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FTSE lithium shares have struggled over the previous 12 months, partly as a result of sharp drop within the value of the steel. The Atlantic Lithium (LSE:ALL) share value was down 7% in early buying and selling this morning (10 July), compounding the 20% loss over the previous 12 months. It has been the same story for Kodal Minerals (LSE:KOD) shares. Nevertheless, right here’s why these development shares might be due a comeback.
Nicely positioned in Ghana
The drop right this moment within the Atlantic Lithium share value may be put right down to the information launch {that a} member of the workforce was fatally injured in an incident whereas working on the Ewoyaa Lithium mission. That is unhappy information, however I don’t see this as a driver for the inventory going ahead until additional stories come out that counsel there’s a widespread drawback with security.
Regardless of the autumn within the share value over the previous 12 months, I believe the longer term appears brilliant. Late final 12 months, the agency was granted the mining lease for the Ewoyaa Lithium mission in Ghana. The enterprise commented that it’s “one of the lowest capital and operating cost hard rock lithium projects globally”. In different phrases, it’s anticipated to not price so much, however on the flipside be very worthwhile. This bodes very effectively.
The half-year report that got here out in March confirmed that funds are additionally secure. That is normally a big threat for related exploration and mining firms. It had $11.4m of money readily available on the finish of the interval. Additional, with it being listed on the Ghana Inventory Alternate, it ought to be capable of increase contemporary capital sooner or later if wanted.
A key threat stays the lithium value. Any lithium efficiently extracted can solely be bought on the going market fee. Subsequently, if the worth retains falling, income shall be decrease.
Exploring each lithium and gold
The second firm in focus is Kodal Minerals. Because of a robust restoration rally prior to now few months, the inventory is simply down 3% over the previous 12 months. Nevertheless, again in February the inventory was down over 50% from the summer season of 2023.
Kodal focuses on mining and exploration for each lithium and gold. For this reason I just like the inventory, because it’s a barely decrease threat lithium play. Over the previous 12 months, the rally within the gold value has helped the share to maneuver greater, significantly earlier this 12 months.
But lithium is a key focus, with the Bougouni Lithium mission. Drilling programmes have revealed a number of high-grade lithium pegmatite veins, which bodes effectively for industrial success. It has additionally secured funding from different partnerships. This could make it much less prone to go bust from a scarcity of money.
A threat is any delay that may trigger buyers to be dissatisfied. In the meanwhile, the mission is forecasted to supply lithium in This autumn. Any pushback on this to subsequent 12 months may see the share value fall.
Lengthy-term demand
I consider that the position of lithium in batteries for electrical autos implies that demand goes to extend in coming years. This could act to help the lithium value, together with boosting the prospects for lithium-related shares. I’ve obtained each concepts on my watchlist to watch in coming months, prepared to purchase.
