Azure Minerals Ltd (ASX: AZS) shares have had a flat start to the week.
Though, that doesn't mean there's a lack of interest in the lithium explorer's shares.
A total of approximately 20 million shares changed hands on Monday, which is approximately 10 times the average daily volume from the week before its takeover approach.
This could be a sign that Gina Rinehart has been in the market again, topping up the 18% stake she built last week.
As covered here, this could pose a few problems for Azure Minerals' proposed takeover by Sociedad Quimica y Minr de Chile SA (NYSE: SQM).
Azure Minerals shares downgraded
It is partly because of this that analysts at Bell Potter have downgraded this lithium share to a hold rating from buy. And while the broker's trimmed price target of $4.85 is well ahead of its current valuation, it doesn't appear to believe the risk/reward is sufficient to buy at these levels given what is happening. It explains:
We change our recommendation to HOLD (Speculative), given the recently announced, and AZS Board recommended, $3.50/sh Takeover Offer. We consider SQM's offer pre-empts several potentially significant price catalysts for AZS, including: i) drill testing of Target Area 3, ii) identification / drill testing of the next generation target areas, iii) the initial Andover lithium Mineral Resource (guided for 1QCY24).
We note there is a risk of a AZS share price decline to pre-offer levels if the Scheme is unsuccessful. Support for the share price at current levels includes: i) AZS just completed a $130m capital raise to execute its exploration plans, ii) SQM's Takeover Offer should provide a floor price as SQM attempts to increase its ownership as much as possible, iii) AZS has several potentially significant price catalysts through CY24, iv) given that Yandal owns 40% of the Andover Lithium Project, and 13.2% of AZS, the ultimate ownership of the Andover Lithium Project is still very much to be decided.
