Why The Eneabba Gas Ltd Share Price Jumped 18% Higher Today

At the time of writing, shares of Eneabba Gas Ltd [ASX:ENB] are up by more than 18%, today trading for 1.3 cents.

Why did Eneabba Gas Ltd shares do this?

On 15 March, Eneabba Gas Ltd entered into a binding agreement to acquire a number of lithium exploration projects in Argentina and Australia. Today, the company announced that it completed preliminary geological work over the projects.

What now for Eneabba Gas Ltd?

The acquisition provides significant share price upside potential. The company has a $6 million market capitalisation today and plans to raise $3 million at no less than 3 cents per share — more than double the share price — once the acquisition is approved. At a 3 cent share price, that equates to an enterprise valuation (market cap less cash) of about $13 million.

That’s not bad.

The pegmatites potentially include the mineral spodumene, a common economic source of lithium. Of course, it’s early days, with the geological desktop study not completed. But, given the two projects are located in favourable jurisdictions that are close to infrastructure, the company could become a world-class lithium player. If that’s the case, while there’s a long-lead time to drilling, Eneabba Gas Ltd shareholders could do well from these levels.

I believe the company is — at least — a 12-month play. That said, if the exploration permits are approved in Argentina via Domingo Lithium Pty Ltd, the share price could react favourably within the next 2–3 months.

Jason Stevenson,
Resources Analyst, Money Morning

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