As Core unveils plan to restart mine, JP Morgan urges lithium investors to sell on the bounce

Core Lithium says it plans to revive its mothballed operations near Darwin but JPMorgan still believes investors in the sector should take the money and run.

Workers at Liontown Resources’ Kathleen Valley project in Western Australia.

Core Lithium has revealed ambitious plans to revive its mothballed operations near Darwin as one investment bank recommends profit taking on any rally in the lithium sector.

The Core share price jumped 37 per cent to 10c in trading on Wednesday after the company fleshed out plans for lower-cost underground mining at its operations about 90km from Darwin.

Gina Rinehart-backed Liontown Resources is up more than 45 per cent in the past week while PLS, formerly known as Pilbara Minerals, is up 31 per cent since early in April.

The Core mine was the first domino to fall as the Australian lithium sector reeled from a plunge in prices that led to hundreds of jobs losses during 2024.

Core, under the leadership of former Mineral Resources boss Paul Brown, has Morgan Stanley on board as it seeks to raise about $200m needed to get back into production under the new lower-cost mining plan.

Core Lithium’s Finniss operation which could be recommissioned.

Perth-headquartered Core last week paid $US2m to exit a long-term offtake agreement with Chinese entity Sichuan Yahua Industrial Group, which also buys lithium from PLS.

The termination of the offtake deal gives Core more flexibility as its seeks to raise funds with a focus on “minimising dilution for shareholders”.

The Core plan to restart its Finniss operations includes slashing mining and processing costs by 40 and 33 per cent respectively. and boosting productivity.

Core estimates operating costs of $690 –$785 a tonne for 6 per cent lithium spodumene concentrate. That product is currently trading below $US700 ($1082) a tonne, down from the $US8000 a tonne some Chinese buyers were paying in early 2023.

Mr Brown declined to speculate about the price required for Core to press the button on a mining restart.

“Everyone would like to see a higher lithium price. What we wanted to do is rebuild our cost base to be more resilient,” he said.

“What I will say is that even though the lithium price is depressed, we have no end of inquiries around supplying spodumene.”

Mr Brown said the quality of the Finniss deposit and proximity to Darwin Port gave it an advantage over WA rivals which have to cart spodumene hundreds of kilometres to the coast.

Investment bank JPMorgan said it continued to be cautious about lithium and advised clients to sell on the bounce in stock prices.

Its analysts said lithium equities had rallied in the face of ongoing spodumene price weakness and oversupply.

“Our latest review of electric vehicle sales shows a strong start to the year on the demand front, but there continues to be ample lithium supply to meet demand,” the analysts said.

“We recommend profit taking on any rally in the space and switching into cheaper base metal or iron ore names.”

Australian producers face the prospect of increased competition from major projects in Africa and Latin America, where Rio Tinto is investing heavily in brine operations.

Originally published as As Core unveils plan to restart mine, JP Morgan urges lithium investors to sell on the bounce