The Sayona Mining share price went backwards in November. What now?

The ASX lithium company expects to increase production next year.

| More on:
A man wearing a hard hat stands in front of heavy mining machinery with a serious look on his face.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Key points

  • The Sayona share price slipped 2.13% in November while the wider materials sector rallied
  • Its decline comes amid some macro headwinds reported in China, which intensified near the end of last month
  • Sayona expects to start producing lithium from its North American Lithium (NAL) operations in Canada in the first quarter of next year 

The Sayona Mining Ltd (ASX: SYA) share price delivered an unimpressive performance in November.

Shares in the ASX lithium company opened at 23.5 cents each on 1 November and closed lower at 23 cents a share at the end of the month for a 2.13% loss.

By comparison, the S&P/ASX 200 Materials Index (ASX: XMJ) had a spectacular month in November. The index climbed 16.23% for the month.

And more broadly, the S&P/ASX 200 Index (ASX: XJO) also made a 6.13% gain over the same period.

Currently, Sayona shares are going for 22.7 cents apiece, a 1.3% drop on yesterday's closing price.

Let's take a look at what the last month held for Sayona and where it might be headed.

What happened to Sayona in November?

Recently, the Motley Fool reported that lithium shares, like Sayona, could be suffering from reduced demand for battery materials in China. This comes amid COVID lockdowns and protests in the country causing operational disruptions in the manufacturing of electric vehicles (EVs).

As noted by my colleague Monica O'Shea, there could potentially be an oversupply of batteries for EVs in China by 2025. Both of these headwinds could have weighed on Sayona's share price near the end of the month.

Another development was Sayona issuing 185 million new shares to the market on 18 November. The company said it would use the funds to acquire an additional 1,824 exploration claims near its 60%-owned Moblan lithium project in Canada.

As well as acquiring an extra 985 kilometres of land for exploration, Sayona announced it would also be buying a 9.26% stake in the seller, the Canadian-listed Troilus Gold Corp.

What's next?

In other news for the month, Sayona announced that it has made progress in the restart of its North American Lithium (NAL) operations in Quebec, Canada. The company expects to start producing lithium from the site in the first quarter of next year.

Yet it seems experts are split on the broader outlook for lithium producers such as Sayona.

Global Lithium LLC founder and president Joe Lowry recently predicted that the price of lithium hydroxide could reach USD $100,000 per tonne. That's well up from the US $85,000 per tonne it's fetching at the time of writing. The strong demand for electric vehicles was said to be a tailwind that could further lift the price of lithium hydroxide.

However, Schroders head of Australian equities Martin Conlon believes that even the current lithium prices are "vastly higher than needed to incentivise new supply and are therefore difficult to rationalise on any fundamental basis".

It appears Conlon believes lithium is presently overvalued and could be due for a downside correction.

Motley Fool contributor Matthew Farley has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. 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 Scott Phillips.

More on Resources Shares

A happy construction worker or miner holds a fistfull of Australian money, indicating a dividends windfall
Dividend Investing

Everything you need to know about the Rio Tinto dividend

Shareholders are getting a big dividend.

Read more »

A miner in a hardhat makes a sale on his tablet in the field.
Resources Shares

Buy this ASX stock for 'the best lithium mine in the world'

The experts at Blackwattle reckon the battery material will come back into vogue soon, and these are the shares to…

Read more »

Miner looking at a tablet.
Resources Shares

The Fortescue share price is down almost 10% in February, time to buy?

Is this an opportunistic time to buy the miner?

Read more »

Two miners standing together.
Resources Shares

2 battered ASX mining shares to buy for cheap right now

The global economy is set to improve in the coming year. That's why one expert is seeing a huge 58%…

Read more »

A happy miner pointing.
Resources Shares

Will Fortescue stock be worth more than CBA by 2026?

The resources giant has done a wonderful job of growing. Can it keep going?

Read more »

a woman wearing a sparkly strapless dress leans on a neat stack of six gold bars as she smiles and looks to the side as though she is very happy and protective of her stash. She also has gold fingernails and gold glitter pieces affixed to her cheeks.
Resources Shares

This ASX gold stock just fell 31%. It's time to buy

The global market for the precious metal remains strong, so Blackwattle analysts advise looking past the recent sell-off of these…

Read more »

A girl holding a globe shouts into a green megaphone about climate change.
Resources Shares

ASX mining shares up amid Labor plan to spend multibillions on renewables revolution

Prime Minister Anthony Albanese will deliver a speech in Newcastle tonight.

Read more »

Miner looking at a tablet.
Earnings Results

South32 share price lifts off as ASX 200 miner greenlights US$2.2 billion project

ASX 200 investors appear optimistic about South32’s major US project approval.

Read more »