Lithium demand and its price has been on an uptick as the world is moving to cut carbon
emissions by switching to clean energy and switching to electric vehicles is one of the
steps. The primary demand for lithium has so far been driven by rechargeable batteries,
which could bolster to new heights after the mainstream adoption of EVs. Being the lightest
known metal, it is also used in various products to improve strength-to-weight ratio such as
alloys, or in the aerospace industry. Demand for lithium has already started to see a positive
trend as more hybrid vehicles are making their way to fill the time gap required for the
mass production of EVs, development of related infrastructure, etc. A billion-dollar emerging
lithium player in Australia that’s up over a mind-boggling 1,647.8% this year, is Sayona
Mining (ASX:SYA)
About the company
Sayona Mining is an ASX-listed exploration company, primarily focused on the evaluation
and exploration of lithium projects. The company also explores overseas projects, having two
flagship projects in Canada namely – the Tansim Lithium Project and the Authier Lithium
Project. Its Authier Lithium Project comprises a hard rock spodumene lithium deposit while
the Tansim Lithium Project comprises lithium, tantalum and beryllium.
Lithium and Sayona Mining’s price performance
The primary reason behind a massive 1,647.48% price surge this year is the bolstering underlying
demand for lithium. With the demand for battery materials on the rise, shortages in the supply
have clearly been seen, especially with its core ingredient, lithium. SYA has delivered
a massive return of 1,647.48% this year, while the last one-year return stands at 2183%.
Compared with broader markets, the ASX 200 has delivered an 11.86% in the same period,
while the benchmark ASX 200 Materials index (ASX:XMJ) is also lagging with a negative
1.81%.
Q1 FY22 Highlights
Currently, the company is trying to become net profitable and has noticeably reduced
its net loss for the current year. In FY21, Sayona Mining reported a negative net income
after taxes of AU$4.38 million, almost an 18.6% improvement over the FY20 numbers of
negative AU$5.4 million. The underlying positive trend of lithium prices would further help
the company towards achieving net profitability.
Although lithium has seen a surge in demand recently, the market has already discounted
that, and its prices have already surged over 400% this year. However, a multi-fold increase
in its price in a relatively short span of time also raises an alarm for a short- to
intermediate-term correction. Also, commodity-based businesses are cyclical in nature, thereby
they increase the importance of rightly timed investments. A period of stagnant or correcting
prices of lithium might create hinderance towards the path of net profitability for
the company. Therefore, investors must do their due diligence.