Core Lithium shares: ASX 200 buying opportunity of 2023?
Core Lithium shares are dipping after management churn, volatile lithium prices, and Chinese political instability. But sales at Finniss have at last commenced.
Core Lithium (ASX: CXO) shares have been one of the astonishing success stories of the lithium bull run, having increased by a staggering 1,400% compared to pre-pandemic levels, to AU$1.34.
However, sporting a market cap of AU$2.45 billion, the ASX 200 lithium stock has experienced severe volatility over 2022, and has fallen hard from its record intra-day AU$1.88 that it achieved just three weeks ago.
But for those with a healthy risk appetite, this pullback could represent a buying opportunity.
Core Lithium share price: a brief overview
CXO is developing one the most capital-efficient and lowest-cost spodumene projects in Australia, the Finniss Lithium Project, located within the Northern Territory. For context, Finniss is ideally located close to power stations, gas lines and rail transport, and is only 88km from Darwin Port, Australia’s closest port to Asian lithium processing giant China.
Last year, the company released an encouraging Definitive Feasibility Study and Scoping Study on the Project, highlighting potential production of an average 173,000tpa of high-quality lithium concentrate at a C1 Opex of US$364/t and AU$89m Capex through gravity processing, along with an initial 10-year mine life.
And now, much of the risk associated with the initial exploratory stages has dissipated. As Core argues, the company could now be ‘at the front of the line of new global lithium production.’ Finniss has been awarded Major Project Status by the Australian Federal Government, is exceptionally capital-efficient, and has arguably the best lithium logistics chain to Asian markets within Australia.
Where next for Core Lithium shares?
Naturally, the recent dip is shaking investor confidence. Goldman Sachs and Credit Suisse recently sounded warnings over the soaring lithium spot price in China, which has come down from its record 597,500CNY/T on 11 November 2022 to 577,500CNY/T today, coinciding almost exactly with Core Lithium’s share price fall.
However, the warnings may be overblown given wider analyst disagreement over lithium’s near-term trajectory. EU Commission President Ursula von der Leyen argued that ‘lithium and rare earths will soon be more important than oil and gas,’ ASX 200 favourite Pilbara Minerals continues to set fresh records at the Battery Materials Exchange, and titan SQM has forecast that prices will stay elevated through 2023.
However, there’s also been several recent personnel changes at the top, coming at a delicate time in Core Lithium’s strategy. CFO Simon Iacopetta is stepping down, though has promised to stay on to support an orderly transition. COO Blair Duncan has already left after five years of service and has been replaced by Mike Stone. And Samantha Rees has just taken on the role of Executive General Manager People and Culture.
Of course, these are suitably qualified replacements, but management churn can worry investors, even if there is nothing more to it than bad timing.
But there’s also the political volatility in China to consider. In addition to the dip in Chinese lithium prices, mixed news regarding the relaxing of the country’s controversial ‘zero-covid’ policy in the wake of serious civil unrest is making predicting levels of short-term demand complex. Incredibly, the country which prizes stability over all else could now have the faintest possibility of forced regime change.
And with minor production delays due to the ongoing bad weather, investment bank Macquarie has cut CXO’s price target by 5% to AU$1.80, putting further pressure on the stock.
However, Core Lithium’s investment case was supercharged on 11 November, when the ASX lithium stock released a business update telling investors that it had finally ‘completed the first sale of a spodumene direct shipping ore product (1.4% Li2O) from its Finniss Lithium mine.’
The 15,000dmt cargo was sold for US$951/dmt, and loading of the ship at Darwin Port was set to commence days ago. CEO Gareth Manderson notes that the sale represents ‘another signification milestone for Finniss, and is a very positive step towards our objective to export from Darwin Port before the end of the year.’
With Core Lithium shares dipping, now could be the time to take advantage of the popular ASX 200 lithium stock.
Take your position on over 13,000 local and international shares via CFDs or share trading – all at your fingertips on our award-winning platform.*
Winner of ‘Best Multi-Platform Provider’ at ADVFN International Finance Awards 2022
The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer.
Act on share opportunities today
Go long or short on thousands of international stocks with CFDs.
- Get full exposure for a comparatively small deposit
- Trade on spreads from just 0.1%
- Get greater order book visibility with direct market access
See opportunity on a stock?
Try a risk-free trade in your demo account, and see whether you’re on to something.
- Log in to your demo
- Take your position
- See whether your hunch pays off
See opportunity on a stock?
Don’t miss your chance – upgrade to a live account to take advantage.
- Trade a huge range of popular stocks
- Analyse and deal seamlessly on fast, intuitive charts
- See and react to breaking news in-platform
See opportunity on a stock?
Don’t miss your chance. Log in to take your position.
Live prices on most popular markets
You might be interested in…
Find out what charges your trades could incur with our transparent fee structure.
Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.
Stay on top of upcoming market-moving events with our customisable economic calendar.