Argosy Minerals Limited (ASX: AGY) shares have been having a tough time in 2023.
Since the start of the year, the lithium developer's shares have lost approximately a third of their value.
As a comparison, Core Lithium Ltd (ASX: CXO) shares are down 6% and Pilbara Minerals Ltd (ASX: PLS) shares are up 36% over the same period.
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Why are Argosy Minerals shares underperforming?
Investors appear to be concerned with the company's commissioning progress over the last 12 months at the Rincon project in Argentina, as well as the uncertainty on costs.
In respect to the latter, a recent update from Lake Resources NL (ASX: LKE) has shown that it now expects its costs to be significantly higher for its operation in Argentina.
As things stand, we still don't know how profitable (or not) Argosy's Rincon project will be and are awaiting its feasibility study. In its annual report, the company warns:
There is a complex, multidisciplinary process underway to complete a feasibility study to support any development proposal. There is a risk that the feasibility study and associated technical works will not achieve the results expected. There is also a risk that, even if a positive feasibility study is produced, the project may not be successfully developed for commercial or financial reasons.
It is also worth noting that, unlike many of its peers, Argosy Minerals has yet to announce any offtake agreements or strategic investors. This makes it a bit of an anomaly, which is potentially raising a few eyebrows.
It also goes some way to explaining why short sellers have been running the rule of the company. Short interest has jumped from 1.25% in the middle of March to 3.4% today. And while this is lower than some of its peers, it is certainly on an upward trend.
Time will tell if this is a buying opportunity or the start of greater declines for Argosy shares.
