Lithium Corp. (OTCMKTS:LTUM) Spikes on Car Battery Hype

Lithium and batteries go hand in hand, and the news that Tesla Motors Corp. (NASDAQ:TSLA) would be building a $5 billion battery factory awakened lithium stocks. One of those was Lithium Corp. (OTCMKTS:LTUM), which went strong in the past three days, but on Tuesday corrected by more than 21% to $0.0979, on selling volumes above $1.21 million. LTUM has not been promoted in emails, but in the past days supported itself through PR updates just enough to stir up the stock price, which has been slowly deflating for years. LTUM0503.png

The latest PR from the company points out that LTUM has renewed its drilling license for the San Emidio property, a beach side where lithium was discovered in sea brine. LTUM promises that drilling would start in the second quarter of 2014- a time frame going well beyond the movement capacity of such a low-priced stock.AMEL0503.png

LTUM points out that it is a development stage company, but even at this position it can be judged for its quality through the financial results. Let’s see how LTUM has been doing since 2009, when it listed itself as a communications company, Utalk Communications, Inc. LTUM revealed in the fall of 2013:

  • $873,083 cash
  • $2,371 current liabilities
  • No revenues since inception
  • $2.7 million net loss since inception

Those data, while showing no profitable activity, are still better than other filings which show a much greater burden of debt and past losses.

LTUM is still a cat in a bag in that its PR updates are few and months between, though it shows a fast reaction to publicity. The Tesla news may help boost the ticker for a while, and some investors’opinions show an almost unbelievable optimism about the upward potential of LTUM. For others, the stock has already shown its best, and from now on will move to its habitual positions.

On Tuesday, Amerilithium, Corp. (OTCMKTS:AMEL) took center stage, again with a very sudden climb on two days of record buying. But the reversal came soon afterward, as the ticker shed 17% to $0.0083. AMEL also rose on recent business updates, combined with the mention that Tesla could be potentially interested in a lithium mining company.

It is currently rare to see a company that is still devoted to mining a potentially lucrative resource. Even in the past, graphite, rare earth metals and lithium were used merely as props to lift up stock prices. Now, the pot stock boom has made companies switch tracks, as was in the case of Cold Coast Mining Corp. (OTCMKTS:GDSM), which was just negotiation new oil and gas interests, when it announced it could create a subsidiary devoted solely to medical cannabis.

It remains to be seen how many newcomers make it on the hype surrounding lithium and battery production. The trend will most probably ride on the promises of creating electric cars for a wider market. But before taking up the offer, it is best to do your own research of each company, to discern the quality and risks.

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