Is there any hope for Core Lithium shares?

11 November 2022 was a great day to own Core Lithium shares. Since then, not so much.

| More on:
Miner looking at a tablet.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Core Lithium Ltd (ASX: CXO) shares may not be set to return to their glory days of 2022.

But is there any hope for the All Ordinaries Index (ASX: XAO) lithium stock?

Let's dig in.

Core Lithium shares still losing ground

11 November 2022 was a great day to own Core Lithium shares.

And a great day to unload them.

The ASX lithium stock closed the day trading for $1.67 a share, having gained 183% over the prior 12 months.

That high water mark was achieved amid all-time high lithium prices, following a period of surging demand and limited new supplies of the battery-critical metal.

Then, as you're likely aware, lithium prices crashed by some 80% over the following year.

And while lithium bearing spodumene prices have moved higher over the past few months, most analysts don't expect them to come back anywhere close to the 2022 highs. In fact, many analysts forecast a further retrace if lithium miners opt to ramp up production.

All told this has seen Core Lithium shares tumble to just 15 cents a share today, having kicked off 2024 trading for 24 cents a share.

With Core Lithium's market cap now down to $321 million, the miner was also removed from the S&P/ASX 200 Index (ASX: XJO) last month as part of the regular quarterly rebalance. That will throw up another headwind for the stock, as many fund managers are restricted to trading on the ASX 200.

2024 also saw Core suspend mining operations at its Finniss project in the Northern Territory, as the company awaits stronger market conditions.

It's quite unclear when those better conditions may arrive, however, and management has not yet decided on when lithium mining might recommence at Finniss.

Last month, Core Lithium shares came under renewed pressure following the release of the company's half-year results and the abrupt departure of CEO Gareth Manderson.

With a 75% fall in its spodumene concentrate realised price over the six months, the miner reported an after-tax loss of $167.6 million.

All up this doesn't bode well for the medium-term outlook.

Indeed, of the eight analysts covered by CommSec, six rate Core Lithium stock as a strong sell and two rate it as a moderate sell. No one appears eager to recommend the company as buy today.

And Goldman Sachs believes the miner is more likely to lose share price than gain it. The broker has a 12-cent price target on Core Lithium shares, some 20% below current levels.

Morphing into an ASX uranium share?

There could be some hope for Core Lithium shares in other metals, like gold and uranium, both of which have seen strong gains over the last year.

Outside of its Finniss project near Darwin, Core owns a number of mining assets across Australia.

When reporting its half-year results, management noted:

The Core exploration team is reviewing the local and regional prospectivity of the company's lithium tenements and the potential of the company's 100% owned gold, uranium and base metal projects.

The company has received multiple inbound enquiries about the Napperby and Fitton Uranium Projects. Updates will be provided as the review continues and the exploration plan is finalised.

In my opinion, if there is any medium-term hope for Core Lithium shares, it could well come on the back of promising uranium news.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group. 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.

More on Opinions

Young people shopping in mall and having fun.
Opinions

1 ASX dividend share down 31% to buy right now

This dividend stock is very compelling to me.

Read more »

A smiling woman sips coffee at a cafe ready to learn about ASX investing concepts.
Opinions

How I'd invest $10,000 in ASX shares right now

I’m bullish about the prospects of these stocks.

Read more »

A woman looks quizzical while looking at a dollar sign in the air.
Technology Shares

Are DroneShield shares still fundamentally expensive now?

DroneShield shares still look expensive, but the growth is there...

Read more »

Man smiling at a laptop because of a rising share price.
Dividend Investing

One ASX dividend machine I'd buy over Fortescue shares right now

When it comes to dividends, growth can be better than a high yield.

Read more »

A young man sits at his desk working on his laptop with a big smile on his face due to his ASX shares going up and in particular the Computershare share price
Opinions

Why I'm still super excited about Guzman y Gomez shares

GYG is an exciting prospect in my opinion.

Read more »

a doctor in white coat and stethoscope stands in front of a building holding an electronic device in his hands.
Opinions

After a 25% crash, is this ASX 200 stock in deep value territory?

This $13 billion company has been kicked the curb. It might be worth inspecting.

Read more »

A happy young couple celebrate a win by jumping high above their new sofa.
Opinions

ASX investors: 1 top stock primed for performance

This stock is tapping into technology advances to boost its capabilities.

Read more »

Woman and man calculating a dividend yield.
Opinions

Would I be crazy to buy CBA shares now at over $132?

CBA shares have defied a host of bearish analysts to soar 29% in 12 months. Now what?

Read more »