteries.

This technology is still emerging. But even so, many experts are excited about its potential future. Redox flow batteries use significant quantities of vanadium. So if this technology takes off, it's not unreasonable to foresee a huge rise in the demand for the metal.

And Australian Vanadium is, of course, building out its capacity to produce this potentially green metal.

But another major development seems to have gotten investors hot under the collar for Australian Vanadium shares. Last month, the company announced that it has been awarded a $49 million grant under the federal government's Modern Manufacturing Initiative (MMI). Australian Vanadium will use the funds to develop its Australian Vanadium Project near Geraldton, Western Australia.

Australian Vanadium is a company with a market capitalisation of just under $300 million. Thus, a grant of $49 million is a significant injection.

In its recent joint announcement with Australia, which we covered last week, the United States government has also singled out vanadium as a critical mineral. This could imply that further government assistance is possible as the US builds out secure supply chains of critical minerals.

All in all, it doesn't get much better than the month the Australian Vanadium share price has just had.

Motley Fool contributor Sebastian Bowen 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.

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