Core Lithium Ltd (ASX: CXO) shares had a nightmare finish to last week.
On Friday, the lithium miner's shares crashed 21% to 26 cents.
Investors were hitting the sell button in a panic after the company revealed that it could suspend its production due to falling lithium prices.
It also advised that it has put it BP33 underground development on hold to conserve cash.
Investors may now be wondering if this decline is a buying opportunity. Well, let's find out what analysts at Goldman Sachs are saying.
Are Core Lithium shares a buy?
According to a note, the broker has retained its sell rating on the company's shares.
And while it has retained its price target of 31 cents, which is comfortably ahead of where Core Lithium shares currently trade, the broker has not yet fully updated its model to reflect the news.
In addition, Goldman is warning investors that the suspension of this development and the potential production shutdown could be bad news for shareholders as it could mean another funding round is required.
The broker said:
Given the difficulties associated with mining and construction in the wet season and the focus on reducing expenditure, BP33 early works have been suspended. We have highlighted an increased risk that funding from existing cash/operating cash flows may be insufficient to fund BP33 development, and that possible external funding may take time and be at high rates. We also note that deferring exploration and pre-stripping spend may be insufficient to keep the business in positive FCF (after the equity raise) on our estimates in FY24, while deferring early works on BP33 development increases the risk of a gap in production in FY25.
Core Lithium shares are down 73% over the last 12 months.
