It's been a strong start to the trading week for the S&P/ASX 200 Index (ASX: XJO) and most ASX shares. At the time of writing, this Monday, the ASX 200 has gained a healthy 0.86%, pulling the index back over 7,480 points. But it's been a very different story for Mineral Resources Limited (ASX: MIN) shares.
This ASX 200 miner and mining services company closed at $58.15 a share last Friday. But this morning, those same shares opened at $57.50 each and are currently down a horrid 8.87% at just $52.99. So what's going on here that has elicited such a dramatic drop in value for Mineral Resources shares?
Well, it's not a result of anything Mineral Resources itself has said or done. That's because there hasn't been any ASX news out of the company directly since 10 January earlier this month.
Most of the big mining shares on the ASX are doing decently so far today as well, albeit not quite as well as the overall market.
However, there are a few factors that could potentially be at play that we can point to.
Carnage for ASX lithium shares
Firstly, ASX lithium shares are collectively having a shocker. Take Pilbara Minerals Ltd (ASX: PLS). The ASX's largest pure-play lithium stock is currently nursing a 5.91% loss at $3.27 a share. Core Lithium Ltd (ASX: CXO) shares are also down 4.7% to 20 cents apiece.
But it's Liontown Resources Ltd (ASX: LTR) that is taking the cake in terms of nasty losses. Liontown shares have cratered by an awful 22% so far today and are down to 93 cents each. That's after hitting a new 52-week low of 88 cents earlier this morning.
As my Fool colleague James covered earlier today, investors are racing for the exits after Liontown put out a disappointing update regarding its Kathleen Valley Lithium Project this morning.
Liontown is reportedly now examining options to defer a planned expansion of Kathleen Valley's lithium production, thanks to lower lithium prices and thus projected cash flow.
Additionally, Liontown has also had a $760 million debt facility terminated thanks to these lower lithium prices. It is now renegotiating a lower facility.
So this news has clearly spooked lithium investors. And although Mineral Resources is not a pure-play lithium stock, it still has significant operations in the lithium space.
There's some more bad news for Mineral Resources shares today as well, though.
ASX broker wary on Mineral Resources shares
ASX broker Jefferies has just updated its view on Mineral Resources shares, and it's not good news.
Jefferies previously had a buy rating on the company, with a 12-month share price target of $70. However, the broker has just revised this down to a 'hold' rating, with a reduced price target of $65.
The broker cited "rapidly depreciating lithium price and spending on pre-development lithium assets" as its reasoning for the move.
It also commented that "Despite relative iron ore strength during the quarter, the weak lithium price environment and ongoing cash outflows will keep the focus on the tightening balance sheet".
So it's probably a combination of these factors that is leading investors to punish Mineral Resources shares this Monday. Investors are no doubt hoping that the rest of the week won't be so painful.
