Why Did Pure Energy Minerals Jump 20 Percent?

Lithium junior Pure Energy Minerals (TSXV:PE) grabbed the attention of market watchers on Tuesday morning after its share price spiked 20 percent on high volume.
As of 11:22 a.m. EST, shares of Pure Energy were up 20.97 percent, at $0.75. Trading volumes were sitting at 957,390, over three-and-a-half times the company’s daily average of 268,706.
It’s unclear what caused the spike in trading for the company. Pure Energy hasn’t put out any news in the past two days, and while a few insider transactions were filed on SEDI on February 29, they were hardly enough to account for Tuesday’s bump in share price.
Still, the company has seen some positive news as of late. Last Thursday, it was named the top-performing mining company on this year’s TSX Venture 50 list. That ranking was based on its market cap growth, share price appreciation and trading volume. Furthermore, on February 18, Pure Energy completed the fifth well at its Clayton Valley South project in Nevada.

Beyond that, last Wednesday, a press release on Pure Energy titled “This Emerging Lithium Producer Could Disrupt the Entire Industry” was put out, with the source of the article listed as Street Reports. Then, on Monday, Mineweb republished a piece on lithium written by James Stafford of Oilprice.com. He states that Pure Energy “has the only brine resource in North America, and that it is directly adjacent to Albermarle’s (NYSE:ALB) Silver Peak Mine, the only producing lithium operation in North America. Certainly, there’s no shortage of market watchers who like Pure Energy Minerals.”
What’s more, it’s no secret that lithium companies have been all the rage lately. While most metals and resource commodities have seen their prices under pressure in recent months, lithium prices are on the rise due to increasing demand from the battery sector (although as Chris Berry of the Disruptive Discoveries Journal has explained, it’s probably more useful to pay attention to production costs than to rising lithium prices).
Add to that the unending excitement surrounding Tesla Motors (NASDAQ:TSLA) and the lithium-ion battery gigafactory it’s building in Nevada, and it’s clear why a number of mining companies have begun to stake properties in the state. Last September, Pure Energy became the second junior mining company to secure a conditional lithium supply agreement with Tesla. The agreement remains light on detail, but the news generated plenty of attention at the time.
While all of those factors add context to Pure Energy’s Tuesday share price rise, it’s worth noting that some analysts have stressed the importance of remaining cautious when looking at the junior lithium space. Joe Lowry of Global Lithium has written about this topic, and when asked whether he had any concerns about the lithium market heading into 2016, Berry stated, “[l]ike moths to a flame, too many juniors in the space can cloud the true potential of the commodity and confuse investors.”

Shares of Pure Energy were up 16.13 percent, at $0.72, as of 12:06 p.m. EST on Tuesday. The company’s share price has gained 26.32 percent in the past month and 140 percent in the past year. It has a market cap of 35.62 million.
 
Securities Disclosure: I, Teresa Matich, hold no direct investment interest in any company mentioned in this article.