'Tip of the iceberg': Why this ASX lithium stock has exploded 200% in a week

What is getting investors excited this week? Let's find out.

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The Errawarra Resources Ltd (ASX: ERW) share price is on fire again on Thursday and rocketing higher.

At the time of writing, the ASX lithium stock is up an impressive 32% to 18.5 cents.

This latest gain means that the company's shares are now up 200% since this time last week.

Why is this ASX lithium stock on fire?

Investors have been fighting to get hold of the company's shares since the release of very promising exploration results from the Andover West project in the West Pilbara region.

This project comprises over 100km2 of prospective ground located approximately 40km east-southeast of Karratha and south of the Azure Minerals Ltd (ASX: AZS) owned Andover LCT Pegmatite project, which was recently acquired by Sociedad Química y Minera de Chile (NYSE: SQM) and Hancock Prospecting.

The release reveals that the ASX lithium stock has identified a large (~ 1.6km x 1km) stacked pegmatite swarm at Andover West. It also notes that there was a highly anomalous Li Soil trend (peak 325ppm Li2O).

These anomalous lithium soil trends are along strike and 1.7km from the Raiden Resources Ltd (ASX: RDN) lithium pegmatite discovery that reported 3.8% Li2O rock chip.

Management also notes the fertility of pegmatite swarm, highlighted by extensive background Li soil anomalism (>100ppm Li2O).

An Andover Heritage Clearance Survey is now scheduled to be undertaken this month, and planning for a drill program is also underway. Field teams have been mobilised to the Pinderi Hills JV, and sampling is underway.

Management commentary

The ASX lithium stock's executive chairman, Thomas Reddicliffe, appeared to be delighted with the exploration update. He commented:

We are excited not only by the recognition of this large pegmatite swarm which lies adjacent to Azure minerals Andover project but also because we can now focus in on the lithium fertile zones within these broad pegmatite packages.

Reddicliffe believes this update may have only "hit the tip of the iceberg" and is looking forward to digging deeper into the Andover West project in the coming months. He adds:

We believe that we may have only hit the tip of the iceberg with these lithium fertile zones within the pegmatite packages and with their shallow dips we have the opportunity to explore for higher grades down dip. Being along strike and in proximity to the Raiden lithium pegmatites we are optimistic of our chances and keen to do some exploratory drilling.

Errawarra Resources shares are now up over 350% on a monthly basis.

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 Scott Phillips.

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