Why has the Argosy Minerals share price plummeted 40% in a month?

What's going on with this small-cap ASX lithium share?

Key points
  • The Argosy Minerals share price has fallen off a cliff over the past month
  • The ASX lithium share closed the session on Thursday at 39 cents, down 1.3% for the day
  • Argosy's 40% share price decline coincides with a 40% decline in lithium carbonate (battery grade) prices

The Argosy Minerals Limited (ASX: AGY) share price has fallen off a cliff over the past month.

The ASX lithium share closed the session on Thursday at 39 cents, down 1.3% for the day.

Since the close on 13 March when the stock was worth 63 cents, it has tumbled by a massive 38.6%.

Let's take a deep dive into this sea of red to find out what's going on.

A man with a moustache sits at his computer with his hands over his eyes making a gap between his fingers so he can peek through to his computer screen.

Image source: Getty Images

Why is the Argosy Minerals share price in freefall?

Argosy Minerals is a lithium mine developer that owns two key projects — the Rincon Lithium Project in Argentina and the Tonopah Lithium Project in the United States.

It's a small-cap player with a market capitalisation of $555 million.

The ASX lithium share has rapidly declined since hitting a 52-week high of 80.5 cents on 9 February.

A factor pushing the Argosy share price up at that stage was an announcement on 1 February that its Rincon Lithium Project would be ready for steady-state production by the end of the June 2023 quarter.

This will make Argosy Minerals only the second commercial-scale lithium carbonate producer on the ASX.

Since then, there have been two price-sensitive updates.

On 1 March, we heard about the commencement of lithium carbonate batch production works at Rincon, with 5.1 tonnes of battery-quality product produced.

A second update came early this month, with Argosy reporting 10.2 tonnes of battery-quality lithium carbonate product at an average quality of 99.79%.

This is all good news, so there are no clues here to explain the 40% fall.

But here's some perspective.

This 40% fall is coming off the back of an absolutely stellar run for the ASX lithium share.

Over 2021 and 2022, the Argosy Minerals share price shot the lights out, rising an astronomical 610%.

That's not a typo.

The shares went from 8 cents at the close on 31 December 2020 to 57 cents at the close on 30 December 2022.

What would you do?

Well, it seems some investors are choosing to take their money and run!

This isn't surprising after such gob-smacking gains in the Argosy Minerals share price.

It's entirely normal to see a stock — or indeed, the entire market — pull back a bit after a massive bull run.

We've also heard a lot about tumbling lithium prices, which may have contributed to Argosy's decline.

The Lithium Carbonate Index (battery grade) has also fallen by about 40% over the past month.

It is currently trading at US$26,217 per tonne on the Shanghai Metals Market.

Motley Fool contributor Bronwyn Allen 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.

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