Shares in Lithium Australia (ASX code LIT) lit up on Monday last week when the volume of trading jumped around eightfold compared to a typical day.
They had been bumping around the 7 to 7.4 cents for the last four weeks but closed on Monday at 8.57c, a handy rise of around 16 per cent in two days, for no apparent reason.
Lithium Australia has increasingly shifted its focus from exploration to battery recycling and the production of lithium battery chemicals.
It now owns 100 per cent of Envirostream, the only company accredited to collect, sort and process spent batteries. Another wholly-owned subsidiary, VSPC, is working on a definitive feasibility study for scaling up its battery materials pilot plant to turn out 10,000 tonnes a year of lithium ferro phosphate (LFP).
At the moment, there is no LFP production in the US, and very little outside China, even though most electric vehicle manufacturers offer LFP batteries for their entry-level models.
That all sounds terribly progressive, but the Punter's shares are worth only half what he paid for them six years ago.
Part of the reason may be that its unique process for extracting lithium from low-grade ore is still not at the commercial stage. It is still working on this in conjunction with the Australian Nuclear Science and Technology Organisation (ANSTO).
It has also had to set aside a $5 million provision for damages claims following a fire at Envirostream's Melbourne plant. At the end of June, it had only $4.8 million in cash, but it has no debt and has some $5 million worth of listed shares in various other companies.
Lithium is looking for a new managing director. Long-term MD Adrian Griffin has retired, although he remains a technical advisor to the company.
The surge in the share price prompted the Punter to buy another 25,000 LIT at 8.5c, cutting the average cost of his investment to just under 11c a share. Fully charged with risk.
- The Punter has no financial qualifications and no links to the financial services industry. He owns shares in a number of companies featured in this column.