Core Lithium Ltd
(ASX: CXO)Share Price and News
About Core Lithium
Core Lithium is an Australian lithium developer focused on the Finniss project in the NT. Lithium was first discovered at Finniss in 2016 and the project has grown ever since.
The April 2022 Definitive Feasibility Study (DFS) reported a JORC compliant Mineral Resource of 15 million tonnes (Mt) at 1.3% lithium oxide. The study reported a Pre-Tax IRR of 80%, an NPV of $114m and free cash flows of $158m from $501m revenue. A 180,000tpa operation was anticipated.
Production is suspended right now due to low lithium prices, but the company plans to re-start production and has updated its resource which is now 48.5Mt @ 1.26% lithium. Moreover, the company announced a further Exploration Target of 10.9-16.5Mt at 1.5-1.7% lithium.
Core Lithium's History
Core Lithium began as a junior explorer focused on lithium assets in Australia and was listed on the ASX in 2016. In the same year, it discovered lithium at Finniss and the project has grown ever since.
Its growth accelerated after acquiring key tenements in the Northern Territory, including the Finniss Project. Key moments came when a DFS was issued in 2022 and when production began in 2023.
Unfortunately, the company suspended production in less than a year due to poor lithium prices. The price of spodumene concentrate—lithium ore in layman’s terms— plunged 86% throughout 2023.
Despite suspending production, the company continued to sell stock-piled ore and continued exploration work. And it has plans to re-start production, releasing what was effectively an updated DFS.
It cut mining costs by 40%, processing costs to 33% and increased concentrate production by optimising the plant and simplifying the flowsheet without major capital. Pre-production capex was reduced by 29% to $175-200m from $282m. It anticipated a 20-year mine life with an average concentrate produced of 2,911kt.
Core Lithium's Future Outlook (ASX: CXO)
Core Lithium's future outlook is largely driven by restarting its Finniss Lithium Project, which can only happen when lithium prices recover to more reasonable levels.
CXO's 'Restart Study' was a positive step, showing significantly reduced costs. However, CXO has not yet made a final decision to re-start the project, and will need to raise up to $200m to achieve this. Currently, there's no time frame for re-starting or even making a decision.
‘FID for the Finniss restart will be subject to the approval of the Core Board and securing a suitably attractive funding option’, the board has told investors.
Is Core Lithium a Good Stock to Buy?
From an investment perspective, Core Lithium presents both growth potential and risks typical of a resources developer. It will be easier for it to recommence production with an established project with a defined resource. But the company will need $200m in cash to re-start the project, and lithium prices have some way to recover yet. And so this may be an opportunity for growth-oriented investors with at least some risk tolerance - because no one knows when lithium prices will recover and only then will Finniss restart.
Our Stock Analysis
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Frequently Asked Questions
When lithium prices recover, and that is anyone's guess. CXO has not provided a specific time frame for re-starting having told investors,' FID for the Finniss restart will be subject to the approval of the Core Board and securing a suitably attractive funding option'.