Money talks — which is why it can be seen as a vote of confidence when company insiders buy shares in the companies they're involved in. These are the people who are most familiar with the inner workings of the business.

Importantly, they still don't know the company's future. However, people on the board or leadership team make the decisions that shape the future of a business. If they're buying shares, you'd think they are pretty happy with the path they are paving.

Which ASX mining shares are insiders buying?

Several small-cap mining companies have released change of director's interest notices over the past two weeks.

Not only are these useful signs of belief in the companies, but it's also positive to see greater 'skin in the game' among directors. The more shares a director holds, the more intrinsic motivation to create more wealth for shareholders.

All four ASX mining shares have a market capitalisation of less than $200 million.

Encounter Resources Ltd (ASX: ENR): On 10 April, independent director Philip Crutchfield scooped up 1.8 million shares in the Australian copper and critical minerals explorer. At 22 cents apiece, the off-market trade was worth $396,000. The purchase takes Crutchfield's holdings in this ASX mining share to $2.8 million.

DevEx Resources Ltd (ASX: DEV): Between 10 and 15 April, DevEx Resources chair Tim Goyder acquired 2 million shares through his TRB Goyder Super Fund. Based on the $614,698.68 paid, Goyder purchased the shares at an average of 30.7 cents.

April has been a busy month for Goyder. Additional purchases were made on 9 April and 2 April, totalling another 2 million shares. Goyder's ownership of DevEx is now 17.1% of the company or $21.9 million worth.

Bulletin Resources Ltd (ASX: BNR): Another ASX mining share with insider buying is this lithium and gold explorer. Over 9, 10, and 11 April, director Robert Martin purchased 1.1 million ordinary shares in Bulletin Resources. In addition, 22,858 listed options were added to his name, expiring 30 September 2024.

Martin's purchases were worth $53,220.90, taking his total holding to $3.7 million.

Prospect Resources Ltd (ASX: PSC): The last company with recent insider investments is ASX mining share exploring for copper, lithium, and rare earth elements in Africa. CEO Sam Hosack followed up the acquisition of a Zambian copper project by buying 3.48 million shares between 10 and 15 April.

The shares were purchased at an average price of 14.5 cents per share, amounting to a $503,498.56 investment. After adding to his holdings, Hosack's stake now comes to $2.3 million.

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The theory is that if they have the confidence to buy shares, it could be a sign that things are going well and they expect them to appreciate in value.

With that in mind, listed below are five ASX mining shares that have reported insider buying recently:

Andromeda Metals Ltd (ASX: ADN)

A non-executive director of this ASX-listed emerging industrial minerals producer has been buying shares on the market. A change of director's interest notice reveals that Austen Perrin picked up 939,598 shares between 19 June and 21 June for a total consideration of $38,889.37.

Challenger Gold Ltd (ASX: CEL)

Another ASX mining share reporting insider buying has been gold developer Challenger Gold. According to a notice, the company's non-executive chairman, Fletcher Quinn, bought 1 million shares through an on-market trade on 23 June. Quinn paid a total of $113,720 for the parcel of shares.

Lunnon Metals Ltd (ASX: LM8)

This nickel and gold explorer has also reported some insider buying. Non-executive director Deborah Lord bought 35,000 shares at an average of 93 cents per share on 22 June. This represents a total consideration of $32,550.

Nova Minerals Ltd (ASX: NVA)

A couple of directors of this gold developer have been buying its shares on-market. CEO Chris Gerteisen picked up a modest 25,000 for $6,500. Whereas executive director Craig Bentley snapped up 512,144 shares for a total consideration of $135,355.15. Nova Minerals is developing North America's next major gold trend, Estelle, to become a world-class, tier-one, global gold producer.

Prospect Resources Ltd (ASX: PSC)

A final ASX mining share that has reported insider buying is Prospect Resources. It is a lithium explorer with operations in Zimbabwe. Three directors have been buying shares recently. This includes Gerry Fahey picking up 300,000 shares for 10.5 cents per share on 20 June, Sam Hosack snapping up 1,670,000 shares for between 10.5 cents and 14.07 cents per share across 20 June and 22 June, and Mark Wheatley buying 500,000 shares at 10.5 cents per share on 19 June.

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The Askari Metals Ltd (ASX: AS2), Prospect Resources Ltd (ASX: PSC), and Piedmont Lithium Inc (ASX: PLL) share prices are all surging today.

Let's take a look at why these three ASX lithium stocks are rocketing higher.

Askari Metals

Askari Metals shares are surging 15.2% today. The company has signed a non-binding lithium strategic partnership agreement with Zhejiang Kanglongda. This will help the company develop its Australian lithium assets in the Northern Territory and Western Australia.

Zhejiang Kanglongda will receive the "preferred offtake position" for commercial production from these projects.

Commenting on the news, executive director Gino D'Anna said:

The lithium partnership agreement with Zhejiang Kanglongda signifies a landmark agreement for the company and validates the potential of our lithium projects within the Northern Territory and the Eastern Pilbara region.

Prospect Resources

Prospect Resources shares are soaring 5.2% higher. This ASX lithium stock is lifting on the back of a drilling update at Step Aside.

The Step Aside Project is located in Zimbabwe, Africa. Drilling intersected with "multiple intersections" of high-grade lithium mineralisation.

Commenting on the news, Prospect managing director Sam Hosack said:

What the initial drilling has shown us is robust intercepts of strong lithium tenor at relatively shallow depths, in multiple places. This is strongly encouraging and demands further, prompt testing.

Piedmont Lithium

Piedmont shares are rising 12.2% today. The company has received a US$141.7 million grant from the US Department of Energy. This funding will be used to help construct the ASX lithium stock's US$600 million Tennessee Lithium project.

Piedmont president and CEO Keith Phillips said the grant will "accelerate the development of the Tennessee Lithium project as a world-class lithium hydroxide operation".

He noted currently, more than 80% of lithium hydroxide production takes place in China.

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While a few lithium stocks are smashing the 1.2% loss posted by the All Ordinaries Index (ASX: XAO) on Friday afternoon, others are significantly trailing the benchmark index.

This comes as lithium prices remain near record highs amid strong global demand for electric vehicle and grid storage batteries.

We'll kick off with today's two worst-performing ASX lithium shares.

ASX lithium shares in the red

The leading loss maker today is Nova Minerals Ltd (ASX: NVA). The small-cap explorer is focused on both gold and lithium, with a 37% stake in the Snow Lake Lithium Project in Manitoba, Canada. The Nova Minerals share price is down 8.7% today and down 47% in 2022.

Also losing ground today is Global Lithium Resources Ltd (ASX: GL1). The emerging lithium exploration company is primarily focused on the Marble Bar Lithium Project, located in Western Australia. The Global Lithium share price is down 7% today but remains up 87% year-to-date.

With the two leading loss makers covered, here are the top two ASX lithium shares today.

Charging higher

The broader selling pressure hitting the market today hasn't impacted investor appetite for today's second-best performer, Prospect Resources Ltd (ASX: PSC). The battery minerals explorer share price is up 4.8% at the time of writing.

And the best performing ASX lithium share today is Aurora Energy Metals Ltd (ASX: 1AE). The United States-focused uranium and lithium explorer commenced trading on the ASX on 18 May this year with a focus on its Aurora Energy Metals Project in Oregon. The Aurora Energy share price is up 9.3% today.

As for the top name ASX lithium shares?

Rounding off the list with some of the biggest lithium stocks, the Core Lithium Ltd (ASX: CXO) share price is frozen today after the company requested a trading halt pending an announcement regarding the launch of its $100 million capital raise.

Meanwhile, the Pilbara Minerals Ltd (ASX: PLS) share price is down 2.4% and Allkem Ltd (ASX: AKE) shares are down 2.8%.

The post Here are the big ASX lithium share winners and losers on Friday appeared first on The Motley Fool Australia.

The All Ordinaries Index (ASX: XAO) is also up a respectable 0.7% on the back of positive investor reaction to the US Federal Reserve's 0.75 interest rate hike.

But three ASX lithium stocks leading the charge today are up 13%, 19% and 17% respectively.

ASX lithium shares charging higher

First up we have Neometals Ltd (ASX: NMT).

The Neometals share price is up 13% today. The miner closed yesterday trading for $1.04 per share and is currently trading for $1.117 per share. That gives it a current market cap of some $625 million.

There's been no fresh market-sensitive news out from the company since it announced a shakeup in its battery recycling project schedule on 14 July. But investors are continuing to favour the ASX lithium share, which is now up 24% over the past month.

Also charging higher today is Africa-focused battery minerals explorer Prospect Resources Ltd (ASX: PSC).

Prospect Resources finished the day yesterday trading for 8.3 cents and is currently trading for 9.9 cents per share, an intraday gain of 19.3%.

If you've been following along with Prospect Resources, you'll have noticed that the ASX lithium share appeared to crash yesterday, tumbling from $1.01 to close at 8 cents, down 92.1% for the day.

But as The Motley Fool reported yesterday, this crash wasn't actually bad news for shareholders. It came after the company distributed most of the proceeds from the sale of its holdings in the Arcadia Project for the tidy sum of US $342.9 million "by way of a 96 cents per share distribution".

Yesterday Prospect Resources traded ex-capital return, seeing the share price drop 93 cents as new investors will no longer be eligible for the 96-cent share distribution.

Rounding off today's leaders list

Rounding off the ASX lithium shares going gangbusters today we have Lithium Power International Ltd (ASX: LPI).

Lithium Power shares closed yesterday at 46 cents and are currently trading for 54 cents, up 17.4% in intraday trading. That gives the explorer a market cap of $185 million.

The last market-sensitive news from the company came out more than a month ago.

But as with Neometals, Lithium Power has had a tremendous month, with shares up 31% since 28 June.

That momentum looks to be carrying on today as investors broadly reward ASX lithium shares amid a strong demand outlook for the critical battery metal.

The post 3 ASX lithium shares going gangbusters on Thursday appeared first on The Motley Fool Australia.

In afternoon trade, the ASX mining share is down a massive 92% to 7.7 cents.

Why is the Prospect Resources share price crashing?

The good news for shareholders is that the Prospect Resources share price crash is for a good reason and not because of a bad update.

Earlier this month, shareholders were asked to vote on a capital return following the completion of the sale of the company's 87% interest in the Arcadia Project for net proceeds of US$342.9 million.

Shareholders unsurprisingly overwhelmingly approved the plan to distribute most of these proceeds by way of a 96 cents per share distribution.

This distribution comprises an unfranked dividend component of 79 cents per share and a capital reduction component of 17 cents per share.

This morning Prospect Resources shares traded ex-capital return. This means that the rights to the impending capital return will remain with owners of its shares at yesterday's market close and not transfer to anyone buying shares from today onwards. As a result, its shares have fallen to reflect this.

When is payday?

Eligible shareholders can now look forward to a big pay day early in August.

According to the mining company's timetable, it is intending to pay both components of the capital return to shareholders next week on Thursday 4 August.

What's next?

This isn't the end of Prospect Resources. It recently laid out its future plans following the Arcadia Project sale. It said:

The Company's future strategy is to be a battery and electrification minerals focused explorer and developer. With the Arcadia transaction now complete, business development and new project generation are our top priorities. The Board believes that, with approximately A$34 million of available cash and continuation of the current management team, that the Company is appropriately resourced to deliver on this strategy.

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The company's shares were up 27% at 97 cents shortly after market open. However, they have since retreated are now swapping hands for 79 cents apiece, up 3.27%

Investors are responding positively to a company announcement that Prospect has sold its 87% shareholding in Prospect Lithium Zimbabwe (PLZ) Limited, owner of the Arcadia Lithium Project in Zimbabwe. Here are the details.

What did Prospect Resources announce?

Prospect advised it has executed a binding share sale agreement (SSA) with Huayou International Mining Limited for the sale of its stake in the Arcadia project.

Huayou has agreed to purchase Prospect's 87% shareholding in PLZ and associated intercompany loans for approximately US$377.8 million (A$524.2 million) via an upfront cash consideration, equating to approximately A$1.23 per Prospect ordinary share.

The company notes this valuation represents a premium to Prospect's 10-day volume weighted average price (VWAP) of approximately 78%.

Prospect says the transaction represents the "culmination of the strategic partnership process undertaken by [the company] since August 2021".

Arriving at this outcome wasn't an easy one for the company. Along the way, Prospect received seven non-binding proposals for the advancement of Arcadia from a range of international parties. These proposals "encompassed structures including development joint ventures, offtake prepayment debt funding and acquisition of Prospect's interest in Arcadia".

After "careful evaluation", the Prospect board formed the view that the sale of its stake in PLZ to Huayou delivers the most attractive risk-adjusted, post-tax value outcome for Prospect shareholders.

What are the details?

There are a number of key conditions to complete the transaction. These include Prospect shareholder approval, requisite Chinese regulatory approvals being obtained by Huayou, and several other precedents outlined in the release.

Payments will be made over several tranches beginning with a deposit of US$20 million immediately payable by Huayou. This is non-refundable in certain circumstances where the transaction does not complete. A break fee of US$20 million payable by Prospect in certain circumstances of non-completion also applies.

Prospect intends to distribute the remaining net proceeds to its shareholders, and anticipates the transaction completing in late Q1 or early Q2 2022.

Prospect Resources share price summary

In the past 12 months, the Prospect Resources share price has soared by around 520%. It has also rallied by 355% this year to date.

It has gained 15% in the past month and is also up by 23% in the past week of trading.

Prospect Resources has outpaced all major benchmarks in these time frames.

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At the time of writing, the lithium producer's shares are advancing 16.24% to 68 cents. This is just shy of an almost four-year record high of 69 cents touched during early afternoon trade.

Prospect reviews non-binding proposals

Investors are sending Prospect shares higher as they digest the company's latest announcement.

According to its release, Prospect advised it has received seven non-binding proposals for the development of the Arcadia Lithium Project.

Located in Zimbabwe, the Arcadia project is Prospect's flagship asset, in which it holds an 87% interest. Since acquiring the project in mid-2016, Prospect has progressed Arcadia from discovery to the most advanced lithium project in Africa.

The company noted that it has engaged with a number of interested parties in the past week following data room access and site visits.

The non-binding proposals have come from several international parties offering various support structures. This includes development joint ventures, offtake prepayment debt funding, and the acquisition of Prospect's interest in the Arcadia Lithium Project.

While there is no guarantee that any of the proposals will materialise, Prospect is in discussions with its financial advisors to determine the best option.

Prospect share price snapshot

Over the past 12 months, the Prospect share price has accelerated 452%, with year-to-date up around 305%. The company's shares have taken off on the back of strong investor hype in the lithium sector.

Based on today's price, Prospect presides a market capitalisation of roughly $295 million, with 428.52 million shares on hand.

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That's a 10.13% drop from the open for the Australian lithium company despite it releasing two key updates today.

Let's cover each update in a bit more detail.

What did Prospect Resources Announce?

The Prospect Resources share price is on the move today after the company advised its 87% owned Arcadia lithium project in Zimbabwe is now "confirmed as (a) world class deposit".

It draws this conclusion from a staged optimised feasibility study (OFS) that confirmed the "strong technical and economic viability of Arcadia under a staged development pathway".

These results indicate the potential of the Arcadia site to become a compelling long life and large scale open pit lithium mine, according to the company.

It also confirms the project is "among the best in the world for scale and cost of production when compared to existing operations".

The update notes that one key contributor is the quality of lithium concentrate products at the site. They are described as high in grade and very low in impurities.

For reference, the price of lithium has come off an all-time high of 177,000 Chinese Yuan (A$37,440.54) per tonne since September, although is still up 254% since January 1.

The company says a so-called staged development pathway now indicates a lower required rate of return on the project to achieve profitability.

As such, the project's economics are expected to be "further improved in (a) direct-to-2.4 Mtpa Optimised Feasibility Study (Direct OFS)" due for completion in Q4 2021.

The company says there is strong interest from several groups focused on the direct OFS's outcomes.

Prospect is "now completing the work on the direct OFS pathway case before funding decisions are made" on its next steps.

The company also held an investor briefing and released an investor presentation regarding the staged OFS results alongside the headline announcement.

Investors have sold on the news, pushing the Prospect Resources share price lower today. It hit 33.5 cents just before midday.

What did management say?

Speaking on the announcement, Prospect Resources Managing Director Sam Hosack said:

The OFS details our clear differentiation with a range of potential product markets and customers versus traditional spodumene projects. Even at the smaller initial scale, the Lycopodium results demonstrate a highly competitive forecast [regarding] operating costs and margins, reflecting prices for technical petalite at a significant premium to traditional chemical grade spodumene concentrate pricing.

Prospect Resources share price snapshot

The Prospect Resources share price has soared this year to date and climbed 111% since January 1.

Despite sliding 17% this past week, it has also gained 89% in the last 12 months.

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While the company has released good news this month, its share price is seemingly moving independently.

At the time of writing, the Prospect Resources share price is 40 cents, 11.11% higher than it was at the end of August.

Let's take a look at the latest news from the lithium and gold producer.

The month so far for Prospect Resources

The Prospect Resources share price is having a great month on the ASX.

It comes after the company released an update on the sale of its Penhalonga Gold Project.

The project's buyer, Luzich Resources, has executed an options agreement for the purchase and has agreed to pay the remaining US$750,000 balance on the US$1 million purchase price.

Luzich paid a deposit on the project when it signed a binding term sheet in October 2020.

According to Prospect Resources' website, the Penhalonga Gold Project is the only gold project currently held by the company.

After its sale, it will focus all its efforts on its Arcadia Lithium Project.

The Prospect Resources share price didn't react to the update on the sale. However, it has since gained 11%.

The sale might not be the only catalyst for the Prospect Resources share price's recent boost.

The price of lithium has been gaining steadily in September and it might be dragging Prospect Resources' stock along with it.

According to S&P Global Platts, the price of lithium carbonate has been gaining this month as concerns surrounding global supply have increased demand.

Prospect Resources share price snapshot

September's gains have added to Prospect Resources' strong performance on the ASX.

Right now, the company's share price is 135% higher than it was at the start of 2021. It has also gained 150% since this time last year.

The company has a market capitalisation of around $157 million.

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At the time of writing, the lithium producer's shares are tumbling 8.1% to 17 cents.

Completed placement

Investors are sending Prospect shares lower as they come to grip with impending share dilution from the company.

According to its release, Prospect has received subscriptions to raise $6.5 million from institutional and sophisticated investors. Approximately 41.9 million new ordinary shares will be allocated at an issue price of 15.5 cents apiece. This represents a discount of 16.2% on Tuesday's closing price of 18.5 cents before the trading halt came into effect.

Prospect highlighted that the strong support came from its largest shareholder, among new international and domestic institutions. The board and the management team also tapped into the company's register.

The funds raised will be used to complete the acquisition of a further 17% interest in the Arcadia Lithium Project. This will increase Prospect's holding to a total of 87%. In addition, the remaining monies will be used to advance the development funding process and for capital working purposes.

Settlement of the new shares is expected to take place on 23 April 2021.

Prospect managing director Sam Hosack commented:

The need for further, high-quality lithium projects to be developed in the face of a looming critical shortage in lithium-ion battery materials is becoming increasingly evident to industry and investment markets.

Arcadia is in the unique position of being the only lithium deposit that is expected to operate in the lowest cost quartile via production of both low iron spodumene concentrate for the lithium-ion battery market and high purity petalite lithium concentrate for the glass and ceramics markets.

Prospect share price snapshot

Over the past 12 months, the Prospect share price has accelerated by 70% but is flat year to date. The company's shares reached a 52-week high of 27.5 cents in August last year, before moving in circles.

Based on the current share price, Prospect presides a market capitalisation of roughly $56.4 million, with 332 million shares outstanding.

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Investors in the sector have recognised enormous gains since the beginning of the year thanks to lithium's soaring price. Notably, lithium is used in batteries and renewable energy and demand is thus expected to continue to rise as electric cars become more prevalent in society, and as battery packs from companies such as Tesla start to power more homes around the world.

Just take a look at some of these returns since the beginning of the year, keeping in mind we're not even at the end of July just yet:

• Altura Mining Ltd (ASX: AJM) up 200%
• Kingston Resources Ltd (ASX: KSN) up 122%
• General Mining Corp Ltd (ASX: GMM) up 180%
• Galaxy Resources Limited (ASX: GXY) up 283%
• Prospect Resources Ltd (ASX: PSC) up 1,080%

Indeed, these are just some of the many companies to have benefited from the lithium boom so far, while many also enjoyed strong gains throughout 2015. Shares of General Mining Corp, for instance, have risen 14,200% since late January 2015.

Is there more to come?

According to a report from The Australian Financial Review, fund managers from Paragon were among those lucky enough to get involved in the sector in the early stages of the boom, prompted by a speech from US President Barack Obama regarding direct government funding towards innovation in electric cars.

What's more, it doesn't seem as though they're ready to jump out just yet. In fact, the report suggests they think they'll be in lithium stocks for several years, owning shares of businesses such as Orocobre Limited (ASX: ORE), Galaxy Resources and General Mining (the latter two of which will likely merge).

They are also of the belief that the market has "nowhere near" exhausted its capacity for mergers and acquisitions, which is encouraging for investors in the sector.

What are the risks?

As tempting as it may be to dip a toe into the sector (especially after seeing the meteoric gains posted by some of those businesses mentioned above), an investment in lithium miners is by no means without its own set of risks.

To begin with, shares across the sector are incredibly volatile, which is quite common in highly speculative corners of the market or where valuations are sky-high. As such, although it's possible to achieve significant gains, it's also possible to lose a lot in a very short space of time.

What's more, if lithium prices do continue to rise, it's likely that bigger, more cashed-up miners will try to make a push into the sector. Rio Tinto Limited (ASX: RIO) could already be about to join the lithium party, while there is a risk that others such as BHP Billiton Limited (ASX: BHP) or Vale could do the same further down the track.

Mining is an incredibly capital intensive sector to operate in and there is absolutely no guarantee of success. Any setbacks could see the shares sold off sharply, with the smaller miners even more at risk than the larger ones.

As such, if I were to make an investment in the sector, I would start by taking a look at the bigger players such as Orocobre which appears to be a safer bet than many of the smaller operators. Again, however, it's important that investors do their own due diligence on the businesses themselves, rather than purely buying into the speculation regarding the future of lithium prices.

The post Does the 2016 Lithium Boom Have More Battery Power? appeared first on The Motley Fool Australia.

Companies around the world have rapidly increased their production of the commodity, which is used for making steel, only to see demand growth fall in recent years. That has forced iron ore's price from a peak of around US$185 a tonne in 2011 to just over US$56 today, according to The Metal Bulletin.

Rio Tinto has played a key role in iron ore production, with the commodity accounting for the vast majority of the miner's earnings in recent years. In what would be a change of pace, however, the company has reportedly suggested a shift in focus towards 'value' by improving productivity and operational efficiencies instead of pumping up its volumes.

According to The International Business Times, part of this move will include the shelving of Rio Tinto's US$20 billion Simandou iron ore project. Jean-Sébastien Jacques argues that, given the conditions in the iron ore market right now, the huge costs of developing the mine are not justifiable in the current iron ore environment.

The Wall Street Journal also noted that the new strategy could involve acquisitions – assuming they can be made at a reasonable price – and even a foray into new commodity markets to drive the next wave of growth. These moves could be to the horror of some of the country's junior lithium miners.

Don't underestimate this threat

Lithium prices have soared in recent times due to the resource's use in rechargeable batteries. Not only are these widely used in everyday devices such as smartphones, but demand is also expected to boom over the coming years as electric cars and home battery packs from innovative companies such as Tesla become increasingly common.

While this boom may have gone unnoticed by many investors, others have generated huge gains over the last 12 months by holding shares of some of the country's lithium producers.

Orocobre Limited (ASX: ORE), for instance, has risen 136% since this time last year, while General Mining Corp Ltd (ASX: GMM) shares have exploded 1,322%. Meanwhile, Galaxy Resources Limited (ASX: GXY) shares are up 1,281% and Altura Mining Ltd (ASX: AJM) is up 632%.

Needless to say, those are some enormous gains, particularly when you consider the short space of time in which they have been achieved. However, it's also fair to presume that momentum and speculation have played a role in that.

As my colleague Mike King noted in May: "Companies only have to mention the word lithium these days to see their share prices fly, thanks to soaring commodity prices and the prospect of even higher lithium prices ahead."

The company he was referring to was Prospect Resources Ltd (ASX: PSC), which soared 217% in a single day. It's up 967% over the last 12 months.

Mining is an extremely capital intensive industry to operate in, while there is also no guarantee of success. It's possible that many of the smaller companies (whose share prices have skyrocketed) will fail to live up to expectations, which could result in heavy losses.

What's more, companies such as Rio Tinto aren't going to sit idly by when there are big profits to be made. The Wall Street Journal noted that Rio Tinto is spending millions of dollars studying the possibilities for a lithium deposit in Serbia, which could mean a bigger push into the sector in the future.

If Rio Tinto is doing it, there is no reason that other businesses such as Vale or BHP Billiton Limited (ASX: BHP) won't do the same in the future if lithium prices do remain strong and demand grows. Higher supply would likely force prices lower again, which would be bad news for some of the smaller producers overshadowed by huge operating costs.

Personally, I wouldn't want to be holding onto their shares if or when that does happen.

The post Why Rio Tinto Limited is a huge threat to the junior lithium miners appeared first on The Motley Fool Australia.

Highlighting this fact, I selected six lithium producers at random and plugged each of them into Google Finance to find their year-to-date returns, and not one of them has gained anything less than 110% so far this year:

• Dakota Minerals Ltd (ASX: DKO) shares are up 136.4%
• General Mining Corp Ltd (ASX: GMM) shares have risen 241.2%
• Galaxy Resources Limited (ASX: GXY) shares have gained 369.6%
• Prospect Resources Ltd (ASX: PSC) shares are up 380%
• Altura Mining Ltd (ASX: AJM) shares have gained 336.4%

Orocobre Limited (ASX: ORE) was the 'worst' performer on the list, returning just over 112% in less than six months. It was enough to earn the business a promotion into the S&P/ASX All Australian 200 Index as part of the June Quarterly rebalance of the S&P Dow Jones Indices.

Indeed, the catalyst for the boom has been a surge in the price of lithium itself. Lithium batteries are used in smartphones, while they are also widely used in renewable energy that looks almost certain to play a big role in our future whereby cars (think Tesla) and even homes (again, think Tesla) are expected to be powered by rechargeable batteries.

However, investors do need to be wary of the meteoric rise of this sector. Rising lithium prices have already attracted a number of new entrants into the industry which would theoretically push returns back towards equilibrium, over time.

If a larger and more cashed-up player, such as Rio Tinto Limited (ASX: RIO), BHP Billiton Limited (ASX: BHP) or Vale became involved, that could certainly have an impact on the smaller, higher cost producers – many of which could be squeezed from the market.

Of course, seeing returns such as those highlighted above over such a short space of time can make a move into the sector incredibly tempting. But investors should remain cautious, and remember to do their due diligence on any opportunity rather than simply assume prices will continue to rise. That may happen for a short period of time, but generally it cannot be sustained in the long-run.

The post 6 lithium miners that have climbed more than 100% in 2016 appeared first on The Motley Fool Australia.

Indeed, while Bellamy's and Blackmores were hogging the spotlight in 2015 in what was deemed to be a baby formula boom, there was one company that generated a far superior return to either of those shares.

That company's name is General Mining Corp Ltd (ASX: GMM). Its shares soared a remarkable 5,000% during the 2015 calendar year from 0.5 cent to 25.5 cents. They have since soared another 148% to 63.2 cents, representing a total gain of 12,540% since January 2015.

To give that figure some context, let's say you'd invested just $1,000 in General Mining shares at the beginning of 2015, and refrained from selling any of them until now. They would now be worth a whopping $126,400.

Of course, General Mining is by far the standout performer from the industry, but there are numerous others which have also generated huge gains for investors. Prospect Resources Ltd (ASX: PSC), for instance, has risen 325%, while Galaxy Resources Limited (ASX: GXY) and Kingston Resources Ltd (ASX: KSN) are up 1,553% and 58%, respectively.

Dakota Minerals Ltd (ASX: DKO) shares have also risen 700% since early January 2015. Google Finance shows this as a 16,900% gain, but investors need to consider that there was a 100:1 consolidation of its shares at the end of December 2014, which appears to have played a role in that result.

Is it worth your money?

While you can read about the rapid rise of the lithium mineral here (notably, lithium is used in batteries and renewable energy), it's well worth reconsidering the risks involved with investing in the sector.

Indeed, seeing those kind of returns would be tempting even to some of the most experienced investors. But therein lies the issue…

Quite often, what happens is investors pile into the shares hoping that the momentum will continue. It can continue for quite some time, but the eventual falls can be very sharp, wiping out enormous gains literally overnight.

Of course, there is the argument that the price of lithium itself has skyrocketed in recent months, "justifying" those share price gains. But then again, a rising lithium price will attract more and more competitors, ultimately pushing the price back down.

Unfortunately, it's impossible to tell how long these kind of booms and bubbles will last, but when they do end – or when the hype begins to fade – the outcomes can be terrible for investors in the sector.

As such, while the potential returns may seem extremely attractive, it seems investors would be wise to watch this one play out from the sidelines.

The post This lithium miner's shares have soared 12,540% since January 2015 appeared first on The Motley Fool Australia.

And now it seems lithium miners have become the latest craze. Lithium is an element with many uses, including in smartphones which are mostly powered by lithium-ion batteries.

However, lithium batteries are also widely used in renewable energy which will almost certainly play a big role in our future whereby cars and even homes are expected to be powered by rechargeable batteries.

Of course, Elon Musk's Tesla is one of the most well-known companies that is driving innovation in that direction, for example see the company's latest car model, the Model 3, as well as its Powerwall designed to power homes and buildings. Also, there are a number of other businesses vying for a dominant position in those markets, including Mercedes and BMW.

As a result of an expected rise in demand, lithium prices have skyrocketed over the last seven months or so, rising from around US$7,000 a tonne in October to around US$22,000 a tonne in March, according to Thomson Reuters.

Shares across the sector are rising higher again today, but the most notable is Capital Mining Limited (ASX: CMY), whose shares have surged 125% (albeit to 0.9 cents each). The micro-cap explorer announced it had executed a binding Sale and Purchase Agreement to acquire Shaw River Lithium Pty Ltd, which holds 13 prospecting licence applications for the Pilbara region of Western Australia.

Similarly, shares of Prospect Resources Ltd (ASX: PSC) soared 217% on Wednesday to 1.9 cents (they've fallen to 1.8 cents today), while Kingston Resources Ltd (ASX: KSN) shares have gained 52% after the company announced a "major lithium portfolio acquisition" this morning, accompanied by a $6.85 million capital raising.

Don't get sucked in just yet…

While those gains might seem tantalising, Kingston's venture into the lithium market highlights one of the key risks facing investors.

As prices rise, more and more explorers will venture into the sector in search of lucrative returns, which will increase the market's supply. When that happens, prices will likely begin to decrease which will wreak havoc for those companies who have either overpaid for acquisitions or maintain higher costs than their competitors.

Another risk is that investors will begin to expect big gains in share prices. Shares of companies such as Prospect Resources and Altura Mining Ltd (ASX: AJM) have gained 280% and 1,500% over the last 12 months, while Dakota Minerals Ltd (ASX: DKO) has also risen 858%.

However, those kind of returns are not sustainable in the long run. They could either slow down or fizzle out altogether, or else experience sharp falls in the event they do not live up to the hype.

To demonstrate the volatility, shares of Dakota have actually fallen 32.1% today, while Altura Mining is also down 4.1%.

Sometimes, shares in certain businesses or entire industries can become so hyped up that investors are only buying based on momentum or on the belief they can sell to another sucker for an even higher price. While it is impossible to know when it will happen, that is certainly a risk facing investors buying into the sector today.

As tempting as it may be, investors would be wise to watch this unfold from the sidelines and focus instead on the many higher-quality businesses that are trading on the ASX.

The post Should you bet big on these ASX-listed lithium shares? appeared first on The Motley Fool Australia.

Companies only have to mention the word lithium these days to see their share prices fly, thanks to soaring commodity prices and the prospect of even higher lithium prices ahead.

Lithium prices have tripled in just the last 6-8 months as we noted earlier last week, with booming demand for the mineral that is expected to be in big demand for rechargeable batteries not just in smartphones, but automotive vehicles as well as homes and potentially in big demand by the energy industry.

Prospect Resources announced today that it had acquired an option over what it calls a 'very high-grade Arcadia Lithium deposit'. The Arcadia Lithium Deposit lies within one of the three well-known lithium caps, approximately 35 kms north east of Harare, in Zimbabwe. The country was the 5th largest lithium producer in the world at its peak production – although that was in the 1950s-1970s.

The option allows Prospect to acquire, via its 70% owned Zimbabwe subsidiary Hawkmoth Mining & Investment, a 90% interest in the Arcadia V claim and the mineral claim applications comprising the Arcadia Camp for the cost of US$10,000. A further US$40,000 is payable on exercise of the option. Prospect then has 4 years to make a decision to mine, and now plans an aggressive exploration programme. Prospect has also filed tenement applications over the remainder of the Arcadia Camp, which includes other deposits.

With the share price up 200% today, what a perfect time to announce a capital raising to fund said exploration.

However, there are some major risks.

Firstly, Zimbabwe is ranked 150 out of 175 countries for corruption, so Prospect is going to have to be extremely careful of how it negotiates with the government and local suppliers. It may not even get approval, or in a worst-case scenario could see the government nationalise the mine if it is highly successful.

It could also find that previous drilling results are inaccurate and overstated. The Arcadia Deposit hasn't been extensively drilled, and it's possible that Prospect finds that it's uncommercial to mine.

Prospect will also need to spend millions to get to the stage where it can even make a decision whether to go ahead and mine, so there's a long road and many capital raisings ahead.

By the time the company is ready to mine, lithium prices may have crashed due to overwhelming supply and less demand than expected.

The rare earths situation over the past few years and Lynas Corporation Ltd (ASX: LYC) are a perfect example of that.

Foolish takeaway

Investors jumping into Prospect today are more than likely buying in on the basis that they can sell their shares to another sucker at a higher price down the track. That only works for so long.

Foolish investors should watch this one play out from the sidelines.

The post Prospect Resources Ltd share price up 217% in one day: Here's why appeared first on The Motley Fool Australia.

The group operates across three divisions, namely: People – outsourcing and placement, Security – penetration testing and assurance, and Communication – infrastructure and consulting.

In its presentation to investors, management described the People division as performing well and maintaining high margins; the Pure Hacking business which is housed within the Security division as performing strongly; and the Communications division as having a strong pipeline of work.

Growth and yield

Having listed in December 2013, the group remains with no debt and $4.1 million of cash which gives PS&C the firepower to grow.

PS&C is obviously trying to position itself for growth in the IT security services sector – it certainly seems reasonable to suspect that more companies will be spending more money protecting their information systems in the future.

At the same time, investors are able to buy into a growth company which has a trailing twelve month dividend of 6 cents per share. With the share price dropping around 5% today (on light volumes) to 89 cents, the stock is trading on a fully franked yield of 6.7%.

Like many of its peers within the IT services sector, such as SMS Management & Technology Limited (ASX: SMX) and DWS Ltd (ASX: DWS), PS&C is also priced on what is arguably an appealing valuation, adding further weight as to why this company could be a good one for investors to keep an eye on.

The post PS&C Ltd reports: Is its 6.7% fully franked dividend yield too good to ignore? appeared first on The Motley Fool Australia.