Lithium stocks are currently the most discussed ones and constitute a hot pick for the investors given the recent boom seen in the sector once again. While on one side we see the support coming in from government-led bodies in terms of investments in the sector, a recent release from Orocobre Ltd (ASX: ORE) has led to a downfall in stock prices of most of the key lithium players. Primarily, the indicative price drop for lithium carbonate seems to have smitten the market and as a result, stocks to the likes of Pilbara Minerals saw a drop of about 7% on December 20, 2018. While there is growth potential, the prevailing negative sentiment on prices and overall market volatility has impacted the lithium sector. Below are three names that have been impacted amongst many other. [optin-monster-shortcode id=”swikrbu1d9j9aq0o4cko”]
Pilbara Minerals Limited (ASX: PLS) – The net cash which comes from the operating activities primarily because of the receipts from the customers amounted to $16.4 million as at first quarter of FY 19. The net cash of $2,248,000 is primarily from operating activities. The market capitalization has since settled at around A$1.5 billion and touched A$2 billion during the year and notwithstanding the considerable recent volatility in global equity markets. The market capitalization of the stock is $1.19 billion at the current market price of $0.635 which is as low as its 52-week low of $0.625. The price is down today.
Kidman Resources Limited (ASX: KDR) – To fund its share of construction of Mt. Holland lithium project the company prepared for a funding term sheet with SQM, following which the lender has agreed to fund the company of $100Mn. The loss for the Kidman Group after providing for income tax amounted to $9,681,568 as compared to 30 June 2017 loss of $31,310,271 as there were no dividends paid, recommended or declared during the current or previous financial year. The market capitalization of the stock is $463.49 million at the current market price of $1.010 which is close to its 52-week low, down 12.9%.
Argosy Minerals Limited (ASX: AGY) – The company has now completed a total of ~38 hectares of lithium brine evaporation ponds and the completed lithium brine evaporation ponds now at a scale for a modular/staged commercial operation. Performance Rights held by Alexander Molyneux of about 5,000,000 are converted by the company and issued as 5,000,000 fully paid ordinary shares after the end of the period on 3 September 2018. The cash reserves at the end of the financial period were $7,336,762 which is essential for working capital. The market capitalization of the stock is $129.29 million at the current market price of $0.135 which is at its 52-week low (down 3.6%).
The headwinds have led to a fall in stock price of another player, Galaxy Resources Ltd (ASX: GXY) by about 10%. Meanwhile, ORE itself is down about 14% post the release of the Olaroz lithium facility update.
With the above developments, investors have dumped many lithium stocks on December 20, 2018 and it will be prudent to see how the sector will emerge post this heavy sell off.
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