Core Lithium share price spikes despite almost tripled losses in 1H FY23

A man in a hard hat and high visibility vest holds his thumb up in a gesture of confidence with heavy moving equipment in the background as on a mine site as the Chalice Mining share price rises todayA man in a hard hat and high visibility vest holds his thumb up in a gesture of confidence with heavy moving equipment in the background as on a mine site as the Chalice Mining share price rises today

The Core Lithium Ltd (ASX: CXO) share price was among the top performers of the S&P/ASX 200 Index (ASX: XJO) today.

The small-cap ASX lithium share closed the session up 3.09% to a neat $1 on Thursday.

This was despite the lithium miner reporting an almost tripled loss in its 1H FY23 report released today.

Then again, it’s unsurprising for a junior miner to report increased losses when it’s been ramping up investment and operations to commence production at scale.

And 1H FY23 was a milestone period for the company in this regard. Core Lithium has now transitioned from a mine explorer and developer to a mine operator and producer with its first sale during the period.

This makes Core Lithium one of the few ASX lithium companies actually producing lithium. Game-changer.

Let’s check out the half-year numbers.

Core Lithium share price up despite $9.2 million loss

The miner owns the Finniss Lithium Operation on the Cox Peninsula, 88km south-west of Darwin.

It produced and sold its first batch of lithium at the very end of 1H FY23. So, the income from that sale didn’t make it onto the books for the period.

However, in terms of income, rising interest rates throughout 2022 certainly helped the company out. Its ample cash reserves generated more than $1 million in interest in 1H FY23, up from just $150,000 in 1H FY22.

Here’s the key data:

  • Loss of $9.2 million, up from $3.3 million in the prior corresponding period (pcp) of 1H FY22
  • Cash and cash equivalents of $125 million, down from $157 million pcp
  • Total net assets worth $327 million, up from $239 million pcp
  • Earnings per share (EPS) loss of 0.52 cents per share, down from 0.22.

Investors appear unperturbed by the increased operational losses. After the report was released to the ASX at about 2pm today, the Core Lithium share price continued to rise until the market close.

What else happened in 1H FY23?

Among the highlights of the half was mining the first lithium ore from Grants Pit. The company also commissioned its dense media separation plant (DMS) to produce its first spodumene concentrate.

This facilitated Core Lithium’s first sale — a one-off direct shipping ore (DSO) to China. The shipment was trucked to Darwin Port in December 2022 and set sail for China in January this year.

Other highlights of 1H FY23 included:

  • Upgrading the mineral resource estimate (MRE) for Finniss by 28% and the ore reserve estimate (ORE) by 43%. This extended the life of mine estimate to a minimum of 12 years
  • Completed a $100 million capital raise to fund an extensive drilling campaign in 2023, pursue growth opportunities, and provide additional working capital
  • Appointment of CEO Gareth Manderson and COO Mike Stone (CFO Doug Warden has also been appointed in 2023).

What did management say?

In the report, Core Lithium said:

The Company continues to receive strong inbound interest in lithium spodumene concentrate from Finniss and is well-positioned to capitalise on high demand for available battery grade lithium concentrate to complement existing binding offtake arrangements with Ganfeng Lithium and Yahua.

What’s next?

Core Lithium had $125 million in liquid capital at the end of the period, and now that it’s producing lithium, it can start generating revenue. So, the future looks pretty bright for this ASX lithium share.

On Monday, the company reported a more than doubling of the Finniss Lithium Project MRC following further drilling activities. This pushed the Core Lithium share price up by 11%.

The company said further significant growth opportunities exist beyond the currently modelled resource domains at Carlton, Ah Hoy, Hang Gong, and Sandras. Core Lithium will continue exploring this year and will update the global mineral resource and ore reserve estimate for Finniss shortly.

Brokers are divided on Core Lithium stock.

Macquarie retains an outperform rating with an improved 12-month price target of $1.50 following the MRC update.

This implies a potential 50% upside for investors who buy Core Lithium shares at today’s price.

Goldman Sachs is less enthusiastic, with a sell rating and a price target of 90 cents.

Core Lithium share price snapshot

Core Lithium has been one of the favourite ASX lithium shares among investors in recent years.

The stock started a pretty sustained run in early 2021, rising from about 14 cents to $1.50 by April 2022.

As is often the case with young and exciting ASX mineral explorer shares, investors bid up the price based on promise and expected future earnings. Arguably, it ran too hard, and in mid-2022, a correction began.

Enormous fluctuations in the Core Lithium share price have followed.

Over the past 12 months, the Core Lithium share price is up 3.3%.

Over the past six months, it’s down 37%.

In the year to date, it’s virtually steady — down by just 0.3%.

The post Core Lithium share price spikes despite almost tripled losses in 1H FY23 appeared first on The Motley Fool Australia.

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More reading

Motley Fool contributor Bronwyn Allen has positions in Core Lithium and Macquarie Group. 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 positions in and has recommended Macquarie Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia

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