What happened to Anson Resources’ share price?
Anson Resources Limited (ASX:ASN) shares are up 44% at the time of writing, to 7.1 cents per share.
Why did Anson Resources shares push higher?
Anson Resources ― one of the most exciting lithium plays on the ASX ― announced that it produced ~1 kilogram (kg) of battery-quality lithium carbonate (Li2CO3) from brine sourced from its Paradox Brine Project near Utah, USA. The company showed a sample of the battery-grade lithium carbonate:
Indeed, while the lithium carbonate sample can be mistaken as another highly profitable substance, Anson Director Bruce Richardson and Southwest Technologies’ Tom Currin deserve a pat on the back for their hard work. The lithium carbonate purity exceeded the specification requirements provided by Anson’s prospective customer in Asia.
It’s no shock why the share price surged on the news.
What’s next for Anson Resources?
Today’s share price action was a sigh of relief for long-term shareholders:
Despite a significant amount of fundamental success over the past year, long-term shareholders have had a rough time. The share price has fallen from a high of 35 cents in January 2018 (not shown on the chart). And it hasn’t been able to gain much traction this year either, consolidating sideways. That said, when the market wrote off the business this time last year, the share price quadrupled on the back of multiple positive announcements.
Anson Resources ― a Lazarus in the lithium space ― has a reputation for big runs, mind you. The company tends to bring out a flurry of positive news within a short period of time, sending the share price bonkers. Now, while we’re not saying this is going to happen now, it’s worth noting that ‘Lilac Solution’ plays are booming today.
Last Friday, we analysed Lake Resources N.L. (ASX:LKE) ― one of the largest lithium tenement holders in Argentina ― here. The share price skyrocketed 51% when the company announced ‘high fluid flows of conductive brines under pressure’ at Cauchari. Indeed, as per our analysis of the lithium space and the company’s drilling program, the share price certainly offered potential to move higher.
Well, it’s up another 31% today!
The question is, as the story happened last year, will Anson Resources’ share price repeat history? We don’t have a crystal ball, sadly. But with the market seemingly writing off the business model yet again, anything could happen. The company wrote in the announcement today (our emphasis added):
A sample was produced using a dedicated and advanced ion exchange (IX) system, which operated using accelerated parameters to produce eluate for the lithium carbonate sample project with only one pass of IX.
Lilac Solutions processed more than 3,500 litres of 180 mgLi/L paradox basin brine to produce about 20 litres of high-purity lithium chloride concentrate at about 18,000 mg/L of lithium.
In the in-field pilot and commercial operations when commercial Lilac operating conditions will be used, Anson expects lithium recoveries from brine to eluate of >80%, as reported in announcement dated 11 May 2019.
Anson Resources is focused on building a low-cost lithium business in the US. The company re-enters historical oil wells where lithium was widely found. Unfortunately, as you can see by the share price, the lithium grades have underwhelmed the market in the past. And with the Lilac Solution technology relatively unproven until today’s announcement, the market wasn’t interested in bidding the share price higher.
Today’s announcement greatly reduces the technological risk of the Lilac Solution, however. So with some technological success up its sleeve, will Anson Resources’ share price start turning around?
The market is widely expecting a resource estimate now. And while this news might or might not move the share price, there are more pressing questions that remain unanswered. For example, how will the technology perform in the field and what kind of profit margins are up for grabs? If the answers to these questions are positive, we hope we’re smart enough to buy some shares.
The bottom line: Anson Resources has been on our watch list for some time. It’s well known for big runs within a short period of time and that offers short-term trading opportunities. But from a deep value perspective, our attention is elsewhere. So, while we currently don’t own any zero stock, if the company shows signs of becoming highly profitable, you might find it on our live trading blog one day.
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To your first million,
The Trading For Millions Team
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