Sayona share price dips despite 'highly encouraging assay results'

Sayona Mining has some positive news for the market today amid continually weakening lithium commodity prices.

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The Sayona Mining Ltd (ASX: SYA) share price is down 1.3% to 7.6 cents on Wednesday.

It's a poor day for ASX lithium shares today, with Sayona's counterparts also struggling.

Here are some examples:

  • Latin Resources Ltd (ASX: LRS) shares are down 4.76% to 20 cents
  • Piedmont Lithium Inc (ASX: PLL) shares are down 4.04% to 43 cents
  • Core Lithium Ltd (ASX: CXO) shares are down 3.51% to 36 cents
  • Allkem Ltd (ASX: AKE) shares are down 3.5% to $8.97
  • Lake Resources N.L. (ASX: LKE) shares are down 3.13% to 16 cents
  • Pilbara Minerals Ltd (ASX: PLS) shares are down 2.04% to $3.61
  • IGO Ltd (ASX: IGO) shares are down 1.69% to $9.0.3

The poor showing is largely due to continuing declines in lithium commodity prices. But let's get into that in a moment. First, let's review these assay results.

Sayona Mining shares dip despite positive assay results

Sayona's joint venture partner Morella Corporation Ltd (ASX: 1MC) announced "highly
encouraging assay results" from a recent soil sampling program at their West Wodgina Project in Western Australia (WA).

The project is located 100km south of Port Hedland and 8km west of the world-class Wodgina
Lithium Operation. The project forms part of the companies' broader WA joint venture portfolio.

A total of 1,171 soil samples were collected in areas chosen based on the results of previous fieldwork,
as well as aeromagnetic surveys and remote mapping exercises.

Morella said the program has yielded additional refined targets for further exploration.

Morella Managing Director James Brown said:

The West Wodgina Project's soil sampling results have showcased the Project's genuine capability to
host lithium-bearing pegmatites.

Alongside the Tabba Tabba East soil program findings … Morella's exploration at its Pilbara tenements is making significant strides toward the future development of these assets, thereby enhancing value for the benefit of our shareholders.

What's happening with lithium prices?

The lithium carbonate price has fallen to US$19,790 per tonne today, the lowest price since September 2021, due to lower demand and steady supply.

According to analysis from Trading Economics:

Expectations that growth in Chinese EV sales is slowing down prompted battery manufacturers to refrain from purchasing significant quantities of lithium during their typical restocking period in the second half of the year.

Instead, firms cleared through inventories from the supply glut caused by extensive subsidies from the Chinese government throughout 2021 and 2022.

Additionally, demand concerns emerged as the EU is investigating predatory pricing for Chinese vehicles.

Elsewhere, the EV sales in the US have missed expectations as higher credit costs hampered consumers' willingness to make large purchases.

Meanwhile, supply is set to remain robust. Mineral Resources Ltd (ASX: MIN), the world's second-largest producer of lithium raw material spodumene, plans to double its lithium production in Western Australia next fiscal year.

Sayona Mining share price snapshot

Sayona shares have tumbled 60.5% in the year to date. Meantime, the S&P/ASX All Ordinaries Index (ASX: XAO) is up 2% over the same time frame.

Sayona remains among the top 10 most shorted ASX shares, with a short interest of 9.4%.

The company will hold its annual general meeting in Brisbane on 30 November.

Motley Fool contributor Bronwyn Allen has positions in Core Lithium. 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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