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- NickelSearch (ASX:NIS) finds something not in its namesake – lithium pegmatites
- The discovery was made at its Carlingup project near Ravensthorpe, WA
- A quarry in the tenements has previously turned over rock chip results of 5.19 per cent lithium
- Infill soil sample assay results are pending
- Shares are down 11.1 per cent, trading at 12 cents at 1:02 pm AEDT
NickelSearch (ASX:NIS) continues to let the hottest commodity steal its focus from nickel, with a new pegmatite lithium discovery logged in Western Australia.
Pegmatites were discovered on-site at the company’s Carlingup acreage near Ravensthorpe, a town in the lower Wheatbelt.
However, investors aren’t immediately overjoyed.
NickelSearch shares were down 7.4 per cent just before midday AEDT today.
Targets brought up to five
Four high-priority areas were already on the company’s radar.
However, newly identified outcropping pegmatites have been added to the list of targets, bringing it up to five.
Geochemical anomalies pointed geotechs to the pegmatites.
Rock chips collected before NickelSearch’s time were logged, with the leading result being 5.99 per cent lithium.
A second chip came in at 4.99 per cent; followed by 1.92 and 1.27 lithium oxide. They were collected from an existing quarry within the tenement package at Carlingup.
While the results are promising, it isn’t unusual for rock chip samples to be higher than grades found underground.
The presence of high-grade rock chips should not be construed as evidence similar grades continue deeper down.
Understanding being grown
“We have completed soil sampling at the quarry, and those samples have been submitted for priority assays … our geologist continues to map and rock chip sample the quarry footprint,” NickelSearch Managing Director Nicole Duncan said.
“The NIS team is building an extensive understanding of the lithium-caesium-tantalum (LCT) mineralisation at the quarry, and also of the geology of the land surrounding the quarry.”
The general motivation behind the pivot to lithium is obvious – WA is littered with it, and it’s rare for a company to post high-grade lithium assays and receive no interest.
Divining a downward dip
So why has the share price gone down?
Reception to the news among traders on HotCopper was mixed. This masthead is part of the corporate ecosystem which owns Australia’s most popular share trading website.
At least one user described the announcement as one which in truth announces not much.
But many other users were keen to see today’s news, and multiple expressed their intention to buy.
NickelSearch announced it was teaming up with Allkem (ASX:AKE) back in September to assess lithium potential at Carlingup.
Some users now believe that’s evidence the lithium major will buy out NickelSearch if results prove promising.
It may be wise to do so: Allkem may experience volatility in Argentina following that country’s election of a far-right leader who wants to shut down the country’s central bank.
Since NickelSearch last announced it had begun lithium mapping at Carlingup, the share price has been on an upward course.
One-month returns are up 150 per cent and one-week returns are up 46.5 per cent.
However, one-year returns are down 14 per cent and YTD returns are lower at 19 per cent.
The company is a microcap at $22.8 million and boasted $0.88 million in cash at the end of September.
It appears likely a capital raising is on the way, and today’s sell-off is likely more to do with the lack of actual bona fide assay results.
NIS shares were down 11.1 per cent, trading at 12 cents at 1:02 pm AEDT.
