Argosy is now down 58% from its all-time high of 48 cents on 15 January this year.
Argosy is a lithium mining company which owns a 77.5% interest in the Rincon Lithium Project in Argentina.
Argosy’s share price tied to the price of lithium
As you would expect Argosy’s share price is closely tied to the price of lithium.
Below you can see Argosy’s share price compared with the price of lithium over the course of the last year:
Sources: marketindex.com.au and tradingeconomics.com
So, when lithium falls in price as more suppliers come to the market, Argosy’s share price suffers.
Argosy has yet to sell any lithium
The company’s strategy is to ‘fast-track’ lithium production.
To date it has managed to manufacture 1.2 tonnes of lithium from its Stage 1 plant.
From that, 175kg of ‘battery quality’ lithium has been produced.
These are small amounts as they are still testing their process and are not far enough advanced to have significant output.
Though earlier this year there were even debates as to whether they would be able to produce ‘battery quality’ grades of lithium.
While an announcement last month settled this debate, investors may still be unsure as to how the company will cope with falling lithium prices.
Complicating matters is the prospect of an export tax being imposed on the company by the Argentinian government.
Meanwhile, other lithium suppliers on the ASX already have established operations.
It seems Argosy may be trying to enter an increasingly crowded market.
For Money Morning
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