AVZ Minerals Shares Plummet: Have ASX Lithium Stocks Peaked? [ASX:AVZ]

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AVZ Minerals [ASX:AVZ] secured a key mining licence for its Manono Lithium Project.

But that didn’t stop its shares from plummeting more than 15% in afternoon trade.

It all started positively for the lithium explorer.

AVZ shares rose as high as 19% in early trade on what AVZ managing director dubbed a ‘watershed moment’ for the company as it was awarded a mining licence.

But the AVZ stock reversed course and plummeted. At time of writing, the lithium stock flipped the script, trading 19% lower than yesterday’s close on the back of surging volume:

Source: Tradingview.com

AVZ mining licence

AVZ announced that its Manono Lithium and Tin Project has received a mining licence through Dathcom Mining SA, AVZ’s 75% owned joint-venture company.

The Democratic Republic of Congo’s minister of mines has awarded the licence, covering Roche Dure JORC Mineral Resource and Reserve and the Carriere de l’Este exploration targets.

Further locations are expected to be included with a renewed five-year exploration licence, provided future negotiations go well.

In other news, CATH progress has been reported as positive, with closure to be finalised this month.

AVZ continues to hold a 51% majority of stakes in the Manono Project, with CATH soon to claim 24%.

Source: AVZ

AVZ Managing Director Nigel Ferguson said:

The receipt of the Ministerial Decree to award the Mining Licence is leading to a watershed moment for AVZ and our partners…This paves the way for AVZ to start developing what is arguably one of the most important new mining projects in the world that will significantly contribute to the global green energy transition, while also uplifting the lives of the Congolese people…

The Company is advancing its early works program ahead of a Final Investment Decision to commence major works and first SC6 production toward the later months of 2023. We have maintained a strategic approach to developing our world-class Manono Project and we will continue to tick every box that will deliver long-term value to what we believe is the largest global hard-rock lithium resource, based on current Proved and Probable Ore Reserves.’

AVZ media speculation

The company addressed recent media speculation regarding its interest in the Manono Project, deeming rumours ‘spurious and immaterial’.

Speculation was circulating about the validity of the company’s share certificate for Dathcom; a claim said to be brought forward by Dathomir Mining Resources.

Another claim was made that Cominiere had sold its 15% interest in Dathcom to the Jincheng Mining Company, the same interest AVZ is in the process of securing.

Why did AVZ shares fall?

Why did AVZ spike so high in early trade only to plummet hours later?

The afternoon drop could reflect investors selling into strength on licence news the market likely already expected.

The licence award was hardly a surprise.

But it could have been seen by shareholders as a good exit point, given the morning spike and the wider macroeconomic uncertainties brought on by rate hikes.

Trading in AVZ shares spiked today, well surpassing the lithium stock’s 50-day average:

Source: ASX

Have ASX lithium stocks reached their peak?

Lithium stocks enjoyed one of the strongest rallies on the ASX over the past 18 months.

In fact, the rally was so strong that it propelled eight lithium stocks into the top 10 best performing stocks of 2021 on the All Ords.

But the last few months have seen lithium stocks pull back from their 52-week highs.

High-flyer Lake Resources [ASX:LKE], for instance, is down 28% in the last month.

Another high-flyer, Sayona Mining [ASX:SYA], is down 20% in the past week.

And AVZ itself is down more than 35% this month.

Have gains in the lithium sector been exhausted?

What sectors are still flying under the radar, waiting for a potential rerating?

In a time when Europe is trying to wean itself off Russian energy, there is one sector our experts think is primed for a reassessment.

Ryan Clarkson-Ledward, editor of Exponential Stock Investor, has found an Aussie small-cap that could help Europe in its energy transition.

If you’re interested in finding out more, read more about it here.


Kiryll Prakapenka,

For Money Morning

About Kiryll Prakapenka

Kiryll Prakapenka is a research analyst focusing on investigating the biggest trends in investments. Kiryll brings sound analytical skills to his work, courtesy of his Philosophy degree from the University of Melbourne. A student of legendary investors and their strategies, Kiryll likes to synthesise macroeconomic narratives with a keen understanding…

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