The Core Lithium Ltd (ASX: CXO) share price is slightly in the red today.
Core Lithium shares are down 0.43% and are currently trading at $1.17. For perspective, the S&P/ASX 200 (ASX: XJO) is down 0.52% today.
Let's take a look at what is going on at Core Lithium.
What's going on?
Lithium explorers are having a mixed day on the market today. The Lake Resources N.L. (ASX: LKE) share price is falling 2.93%. However, Pilbara Minerals Ltd (ASX: PLS) shares are up 2.35% and Sayona Mining Ltd (ASX: SYA) shares are rising 3.49%.
Morgan Stanley has cut the lithium sector to "underweight", The Australian reported today.
Core Lithium is exploring the Finniss Lithium Project in the Northern Territory. Core Lithium shares have fallen 10% since market close on 7 December.
A broker note out of Goldman Sachs appeared to impact the Core Lithium share price late last week.
Goldman placed a "sell" rating on Core Lithium shares with a $1 price target. Analysts highlighted Core Lithium will be Australia's "next lithium producer". However, analysts raised concerns about production cost risks and the potential for lithium prices to decline in the future. Analysts said:
Core Lithium's Finniss project will be Australia's next lithium producer, with spodumene production scheduled for 1H CY23, where we factor in an average ~175ktpa production over a ~12-year M&I resource life.
However, while resource upside looks likely, the required magnitude to support the capacity expansion/life extension/future downstream that is currently priced into the stock looks significant, in our view, particularly given the upside case is unlikely to be achieved before lithium prices decline (GSe from 2H CY23).
With production/cost risks as the project moves between mining configurations, and the stock trading well above peers at 1.5x NAV (~US$2,400/t LT spodumene) on the lowest average operating FCF/t LCE, we initiate on CXO with a relative Sell rating and a 12-month PT of A$1.00/sh, implying 23% downside.
In an AGM presentation in late November, Core Lithium highlighted it is trucking direct shipping lithium ore to Darwin Port. The company said it would "commence shipping to China in coming weeks".
Construction at Core Lithium's DMS processing plant is on track for commissioning in the first quarter of 2023, with first concentrate scheduled for the first half of 2023.
Core Lithium share price snapshot
Core Lithium shares have soared 134% in the last year. In the year to date, Core Lithium shares have jumped 98%.
Core Lithium has a market capitalisation of about $2.15 billion based on the current share price.
