Despite pockets of optimism among ASX lithium shares today, the Core Lithium Ltd (ASX: CXO) share price is whimpering as we approach the long weekend.
The lithium producer is fetching 18.5 cents apiece in afternoon trade, down 5.1% from yesterday. Meanwhile, other popular names in the space are climbing higher, such as Mineral Resources Ltd (ASX: MIN), which has lifted 5.3% after releasing its quarterly update.
Core Lithium has a catalyst of its own today in the form of an exploration update. However, it doesn't appear to be striking a chord with shareholders.
Image source: Getty Images
Increased confidence not flowing to Core Lithium shares
Expanding available resources is important for miners, helping to ensure they don't get depleted. No resource means no product, and no product equates to zilch revenue.
Last year, Core Lithium worked on avoiding such a fate by conducting an exploration program. The program was segmented into three phases, encompassing drilling works across several targets at the company's Finniss District in the Northern Territory.
The 2023 program is now complete, with Core Lithium summarising its findings.
In the first phase, the company conducted drilling at BP33 and Carlton. Results from this have previously been reported, namely the increase of BP33's mineral resource estimate to 10.5 million tonnes at 1.53% lithium oxide.
What is new knowledge to investors is the drill program in phase two. This phase focused on Lees-Booths, Hang Gong, Ah Hoy, and Penfolds deposits (see the drilling map below for context).
The findings are as follows:
Lees-Booths deposit
- 15 metres at 1.18% lithium oxide from 490 metres
- 20 metres at 1.64% lithium oxide from 485 metres
- 21 metres at 1.42% lithium oxide from 171 metres
- 16 metres at 1.57% lithium oxide from 146 metres
- 11 metres at 1.75% lithium oxide from 168 metres
- 20 metres at 1.02% lithium oxide from 165 metres
- 15 metres at 1.40% lithium oxide from 244 metres
- 26 metres at 1.13% lithium oxide from 246 metres
Penfolds
- 20 metres at 1.20% lithium oxide from 295 metres
- 25 metres at 1.20% lithium oxide from 89 metres
- 20 metres at 1.48% lithium oxide from 155 metres
- 44 metres at 1.23% lithium oxide from 235 metres
- 26 metres at 1.61% lithium oxide from 195 metres
Hang Gong (best result)
- 13 metres at 1.29% from 164 metres
In phase three, the company applied ambient noise tomography to identify new pegmatite bodies. These results were used to inform drilling locations during the third phase. Importantly, Core Lithium highlighted its goal of locating larger targets to drive scale.
The exploration program will be reviewed in the March 2024 quarter to determine its next steps.
Demand driver at risk
Some insight into the demand for lithium in 2024 could also be dragging on Core Lithium shares.
Electric vehicle maker Tesla Inc (NASDAQ: TSLA) published its latest quarterly figures this morning. Inside its presentation, the company warned its vehicle production growth could be "notably lower" than in 2023.
As EVs require lithium for their batteries, a reduced increase in production could mean lower lithium required than originally anticipated, potentially putting more pressure on the already slaughtered price of lithium.
Core Lithium has had to suspend mining operations amid the lower commodity price. Any hint at even softer conditions could cause alarm among investors and Core Lithium shares.
