Much to the relief of its shareholders, the Core Lithium Ltd (ASX: CXO) share price has started the week positively.
In morning trade, the lithium developer's shares are up 3% to $1.09.
Though, this is little consolation for shareholders that snapped up shares just over a month ago.
Since then, the Core Lithium share price had lost a whopping 43% of its value prior to today's gain.
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Why is the Core Lithium share price rising today?
The catalyst for its strong gain today has been the release of a broker note out Macquarie this morning.
In response to the aforementioned share price weakness, the broker has upgraded its shares to an outperform rating from neutral with a steady price target of $1.30.
Based on the current Core Lithium share price, this implies potential upside of almost 20% for investors over the next 12 months.
As well as the share price weakness, the broker believes recent exploration activity has the potential to deliver a big boost to the company's resource base. This follows promising results announced last week from the drilling of the Hang Gong and Bilatos prospects close to the existing Finniss operations.
Macquarie commented:
We believe the regional exploration potential of the Finniss project is strong and will become more recognized once spodumene production commences in 2023.
Raining cash
Looking ahead, the broker also highlights that Core Lithium is expected to start producing lithium before the end of FY 2023. Based on this, it is expecting the Finniss project to be printing cash in the near future.
So much so, it estimates that the Core Lithium share price currently trades on free cash flow yields of 14% and 37% for FY 2024 and FY 2025, respectively. This could support dividend payments in both years according to Macquarie.
