European Metals Holdings lifted by lithium excitement

Shares in mining minnow European Metals Holdings shot up 43% to their highest point since their London flotation as interest in the lithium sector intensified due in part to excitement around the launch of new electric cars and subsequent demand for lithium-ion batteries.

Aussie-listed EMH, which joined the AIM junior market in December, put out a statement on Monday afternoon that it was "not aware of any reason for the movement other than recent general market interest in the lithium sector and in ASX-listed lithium companies in particular".

Lithium prices have been a rare bright spot in the commodities market due to their use in electric batteries and electronic devices like tablet computers.

Last month, EMH said it had signed up to a new testing agreement with Germany's Dorfner Anzaplan as it deepened its series of independent studies to evaluate the best lithium extraction method for the company's 100% owned Cinovec Project in the Czech Republic.

Dorfner have previous experience with the treatment of extracting lithium from the same sort of zinnwaldite host rock that exists at Cinovec.

Lithium fever has spread of late thanks largely due to Tesla’s new electric vehicles (EVs), stationary storage devices and the resulting positive implications for lithium-ion batteries.

Daimler also last month announced plans to spend €500m on the development of a new Li battery factory in Germany.

Moreover, research into the performance and lifespan of lithium batteries used in EVs has been said to show less degradation and better performance than had been thought and can be reused for stationary storage applications.

From 2015 to 2024, the market to supply lithium ion batteries for light vehicles may total $221bn, according to some estimates.

Prices of lithium carbonate, the industrial chemical used in lithium ion batteries, have soared in 2016 and were recently running at around $5,800-6,200/t in the contract market. The spot market is seen trading in the $7,000-9,000/t range but some investors have worried that a bubble may be forming.

Broker SP Angel recently said: "While we believe lithium prices could continue to appreciate investors should be wary of ambitious lithium price claims. Lithium battery makers are keen to expand supply but are also keen to lower battery prices to better compete with NiCd and lead-acid batteries and expand the market for lithium battery products."

European Metals, which made it AIM debut at around 11p but has since neared 5p, rallied above 16.5p by lunchtime on Monday and was holding at 15.25p by mid afternoon.