Pay dirt: Why is this ASX lithium share up 25% in 5 days?

Two sets of drilling results have got investors excited about this nano-cap ASX lithium share.

| More on:
A man in a hard hat and high visibility vest speaks on his mobile phone in front of a digging machine with a heavy dump truck vehicle also visible in the background.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • ASX lithium share Red Dirt Metals has investors excited after the company revealed drilling results for two of its mines this week 
  • Red Dirt Metals revealed "excellent drilling intercepts" at Mt Ida and "multiple thick mineralised intercepts" as deep as 350 metres at Yinnetharra 
  • The Red Dirt Metals share price has risen 210% over the past two years 

ASX lithium share Red Dirt Metals Ltd (ASX: RDT) is showing investors the money, catapulting 24.3% in just five days while the rest of the market hovers around break-even.

By comparison, the S&P/ASX All Ordinaries Index (ASX: XAO) has risen by 1.8% over the past five days.

Let's dig a little deeper into why Red Dirt Metals shares are on fire this week.

What news has this ASX lithium share skyrocketing?

Red Dirt Metals made two price-sensitive announcements this week, and clearly, investors are impressed.

The first one was released yesterday and documented encouraging drilling results at the Mt Ida Lithium Project, which is located in the Eastern Goldfields region of Western Australia.

Red Dirt Metals has got five drill rigs undertaking resource infill and extension drilling to expand and upgrade the initial global resource estimate of 12.7Mt @ 1.2% Li2O.

Additional testing of exploration targets is ongoing over a large prospective area of 170 sq km.

Over January and February, 27 holes and 4,392 metres were drilled, revealing "excellent drilling intercepts starting at 30 metres below surface and extending to deeper levels", the company said.

The new drilling intercepts included:

  • 44.5m @ 1.2% Li2O from 357.3m
  • 34.9 @ 1.3% Li2O from 398.3m
  • 27.2m @ 1.2% Li2O from 430.4m
  • 14.1m @ 1.2% Li2O from 93.9m
  • 11.7m @ 1.3% Li2O from 75.3m.

The company said the results demonstrated "the calibre of the Mt Ida Lithium Project".

Red Dirt Metals executive chair David Flanagan commented:

It is all about speed to market. We have a granted mining lease with a long and recent history of mining … 5 rigs in the field, thousands of samples in the lab and targeting approval to start mining this year.

The outlook for lithium is fantastic and with so many high grade and wide drill intercepts we see strong prospects for material resource extensions.

This news prompted a 5% bump for the ASX lithium share yesterday to 42 cents at the market close.

What did Red Dirt Metals reveal today?

Red Dirt Metals released its second announcement for the week today. This one relates to its Yinnetharra Lithium Project in the Gascoyne region of Western Australia.

The project is a whopper in land size, spanning 575 sq km.

The company said new assay results from the project's Malinda Prospect showed "multiple thick lithium mineralised intercepts" from the surface to a depth of 350 metres.

The Malinda Prospect has 50 mapped pegmatites. Recent drilling of some of them found:

  • 29m @ 1.39% Li2O from 121 meters
  • 21m @ 1.13% Li2O from 71 metres
  • 17m @ 1.06% Li2O from 52 metres
  • 12m @ 1.38% Li2O from 155 metres.

Red Dirt Metals said this particular prospect was "very large and remains relatively untested".

Flanagan quipped that Yinnetharra was starting to look "more like a province than a project".

He said:

This project just keeps on producing brilliant hits.

It's hard to believe these results are from first pass drilling at a project we acquired in September in a region already producing 55% of the world's annual lithium demands.

Red Dirt has drilled 101 holes for 21,150 metres at Yinnetharra. It is assaying a further 77 holes now, with results due over the coming months. The company is on track to complete 230 more holes by September.

Today's announcement saw the ASX lithium share rise a further 4.2% to 43.25 cents at the close.

Red Dirt Metals share price snapshot

This ASX lithium share has fallen 27% over the past year but is up 210% over the past two years.

Red Dirt Metals is a nano-cap lithium share with a market capitalisation of $193.5 million.

Motley Fool contributor Bronwyn Allen 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 Scott Phillips.

More on Materials Shares

Image of young successful engineer, with blueprints, notepad and digital tablet, observing the project implementation on construction site and in mine.
Materials Shares

Are BHP shares are buy after its results?

Let's see what brokers are saying about the mining giant after its results.

Read more »

A group of miners in hard hats sitting in a mine chatting on a break as ASX coal shares perform well today
Resources Shares

Materials shares dominate for a second week amid another record high for the ASX 200

The big ASX 200 mining shares experienced strong gains amid a strengthened iron ore price.

Read more »

A young man stands facing the camera and scratching his head with the other hand held upwards wondering if he should buy Whitehaven Coal shares
Materials Shares

Why are Rio Tinto shares sinking today?

Let's see what is weighing on this mining giant's shares today.

Read more »

woman's reflection looking through binoculars
Materials Shares

Where does Macquarie see value amongst ASX lithium shares?

The broker has been running the rule over the lithium industry.

Read more »

Overjoyed man celebrating success with yes gesture after getting some good news on mobile.
Materials Shares

Why are Liontown shares rocketing 25% to a 52-week high?

This lithium miner is having a day to remember on Monday.

Read more »

A mining worker clenches his fists celebrating success at sunset in the mine.
Resources Shares

ASX 200 mining shares rip amid one of the strongest rallies for the materials sector in months

Mining shares powered the ASX 200 materials sector higher last week in one of its strongest rallies in months.

Read more »

A man holds a Chinese flag and give the thumbs up, indicating approval for Chinese shares trading on US stock market
Materials Shares

Fortescue shares push higher on big China news

Let's see what this mining giant has announced this morning.

Read more »

A man reacts with surprise when her see a bargain price on his phone.
Materials Shares

Broker tips 50-60% upside for two ASX materials shares

Here are two materials shares to consider for your portfolio 

Read more »