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Reedy Lagoon’s shares have taken a dive this morning after the lithium minnow revealed it still isn’t finding anything of significance at a project in Nevada.

Reedy (ASX:RLC) told investors after market close on Friday that it had uncovered “low levels” of lithium and boron that were not “considered to be significant” during drilling at its “Big Smoky South” project.

Shares dropped 20 per cent to 0.8c on the news.

The stock is now down 90 per cent from its 7.5c high at the start of the year after several disappointing reports of very low lithium levels.

The company says it submitted 100 samples from recent core drilling and results ranged from 10 parts per million (ppm) to 40ppm lithium and boron.

Reedy is drilling for lithium in brine deposits and had set a target depth of 850m but stopped at 400m.

Lithium brine deposits are found in salars (salt lakes). Nearly half of the world’s lithium production comes from brines.

Brine deposits are cheaper to extract lithium from than hard-rock deposits.

Reedy Lagoon (ASX:RLC) shares have it a new 52-week low of 0.8c.
Reedy Lagoon (ASX:RLC) shares have it a new 52-week low of 0.8c.

But what Reedy has been finding is lithium in clay.

“It’s not the case that if you’ve got low lithium grades in your sediments that’s bad,” managing director Geof Fethers told Stockhead.

“It’s not bad. It probably means it’s in the brine, but the trouble is with that hole there we didn’t get brine in it either.

“Our interpretation for that is because it’s uplifted, and we just need to be in one of these down-lifted blocks.”

Mr Fethers said Reedy has been getting more promising results from its recently staked Clayton Valley property nearby.

Reedy announced in August that a survey carried out over the project indicates there is a conductive body that potentially hosts a 200m thick interval of sediments containing multiple brine filled aquifers.

The geophysicist estimated the volume of the conductive body to be one cubic kilometre.

Reedy also thinks it has found brines at its Alkali Lake North project. Both Clayton Valley and Alkali Lake North are located to the northeast of Big Smoky South.

Despite the lack of success so far at Big Smoky South, Reedy has no plans of dropping the project.

Mr Fethers says the project is paid up until September 2019 so there is no hurry.

“There’s absolutely no incentive for us to go along and start considering whether we’re going to drop it or not,” he said.

“We’ve got an incentive to go along and figure out whether we want to go along and do some surveys there, but we’ve got some decent results in those other two areas.”