Why is the Firefinch (ASX:FFX) share price suffering today?

The gold and lithium miner’s share price is going underground today…

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Two Firefinch miners dressed in hard hats and high vis gear standing at an outdoor mining site discussing a mineral find with one holding a rock and the other looking at at his ipad

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Key points

  • The Firefinch share price is dropping 3% today
  • The move coincides with its latest quarterly activities report
  • Firefinch is positioning for production growth in gold and lithium

The Firefinch Ltd (ASX: FFX) share price is falling today.

The price move follows Firefinch’s latest quarterly West African-based mining activities and cash flow update. At the time of writing, the Firefinch share price is down 3.17% to 61 cents.

So what’s been going on with the gold and lithium miner to make its share price drop?

Let’s take a deeper look…

Firefinch’s quarterly cash flow

The miner’s quarterly corporate snapshot (as of 31 December 2021) is as follows:

  • Cash (and cash equivalents available) is $152 million
  • $5.6 million in gold sold (proceeds not received by date)
  • Share purchase plan “heavily oversubscribed” and raised $51.36 million at 58 cents apiece
  • $100 million institutional placement at 67 cents a share completed in December

Since the end of the quarter, the Firefinch share price has decreased by 33%.

Further, the miner has had “aggressive growth plans” on its mind leading into 2022, as it aims to increase annual production.

In fact, it’s aiming to hit a target of 100,000 ounces of gold this year and double that by 2024. It also wants to rapidly progress its lithium site and believes it is now “fully funded” to hit these targets.

Now, moving away from its corporate targets — what practical advancements has the company? Let’s take a look…

Firefinch mining activity snapshot

Morila Gold Mine (Mali, West Africa):

  • 11,115 ounces of gold produced (within guidance)
  • A new “high grade” zone found in the eastern side of its Super Pit
  • Pre-stripping of the pit underway (in order to increase production to 100,000 oz this year)
  • Mining and haulage is underway at its Viper satellite pit
  • Additional mineralisation at Viper location found and to be explored

Goulamina Lithium Mine (Mali, West Africa):

  • The Lithium site received a post-tax, net present value (NPV) of $4.1 billion
  • It had an internal rate of return (IRR) of 83% (more than double the prior definitive feasibility study)
  • 50:50 joint venture with Jiangxi Genfeng Lithium Co Ltd to develop Goulamina is nearing “formal finalisation” (though still subject to conditions)
  • Required Chinese regulatory approval achieved and Mali Government also in support
  • JV parties agreed a final investment decision and early-stage engineering and drilling programs to begin
  • Essential sterilisation of the waste rock facility underway
  • Lithium production from the site expected early 2024

As announced in August, the Goulamina mine is set to be demerged from Firefinch and placed under its new entity, Leo Lithium Limited (Leo). In its latest update, Firefinch said the necessary regulatory documents were being prepared.

The demerger is scheduled for March but is still subject to shareholder approval (the miner has assured investors that no cost will be incurred). The ASX listing is expected by the end of the 2022 first quarter.

Firefinch share price summary

Over the past 12 months, the Firefinch share price has increased by a staggering 221%.

It saw its highest point of the year earlier this month at 92 cents apiece. This compares to its lowest point (almost a year to the day) of 17 cents.

But since its high point, the Firefinch share price has decreased, seeing a 7% drop coinciding with a Morila Gold Mine update. There was also a share price fall around the time of appointing Leo Lithium’s new managing director.

The company has a market capitalisation of $712 million and a price-to-earnings ratio (P/E) of -86.

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