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Date : 18/10/2022

Our Crystal Ball on Lithium

With Ganfeng watering down its ASX lithium stock in Core Lithium, where is the Australian lithium producer headed? 

In recent lithium news, Core Lithium reported that Ganfeng, a significant stakeholder, has offloaded some of the company’s shares. They are a China-based company engaged in researching, developing, producing, and selling deeply processed lithium products. The number of ASX lithium stocks sold was not disclosed, but the sell-down suggests that Ganfeng is no longer a sizable shareholder. It owned more than 6% of Core Lithium ASX lithium stock before the market update.

Back in August 2021, lithium producers Core Lithium and Ganfeng entered a binding offtake agreement for a four-year period for 75,000 tonnes annually. Additionally, Ganfeng made a $34 million equity placement into Core Lithium at a price of 33.8 cents, or around 100.6 million ASX lithium stocks.

RelatedBest Lithium Stocks to Buy in 2023

With the Ganfeng selldown, there is a little commotion and ambiguity around what Ganfeng will do with its outstanding shares.

core lithium ltd asx lithium stock on tradingview

We predicted the shift of Core Lithium 6 months ago

We initially recommended a buy to our members for Core Lithium in mid-September last year, while the lithium exploration and development company’s ASX lithium stock traded for 45.5 cents. About 6 months later, we then advised our members to take profits of half their position, which allowed them to earn a sizable +171% gain in March 2022. 

On 27th July, we recommended our members to sell as CXO has pulled back from its all-time high of $1.65 reached earlier in April down to near its key level of one dollar per share. CXO’s shares have lost about -35% Since April.

The valuation of Core Lithium’s ASX lithium stock was overstretched

CXO and broadly lithium producers’ share prices are mostly driven by the EV hype, which links them immediately with the underlying surge in lithium prices. At some stage, valuations will likely run ahead of fundamentals, which we believe is the case now. A market correction is inevitable once lithium price ASX is wholly disconnected from reality. 

Investors clearly want to see lithium producers fulfil their production commitments through offtake agreements and strategic alliances. However, we believe that overextended lithium spot prices have resulted in overinflated valuations. Thus, the upside will be very much specific to ASX lithium stock, in our opinion.

battery producers asx lithium stock

Worried you missed the boat? Not quite. 

The next rising ASX lithium stock is here. We have another High Conviction Buy with similar attributes to Core Lithium back when we first covered it in September 2021. 

It’s a lithium explorer based out of Western Australia. Strategically, it is a tier-1 mining jurisdiction, and in addition to having sizable access to lithium, they have gold resources, which means they are actively exploring two of the hottest commodities today.

There is aggressive exploration going on for more lithium discoveries

With so much drilling happening, there are multiple catalysts for the ASX lithium stock price to do really well in the coming months. There is a huge upcoming catalyst with the company due to announce their resource estimate drilling results in Q4 this year, and our analysts believe this will present a huge upside to the share price.

Additionally, the company’s director recently purchased shares on the market, which is typically a good indicator. As we speak, the ASX lithium stock is trading at about 60 cents, and several of our members have already purchased shares in this business. 

Our crystal ball on lithium says you would love this high-conviction stock.

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Should You Invest in ASX Lithium Stocks?

According to the US Geological Survey Mineral Commodity Summaries 2022, Australia is home to about a quarter of the world’s lithium deposits.

Whether they are well-established blue chips or speculative penny shares, ASX lithium stocks are currently in high demand. 

As the EV revolution picks up speed, the price of lithium carbonate in China has risen to a record $71,315 a ton, or 1,150% more than the epidemic lows of July 2020. Furthermore, Australia already provides 60% of the world’s lithium, most of which is mined from some of the most productive projects.

The rising demand has influenced the price hike. While China’s economic stimulus and payment incentives have significantly expanded the EV market, the country’s energy crisis brought on by the heat wave and lockdown has caused many domestic lithium producers to reduce production.

The US Inflation Reduction Act has extended hefty tax incentives for electric vehicles on the other side of the Pacific, sparking a bidding war among larger manufacturers for long-term supplies. Australian lithium is frequently chosen by procurement agencies because of the nation’s trustworthy financial and legal institutions.

Tesla, a leading manufacturer of electric vehicles, has agreements for the supply of lithium with companies and developers around the world. Many of those are also listed on the ASX. In fact, the NASDAQ-listed tech giant has signed supply agreements with top ASX lithium producers.

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