Monsters of Rock: Some of these booming lithium exploration stocks are creeping up on us

Lithium juniors continue to make solid gains as market for battery metals stays strong
Commbank mining guru pours cold water on China reopening rumours
Energy stocks down, miners indifferent as gas and coal intervention dominates national agenda

With retail investors in the driving seat we’re seeing some pretty volatile moves for juniors who crack a rare and unusual discovery.

Case in point WA1 Resources (ASX:WA1), up a tidy 1200% in a month on a new niobium discovery in South Australia, cutting into a small critical minerals market dominated by a handful of players.

The big movers have largely been in the lithium space, where prices have increased fourfold this year, opening the door to even direct shipping ore operations potentially being profitable.

Some lithium growers have emerged more quietly.

Take 2021 listing Green Technology Metals (ASX:GT1).

The under the radar lithium explorer owns the Seymour hard rock lithium project in Ontario, Canada, where Australian companies at least are still welcome to prospect for the battery metal.

Pegmatites are typically well-trodden, having been explored for decades for other minerals like tin and tantalum.

So it was interesting to see GT1 today announced “the first new discovery in 50 years” at Seymour, found under thin cover 500m south-east of the 9.9Mt at 1.04% Li2O Aubry Complex.

Channel samples returned assays at the Blue Bear pegmatite like 12.4m at 2.38% Li2O and 14.2m at 1.17% Li2O, with 14 diamond drill holes to date all intersecting pegmatite.

Assays from the six holes returned so far included 13.9m at 1.53% Li2O from 13.8m and 14.4m at 1.3%Li2O from 21.1m.

“This is the first discovery at Seymour in over 50 years. To find a spodumene-bearing pegmatite under cover utilising classic geological and modern geophysical and geochemical techniques is testament to the abilities of the GT1 technical team and our exploration modelling,” GT1 boss Luke Cox said.

“We will now drive hard to rapidly delineate the scale of this new discovery, as well as testing further new targets in this area of North Seymour.

“This is expected to culminate in an updated Mineral Resource estimate for the Seymour Project in coming months. We also continue to rapidly progress Preliminary Economic Assessment work on a development of Seymour, with scheduled completion in Q1 2023.”

GT1 is up 7.5% today and a tidy 67.97% in 2022 so far, with a market cap of $205m.

Green Technology Metals (ASX:GT1) share price today:

“Major Covid overhaul unlikely”: Commbank

Media reports of a potential reversal in China’s strict Covid policy have powered a rally in mining stocks this week.

Experts continue to say there are few signs of a swift reversal though. Analysing China’s import and export data for October, CBA mining analyst Vivek Dhar says we will likely be waiting until March to see a meaningful shift in the economy stifling policy.

“Speculation that China’s COVID‑zero policy will be relaxed has gained media traction over the last week. Authorities have responded to the speculation by reaffirming they will abide by China’s COIVD‑zero policy “unswervingly,” Dhar said in a note.

“We continue to believe that a major overhaul in China’s COVID‑zero policy is unlikely in coming weeks.

“We think that policymakers may meaningfully relax the policy by the end of March next year. Our timing lines up with the conclusion of China’s ‘Two Sessions,’ where annual growth targets are set for 2023.”

Coal imports surprised by rising 8% in October, having fallen 11% year to date due to China’s vast expansion of its domestic output.

Iron ore imports were also up, surprisingly given how weak China’s steel sector has been, while gas imports fell 19% in October, giving a sense of the impact China’s restrictions have had on industrial activity and an increase in domestic energy production.

“China accounted for 21% of the world’s LNG imports in 2021 and ship‑tracking data indicates that China’s LNG imports have declined 22%/yr in the first 10 months of 2022,” Dhar said.

“With Russian gas flows to Europe drying up and our forecast that China will meaningfully reverse its COVID‑zero policy next year, we think LNG markets are likely to remain tight in 2023.”

And how did those markets finish up?

The materials sector closed down 0.26%, with energy stocks tumbling 2.27% on a day dotted with discussion about possible intervention in domestic gas and coal prices.

Among the large caps it was lithium stocks which flourished, with Mineral Resources (ASX:MIN) closing at a record high and Pilbara Minerals (ASX:PLS), Allkem (ASX:AKE) and IGO (ASX:IGO) all finishing strongly.

Battery metals stocks were also dominant among the mid-cap winners, with graphite play Syrah Resources (ASX:SYR) moving up 2.79% alongside a host of lithium and nickel companies.