Shares in aspiring lithium player Estrella Resources were...

Shares in aspiring lithium player Estrella Resources were punished savagely today after the company delivered a double whammy of bad news.

Shares in the explorer surged to a two-year high of 14 cents last week on high-grade lithium detected in rock chip samples and excitement ahead of a drilling program at its newly acquired Mt Edwards lithium project near Widgiemooltha.

The company’s share price retraced throughout this week, but tumbled 50 per cent today after the company advised its drilling program had been delayed because of heavy rainfall in the Goldfields recently.

“At this stage, crews have been stood down until next week when it’s expected that the ground conditions will have improved sufficiently for the movement of the heavy drilling fleet and auxiliary vehicles to commence drilling target areas,” the company said in a statement.

Estrella also announced today that assay results from two historic drill core samples at the Axis prospect, about 3.4km west of recently discovered lithium mineralisation at the Munda prospect, had returned relatively low levels of lithium.

“Although the location of the granite source of the pegmatites of the Mt Edwards lithium project area is unknown, these results demonstrate that Axis is possibly not at the optimal distance from the source to produce economic concentrations of lithium,” the company said in a statement.

“The company will now focus its upcoming drilling programs at Kingmaker, Atomic Three, Inco Boundary and Munda where it has already obtained highly anomalous lithium results from surface rock chip sampling of exposed pegmatites.”

Estrella last month tied up its acquisition of 75 per cent of the lithium rights on 129sqkm of tenements held by Apollo Phoenix Resources on the Widgiemooltha Dome in an all-scrip deal.

Chris Reed’s Neometals tipped cash into Estrella at the time while Chris Dawes was appointed chief executive, John Kingswood as a director and Stephen Brockhurst as company secretary.

The Company said it had $1.48 million in cash and was well positioned to explore its assets.

Estrella also last week entered into a strategic partnership with Chinese industrial and resources conglomerate Tianjin Datong Xintian Investment Co Ltd.

Neometals co-owns the Mt Marion lithium mine 40km to the north of Mt Edwards as part of a joint venture with Mineral Resources and Ganfeng.

Neometals expects to make a decision on developing a downstream lithium processing plant in Kalgoorlie-Boulder with MinRes later this year.

The plant would have a nameplate capacity of 20,000-25,000 tonnes a year of lithium carbonate.

Shares in Estrella were off 3.8 cents, or 46.34 per cent, to 4.4 cents at the close after touching an intraday low of 3.9 cents. More than 117 million shares worth $5.2 million changed hands.