Why Global Lithium Resources (ASX:GL1) jumped 13x in 15 months

Nick Sundich Nick Sundich, September 16, 2022

Since listing in May last year, Global Lithium Resources (ASX:GL1) has skyrocketed from 20c a share to over $2.70. The growth shows little signs of easing and has continued this week. But have investors gotten ahead of themselves?  

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Global Lithium Resources has done the hard yards before listing 

Global Lithium Resources owns the Marble Bar Lithium project, named after the nearby Western Australia town, along with the Manna lithium project – also in Western Australia. Investors liked just about any lithium explorer in 2021, but this one stood out for one reason.  

This is because, at the time it listed, it had already done significant exploration work, declaring a maiden JORC Inferred Mineral Resource at both projects with 18.4Mt lithium at a grade of just over 1%.  

Global Lithium Resources (ASX:GL1) (Graph: TradingView)

 

A rapid 15 months and another busy week 

The company knew it had something, but was determined to see just where the deposits ended, hoping to replicate the success of Pilbara Minerals.  

Not only has Global Lithium Resources found more in the last 15 months, but it inked a 10-year offtake deal for the spodumene concentrate with Suzhou TA&A Ultra Clean Technology for at least 30% of its available output. And it welcomed Mineral Resources (ASX: MIN) as a substantial shareholder, buying a 5% stake for ~$30m.  

Despite a dour week for equity markets, the company has gained another ~20% this week for two reasons. First, because Mineral Resources increased its stake to 8%. And second, it achieved strong results from metallurgical test work – up to 5.76% lithium spodumene concentrates at lithium recoveries up to 85%. This was the second set of positive results in as many months.  

 

Global Lithium Resources has potential, but investors should still be cautious 

Global Lithium Resources shareholders would be feeling confident in the company’s future. If it can move to production, there will inevitably be further upside.  

However, the situation isn’t completely safe for Global Lithium Resources shareholders. There is a risk of late-stage operational issues and consequential punishment from shareholders – Kalium Lithium (ASX:KLL) is one recent company to suffer that fate.  

And there is the risk that some investors might just want to take profits, especially if the markets remain volatile. 

 

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