Why is Kali Metals soaring again while Core Lithium shares slide?

Core Lithium is struggling to catch a bid from investors while the new kid on the block flies.

Mitchell Lawler

Mitchell stumbled upon the concept of investing when in high school, devotedly urging his parents to put some money into a handful of technology companies with increasingly popular products among his demographic – many of which have gone on to great success. It wouldn’t be until 2017, some five years later, that Mitchell became an investor of his own money. Having studied and worked as a mechanical engineer in the building services industry, Mitchell takes a methodical and analytical approach to evaluating businesses. Rather than relying purely on numbers, Mitchell drills beyond a company’s metaphorical mantle to unearth obscure patterns or competitive advantages that would go otherwise unnoticed. His expertise resides within areas such as software, consumer goods, and building services equipment. However, his quest to find quality companies that set the industry standard and flex some degree of an impenetrable position has no limits – small cap to mega cap, cosmetics to healthcare – if it’s an exceptional business it’s on his radar.

Published January 10, 2024 3:03 pm AEDT

Shares in freshly listed lithium explorer Kali Metals Ltd (ASX: KM1) are keeping the good times rolling on Wednesday. Yet, fellow white gold hunter Core Lithium Ltd (ASX: CXO) is in the crosshairs of shareholders eager to sell again today.

Heading into the afternoon, 3-day-old Kali Metals (in terms of listed life) is seeing its share price skyrocket a further 38%. The rapid gain builds on a monumental 110% increase achieved in the first two days.

In comparison, Core Lithium is sitting on a flat share price after descending 22% since 2024 got underway.

So, what is behind the relentless march higher for Kali? And why are Core Lithium shares not partaking in the enthusiasm despite chasing the same commodity?

Miner looking at a tablet. — Image source: Getty Images

Out with the old and in with the new

Firstly, what are we working with here? According to the prospectus, Kali Metals is a 'lithium-focused exploration company' with rights to explore tenements for the energising commodity across projects in multiple regions, including:

Pilbara, Western Australia
Eastern Yilgarn, Western Australia
Lachlan Fold Belt, Northern-eastern Victoria and Southern New South Wales

Today's sustained excitement for Kali Metals could be due to two reasons, as outlined by my studious colleague James Mickleboro. These include the discovery of lithium-bearing pegmatites in Kali's Spargoville Project, and the news of Mineral Resources Ltd (ASX: MIN) (MinRes) — which owns nearby mines to the north and the east — taking a stake of almost 10% in its neighbour.

For investors, Kali Metals offers the chance to get in at the bottom floor (exploring stage). With 3,853 square kilometres of area for potential discoveries — combined with its proximity to existing deposits — speculators are hopeful something lies beneath.

On the other hand, Core Lithium shares have already gone from explorer to producer, becoming a 40-bagger at its high.

However, the excitement has since worn off amid falling lithium prices. Adding to the pressure, the more established lithium company suspended mining at its Finniss site on Friday as it tries to conserve cash.

Faced with the prospects of dwindling revenue, Core Lithium shareholders might be losing interest in sticking around to find out what happens next.

Mining magnates missing in Core Lithium shares

Another ace up the sleeve of Kali Metals is its star-studded backing. Like Liontown Resources Ltd (ASX: LTR) flaunting Gina Rinehart (owner of Hancock Prospecting) as a large shareholder, Kali Metals has found the support of MinRes founder Chris Ellison.

Given Ellison's success, speculators could be buying based on the vote of confidence through his 4.85% ownership in Kali. Furthermore, after recent takeover activity in the Aussie mining space, having a wealthy shareholder could come in handy if the newly listed company is approached down the track.

Meanwhile, Core Lithium shares lack any drawcards regarding mining magnates on its register. The downtrodden miner counts State Street Global Advisors and the Vanguard Group as its largest shareholders.

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