The share price of the ASX-listed lithium mining company Sayona Mining Limited (AU:SYA) has been trading down by over 50% in the last 12 months. Analysts see this as a good entry point and predict more than 100% growth in the share price. The stock received a Moderate Buy rating from analysts on TipRanks.
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Sayona Mining Limited is an Australian lithium producer, that operates projects at locations in Quebec, Canada, and Western Australia.
What’s Happening With Sayona’s Share Price?
Recently, the shares have hit a fresh 52-week low of AU$0.13. The recent drop signifies that the value of Sayona’s shares has diminished by 44% in the past half-year. The weakness in Sayona’s shares reflects investors’ apprehensions about the company entering the phase of lithium production at a time when prices are declining.
The stock has also demonstrated volatility over the past month, largely attributed to the broader weakness observed in the lithium industry. This trend is also noticeable among other players in the sector. In the last month, Core Lithium (AU:CXO) witnessed a decline of 40%, whereas Liontown Resources Ltd. (AU:LTR) experienced a decrease of 3.86%.
The Bullish Case
Last week, the company achieved a significant milestone by successfully delivering its first commercial shipment of lithium-bearing concentrate from its North American Lithium project (NAL) in Quebec, Canada. The shipment consists of 20,500 metric tonnes of spodumene concentrate, and the next one is already in line.
This proved that the company not only has lithium deposits but is actually selling them to generate revenues within the first two years after acquiring the project. This also validates Sayona’s capacity to fulfil the increasing global demand for lithium and contribute to the ongoing energy transition.
In July, the company also reported its quarterly production numbers with a strong operational performance. The total ore mined increased by 104% from last quarter to 227,171 tonnes. The spodumene concentrate production jumped by 744% to 29,610 tonnes. On the flip side, the average released price for spodumene was down 33% to $3,256 per tonne as compared to last quarter. As a result, the decline in revenue for the quarter amounted to around A$800 million, representing an 18% decrease.
The company’s progress towards achieving production levels has exceeded its predictions, laying a strong foundation for future targets.
Is Sayona Mining a Good Investment?
Based on analysts’ assessments available on TipRanks, SYA stock is perceived to hold substantial potential for growth and is considered a favorable prospect for investment. The stock has received a Moderate Buy rating, supported by two Buy recommendations.
Nine days ago, Macquarie analyst Hayden Bairstow reiterated his Buy rating on the stock, predicting 77% growth in the share price.
The average price prediction for a 12-month period is AU$0.31, which implies a huge upside of 126.6% from the current price.
Ending Notes
Given the strong growing demand for lithium, Sayona Mining’s NAL project is strategically poised to excel within this expanding market.
The stock’s volatility is a result of the intriguing dynamics within the current lithium market for small players, where any news or development frequently triggers fluctuations in prices. However, once the profits actually start for these players, long-term investors become interested in these stocks, pushing the share price higher.
Nonetheless, the falling lithium price will remain a headwind for the company’s shares, especially after November 2022, when China cancelled electric vehicle subsidies.
