3 Lithium Mining Stocks to Sell in August Before They Crash & Burn

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These lithium mining stocks have as sell case behind them. Ioneer (IONR): It has a high cash burn rate and potential for significant shareholder dilution. Sigma Lithium (SGML): Extensive leverage and ...

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The rapidexpansionof lithium production, particularly in China, has resulted in a global oversupply.It should be noted thatChina is one of the key markets for lithium production, as the world’s surplus has been accelerated by lower-than-anticipated growth in the electric vehicle  and energy storage sectors.Source: ShutterstockSigma Lithium Corporation is a commercial producer of lithium concentrate with operations in Brazil. Net loss for the last quarter was $9.3million, compared to $29.8 million in Q1 2023. However, the biggest issue with SGMLin my viewis due to its extensive use of leve","collect":0,"end_time":0,"defaultTopTitle":"investorplace.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"BK4588":"碎股","BK4109":"特种化学制品","SGML":"Sigma Lithium Corporation","BK4585":"ETF&股票定投概念","IONR":"IONEER LTD SPON ADS EACH REP 40 ORD SHS","BK4168":"多种金属与采矿","GNENF":"Ganfeng Lithium Group Co. Ltd."},"translate_title":"3只锂矿股将于8月份在崩盘和烧毁之前出售","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"GNENF":1,"IONR":1,"SGML":1},"content_text":"These lithium mining stocks have as sell case behind them.\nIoneer (IONR): It has a high cash burn rate and potential for significant shareholder dilution.\nSigma Lithium (SGML): Extensive leverage and negative net cash position raise concerns.\nGanfeng Lithium Co (GNENF): Declining stock value and geopolitical challenges affect the company’s outlook.\n\n\n\n\n\n \n\nSource: shutterstock.com/eamesBot\n\n\n\nNow might be a prudent time to consider selling these lithium mining stocks. The rapid expansion of lithium production, particularly in China, has resulted in a global oversupply. It should be noted that China is one of the key markets for lithium production, as the world’s surplus has been accelerated by lower-than-anticipated growth in the electric vehicle (EV) and energy storage sectors.\nDue to the cyclical amount of oversupply and a converse downtrend in battery and EV markets, we could be near the bottom of a cycle for the lithium market in general. Some of these firms have poor balance sheets, troubling valuations, and a worsening outlook.\nWith many great lithium mining stocks to buy out there, it makes little sense to hang on to those who are experiencing problems. So here are three companies that investors should steer clear of.\nIoneer (IONR)\nSource: tunasalmon / ShutterstockIoneer (NASDAQ:IONR) has a number of issues with it as one of those lithium mining stocks that investors should consider selling. The company’s quarterly cash burn rate ($8.3 million) suggests they have about 4.3 quarters of funding left at current spending levels. The recent $25.1 million raise may not be sufficient to reach production. Furthermore, The project is still in the permitting and engineering phase, with construction not yet started. \nThe company recently completed a $25.1 million equity placement. My biggest fear is that shareholders will become increasingly diluted as IONR must raise cash in order for its other long-term financing strategies to take place. It may also significantly take on debt, which reduces its upside from a risk-adjusted basis. Since it has already issued equity in order to stay afloat, my view is that investors will continually become diluted. \nIt has plans such as a potential $700 million loan from the U.S. Department of Energy’s Loan Programs Office, but this is subject to final approval, and it’s unclear when or if this will come through to the company’s balance sheet.\nSigma Lithium (SGML)\nSource: ShutterstockSigma Lithium Corporation (NASDAQ:SGML) is a commercial producer of lithium concentrate with operations in Brazil. Net loss for the last quarter was $9.3 million, compared to $29.8 million in Q1 2023. However, the biggest issue with SGML in my view is due to its extensive use of leverage. The company has significant debt, with total loans and export prepayments of $272.6 million. At the time of writing, SGML has a net cash position of -$95.47 million or -$0.86 per share. Shares outstanding have also risen over the past twelve months, gaining 8.23%. Both of these factors increase the risks of investing in SGML and also decrease its value on a risk-adjusted basis.\nAnalysts have very optimistic targets for the company. Notably, its EPS and revenue are expected to rise 250.76% and 98.17%, respectively. These are huge numbers, that while attractive, may also be setting the company up to fail if it’s unable to meet these lofty expectations.\nGanfeng Lithium Co (GNENF)\nSource:  T. Schneider / Shutterstock.comGanfeng Lithium Co (OTCMKTS:GNENF), a Chinese company, is one of the largest lithium producers in the world. As a penny stock, I think that GNENF is expensive in my view, with a P/E ratio of 13x. The company’s value has cratered 64.83% over the past year due to declining lithium pricing as well as weakness in the Chinese economy that has caused alarm for market observers.\nWhile lithium might be at or near the bottom of its cycle with weaker demand for EVs, I still think that GNENF might be priced at a premium and that it is a falling knife. Indeed, its stock price over the past year resembles a falling knife, and its gains over the past five years have been reduced to the low double digits.\nGNENF’s geopolitical position should also be considered, with many U.S. companies opting to source lithium directly from companies in the U.S.\nOn the date of publication, Matthew Farley did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.\nOn the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article. \nMatthew started writing coverage of the financial markets during the crypto boom of 2017 and was also a team member of several fintech startups. He then started writing about Australian and U.S. equities for various publications. His work has appeared in MarketBeat, FXStreet, Cryptoslate, Seeking Alpha, and the New Scientist magazine, among others.\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\nSubmit\n\n\n\n\n\n\n\nArticle printed from InvestorPlace Media, https://investorplace.com/2024/08/3-lithium-mining-stocks-to-sell-in-august-before-they-crash-burn/.\n©2024 InvestorPlace Media, LLC","kind":"highlight","is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[],"isCommentEnd":true,"newsSizeData":{"likeSize":0,"commentSize":0,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; +claudebot@anthropic.com)","isDev":false,"isTTM":true,"deviceId":"web-server-community-laohu8-v3","version":"4.29.3","shortVersion":"4.29.3","platform":"web","vendor":"web","appName":"ttm","isIOS":false,"isAndroid":false,"isTiger":false,"isTHS":false,"isWeiXin":false,"isWeiXinMini":false,"isWeiBo":false,"isQQ":false,"isBaiduSwan":false,"isBaiduBox":false,"isDingTalk":false,"isToutiao":false,"isOnePlus":false,"isHuaWei":false,"isXiaomi":false,"isXiaomiWebView":false,"isOppo":false,"isVivo":false,"isSamsung":false,"isMobile":false},"href":"/m/news/2459171697"}