Core Lithium Ltd (ASX: CXO) shares have been on a horror run over the last 12 months.
During this time, the lithium miner's shares have dropped a very disappointing 80% to 21 cents.
This has been driven by combination of factors such as weak lithium prices, disappointing guidance, and the suspension of its mining operations.
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Are Core Lithium shares good value?
The team at Goldman Sachs has been bearish on Core Lithium for some time, warning that it was overvalued countless times.
Unfortunately for shareholders, the broker feels the same way about the company today despite its weakness over the last 12 months.
According to a note, Goldman has retained its sell rating and slashed its price target down to just 15 cents.
Based on the current Core Lithium share price, this implies further downside of almost 29% for investors.
What did the broker say?
Goldman highlights that Core Lithium shares are still trading at a premium to peers. It said:
We rate CXO a Sell on: (1) Valuation, trading at a premium on ~1.3x NAV and an implied LT spodumene price of ~US$1,300/t (peer average ~1x & ~US$1,180/t), with the lowest average operating FCF/t LCE on a more moderated production ramp up; (2) Potential resource growth/ development now likely longer dated, (3) Ongoing production/development funding risk.
The broker also has concerns over the potential for a gap in production in FY 2025. It adds:
We reiterate that deferring early works on new mine development, and now suspending mining operations at the existing mine, increases the risk of a gap in production in FY25. Updated guidance for FY24 will be provided with the quarterly, and CXO has advised that it is likely to record an impairment of the carrying value of the Finniss operation in the half year results. We update our earnings for mine suspension/cost deferrals/other impacts (i.e. cutting fines sales), where our 12-m TP falls to A$0.15/sh (from A$0.31).
