Why has ASX lithium share Winsome Resources rocketed 220% in a month?

ASX lithium share Winsome Resources Ltd (ASX: WR1) has rocketed 220% since this time last month.

Yep, that's no typo. It's also up 25% so far today.

So, what's driving investor interest in the lithium stock?

Why has this ASX lithium share soared 218% in a month?

The Winsome Resources share price has been a clear beneficiary of the rocketing demand for lithium. As nations around the world ramp-up electric vehicle production, the price of the battery-critical metal is trading at all-time highs.

And, according to a report by the Australian government, investors can expect lithium prices to charge even higher into 2023 before moderating in 2024 as supply begins to catch up with demand.

While that's benefited most ASX lithium shares, Winsome Resources has gained far more than the average.

The explorer's share price really took off on 28 October. That came after the company reported it has identified significant pegmatite intercepts in a drilling campaign at its Adina and Cancet lithium projects, located in Canada.

As additional promising data from the exploratory drilling came in over the following days, the ASX lithium share continued to power higher.

Why is Winsome Resources raising capital?

If you tried to buy or sell shares in Winsome Resources recently, you may have noticed the company was in a trading halt on Friday and Monday.

Shares began trading again on Tuesday when the explorer announced a $6.8 million capital raise.

The funds will be raised via the "Flow-Through Shares" provisions under Canadian tax law at $1.67 per share. That's 54% higher than the current share price of $1.09.

Winsome said the new shares in the ASX lithium explorer "will be immediately on-sold through a block trade agreement to select high-quality domestic and offshore institutional investors".

Commenting on the capital raise, Winsome Resources managing director Chris Evans said:

This capital raise comes at an ideal time for the Company and allows us to secure funds under a very attractive arrangement facilitated through the Canadian Government's generous tax incentives for mining exploration companies. It allows us to raise capital at a premium price without the level of dilution that would occur via a standard, share placement offer.

Winsome Resources share price snapshot

Winsome Resources listed on the ASX just under a year ago, on 30 November 2021.

Since then, the ASX lithium share has gained 193%. Over that same period, the All Ordinaries Index (ASX: XAO) has lost 3%.