The Core Lithium (ASX:CXO) share price slips today

The Core Lithium (ASX: CXO) share price dropped 2.27% today despite the company announcing it was acquiring a new mine. We take a closer look.

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The Core Lithium Ltd (ASX: CXO) share price has been falling today after the company announced a new acquisition this morning. Shares in the company are currently trading 2.27% lower at 22 cents.

What happened

In today’s release, Core Lithium advised it has acquired the right to pegmatite mines in the Northern Territory. The company has an option agreement to acquire the six mineral leases containing more than 30 lithium pegmatite targets. Furthermore, the mines are in close proximity to the company’s Finniss Lithium Project.

The company notes that the mineral leases have a history of tin and tantalum mining. As the company operates a mine close-by it is familiar with the chemistry of the pegmatites (igneous rock on which the elements form).

What now

The company now plans to start assessment drilling the lithium pegmatite targets as the 2021 field season commences. Approvals are expected to be received next quarter.

Core Lithium also outlined its intentions to complete the acquisition of these assets in 2021 and, all things going well, to extend the lifetime of the mines.

Nevertheless, it should be noted that it’s the first company to physically drill and explore this site. While lithium-rich pegmatite systems are common, it is by no means a guarantee that lithium will be observed.

Management comments

Commenting on the news, Core Lithium managing director Stephen Biggins said:

This new acquisition of multiple pegmatite mines adjacent to the Finniss Lithium Project has the potential to significantly accelerate Core’s resource expansion plans. The expected increases in resources from this deal and our well-funded resource drill programs at Finniss this year should provide a strong platform for extending and expanding production of lithium from the project as lithium prices increase.

Spodumene and lithium chemical prices have increased over 50% from lows in 2020, and as Australia’s most advanced lithium developer, Core is right at the front of the line of new lithium production in Australia.

The Core Lithium share price has performed well over the last year, gaining 347.5%

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Motley Fool contributor Daniel Ewing has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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