- Atlantic Lithium’s Ewoyaa project could contain more than 14.5 million tones of lithium ore
- The uk lithium stock is on an upward streak since November 2021
- Surging demand from the electric vehicle industry is pushing lithium prices up
Lithium has become a hot commodity these days, as are the UK mining stocks involved with the metal. Because of its use in batteries for electric vehicles (EV), its demand has soared. Therefore, the news of the completion of a Scoping Study on the Ewoyaa Lithium Project by the company Atlantic Lithium (LSE:ALL) was received with tremendous enthusiasm. Currently trading as a penny stock, the Atlantic Lithium share price is on an upward streak since November 2021.
So what was in the study that has investors so excited? And should I be considering this UK lithium stock for my portfolio? Let’s explore.
Ewoyaa Lithium Project
The Ewoyaa Lithium Project is the company’s flagship pursuit which commenced in 2016. The Ewoyaa mine contains an estimated 14.5 million tonnes of lithium waiting to be extracted. In line with the rising demand and the expected mineral output, the emerging lithium company, Piedmont Lithium, has signed a conditional binding agreement to fully fund the site’s development to reach the production stage.
Recently, the company announced the initial infill drilling results at the digging site. And as far as I can tell, the numbers were exceptionally encouraging. As per the report, the drilling led to detecting the highest metal concentration found to date. Consequently, the initial mineral resource estimate has been increased by 47%!
RELATED: How to analyse drilling results
These positive results have unsurprisingly attracted a lot of attention to this lithium UK stock. Consequently, the firm’s share price has jumped more than 20% within a week.
Previously known as the IronRidge Resources Limited, the lithium exploration company changed its name to Atlantic Lithium Limited in November 2021. Since then, Atlantic Lithium share price has almost surged from around 20p to 29p today.
This UK lithium stock has its risks
No doubt, Atlantic Lithium will continue to keep the investor motivated through its potentially explosive growth. But, what concerns me is the limited lithium resources compared to the continuously increasing demand. It will take a long time to extract all that metal. Still, with plenty of competitors pursuing similar mining projects, the market could get flooded, causing lithium prices to fall.
Meanwhile, continued innovation within battery technology could lead to lithium eventually becoming obsolete for this purpose. Naturally, that could also send the price of lithium crashing down, sending this UK stock with it.
Time to buy?
Studying the fundamentals of the flagship project, coupled with the exponential growth potential in the lithium demand, I believe Atlantic Lithium is in an ideal position to thrive. Providing the demand for the metal continues to rise, the Atlantic Lithium share price could quickly be elevated to new heights.
There are some considerable risks, of course. But personally, I feel this is a risk worth taking. So, I’m seriously considering adding this business to my portfolio for the long term.
RELATED: How to buy lithium stocks
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Saima Naveed does not own shares in any of the companies mentioned. The Money Cog has no position in any of the companies mentioned. Views expressed on the companies, assets, and strategies mentioned in this article are those of the writer and, therefore, may differ from the opinions of analysts in The Money Cog Premium services.
