Unfortunately for its shareholders, the Argosy Minerals Limited (ASX: AGY) share price has been one of the worst performers on the market today.
At the time of writing the mineral exploration company's shares are down almost 12% to 19 cents.
Why have its shares tumbled lower?
As we reported recently, Argosy had been one of the biggest movers on the market in recent weeks.
Its shares rose as much as 130% in the space of a month thanks to a company-transforming announcement in August which revealed the signing of a binding investment and off-take agreement with Qingdao Qianyun.
Qingdao Qianyun, one of China's fastest growing battery materials companies, took a 19.9% stake in the company via a $16.9 million placement. It also made a $9.5 million upfront prepayment for an agreed quantity of battery grade lithium carbonate from its Rincon Lithium Project.
This agreement was, however, conditional on Qianyun's confirmatory due diligence. Which brings us onto today's decline.
This morning Argosy advised that it has granted Quanyun an extension to its due diligence period.
Whilst this is due to delays in the receipt of certain documents by its lawyers and Qianyun has reaffirmed its commitment to Argosy, some investors appear to believe there is more to it.
Should the agreement fall through, I expect the Argosy share price would fall significantly. However, it is worth remembering that there is nothing at this stage that hints at that being the case.
Should you buy the dip?
Whilst Argosy's Rincon Lithium Project looks like it has significant potential and lithium demand appears to be growing strongly, I think a lot of growth is already built into its share price.
Because of this I don't believe there is a compelling risk/reward on offer at this stage. So for now I would suggest investors looking for exposure to lithium consider an established miner like Galaxy Resources Limited (ASX: GXY).
