How did the Core Lithium share price gain 300% in the 2022 financial year?

The Core Lithium Ltd (ASX: CXO) share price was on fire in the 2022 financial year (FY22).

Shares in the ASX lithium producer were trading at 24 cents on 30 June 2021, the final day of FY21.

On 30 June 2022, the Core Lithium share price closed FY22 at 96 cents, up a whopping 300% over the 12-month period.

To put that in an even better light, the All Ordinaries Index (ASX: XAO) lost 11% in FY22.

Core Lithium share price hits all-time highs in FY22

Core Lithium broke numerous record highs during the financial year just past.

Shares peaked at the current all-time high of $1.60 on 4 April.

Investors were bidding up the Core Lithium share price amid rocketing prices for lithium over most of FY22.

Lithium is a critical element in modern batteries, valued for its high conductivity and lightweight. And the global battery market was booming over the 12-month period amid fast growing sales of electric vehicles (EVs), with EV batteries accounting for some 70% of global lithium demand.

The company also received a big boost in March, when it announced it had reached an agreement with global EV company Tesla Inc (NASDAQ: TSLA) to supply 110,000 tonnes of lithium spodumene concentrate over four years. Pricing will be referenced to the market price of spodumene concentrate.

Core Lithium’s Finniss Lithium Project, located near Darwin in the Northern Territory will provide the concentrate, which the agreement with Tesla stipulates should commence before 31 July 2023.

The company expects the Finniss Lithium Project to start production by the end of the calendar year.

Another boost for the Core Lithium share price in FY22 was that the company joined the S&P/ASX 300 Index (ASX: XKO) following on its enlarged market cap. As part of the ASX 300, the company will receive more coverage and be open to more fund managers restricted to the larger indexes to invest in.

After a stellar 11 months, however, FY22 ended with a big sell-off.

If not for June…

The Core Lithium share price closed at $1.40 on the last trading day of May.

Had the financial year ended there, shares would have finished up 483%.

But June saw Core Lithium tumble 31% as investor sentiment towards the battery metal took a hit. This came after a number of influential analysts, including the boffins at Goldman Sachs, forecast that due to an overabundance of investment, lithium prices were due for a large short-term pullback despite continuing strong demand.

How that plays out over the coming months remains to be seen.

The post How did the Core Lithium share price gain 300% in the 2022 financial year? appeared first on The Motley Fool Australia.

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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 Tesla. 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.

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