The Core Lithium share price surged 25% in October. Here's why

On October 27, the company announced its lithium spodumene concentrate offtake agreement with Tesla was off the cards, but it was still a fine month for its shares.

Key points
  • The Core Lithium share price surged 25% in October
  • Lithium prices are trading at or near all-time highs
  • Core Lithium’s Finniss Lithium mine officially opened in October, transitioning the company into a producer

The Core Lithium Ltd (ASX: CXO) share price put in another stellar performance in October, though it was not without its share of volatility.

On 29 September, the S&P/ASX 200 Index (ASX: XJO) lithium stock closed trading for $1.11.

Yesterday, shares ended the day, and the month, trading for $1.39. That puts the Core Lithium share price up a whopping 25.2% in October.

Now, in case you're wondering, the ASX was open on 30 September. But Core Lithium shares were in a trading halt on the final day of September at the company's request. This came as the miner announced it was launching a fully underwritten $100 million institutional share placement to "pursue new and aggressive exploration programs".

The new shares in the placement are being issued for $1.03 per share. That was almost 7% below the Core Lithium share price on the day of the announcement, and some 26% below October's closing price.

Man pointing at a blue rising share price graph.

Image source: Getty Images

What happened with the ASX lithium miner last month?

As you'd expect, the Core Lithium share price fell on 3 October, losing 4.5% on the first trading day following its capital raise announcement.

But things turned around quickly from there.

Core Lithium, and indeed most ASX lithium shares, received some heady tailwinds early in October following the release of the Australian government's Department of Industry, Science and Resources quarterly Resources and Energy Report.

Australia, as you may be aware, leads the world in lithium exports. And the report painted a rosy outlook for the year ahead, stating, "Notably, lithium exports are now forecast to rise by over 180% to $13.8 billion in 2022-23."

That's up from $4.9 billion in 2021-2022, and up from $1.1 billion of lithium export earnings in 2020-21.

You can see how that may have piqued ASX investor interest.

What else impacted the Core Lithium share price in October?

Atop continuing high demand and near-record prices for lithium, a metal critical for most EV batteries, the Core Lithium share price got a big boost when it officially transitioned to a lithium producer this month, joining only three other Aussie miners with that distinction.

On 10 October, Core Lithium announced its Finniss Lithium mine had officially opened. This marks the first lithium mine in the Northern Territory, and the only Aussie mine producing lithium outside of Western Australia.

The miner suffered what looked to be a setback on 27 October, when it announced its lithium spodumene concentrate offtake agreement with global EV giant Tesla, Inc (NASDAQ: TSLA) was off the cards. Shares closed down 4.5% on the day.

Not that CEO Gareth Manderson sounded overly concerned, stating:

An increasing lithium price environment indicate[s] that Core Lithium is well positioned to capitalise on the high demand and current shortage of available battery grade lithium spodumene concentrate.

And the Core Lithium share price rebounded strongly just two trading days later, on 31 October, after the miner released its quarterly activities report.

During the quarter just gone by, Core Lithium appointed Manderson as CEO. And the miner ended the three months with a strong balance sheet, reporting $95.5 million in cash and equivalents as at 30 September.

How has the Core Lithium share price performed this year?

Longer-term shareholders will have little to complain about.

So far in 2022, the Core Lithium share price is up 120%. That compares to a year-to-date loss of 10% posted by the ASX 200.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Tesla. 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 Scott Phillips.

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