Down 30% in a week, is the Atlantic Lithium share price now a bargain?

Down 40% on Friday – then up 15% the next day – on Atlantic Lithium This share price from LSE: ALL. Large price movements always interest me, so I’m interested in learning more about it AIM– registered mining companies.

So green

Atlantic Lithium is looking to develop its first lithium mine in Ghana. The West African country wants to increase its oil exports with metals used in cleaner technologies. In February, Li-Bridge said that global demand for lithium batteries will grow fivefold by 2030.

Last week, Atlantic Lithium stated that “false and misleading“and”in fact it is not true“The report has been issued by Blue Orca Capital.

The report focuses on the activities of the company itself and, partners and shareholders, Piedmont Lithium District. The documents contain serious allegations against Atlantic Lithium. Blue Orca wrote: “We found evidence that mining licenses in Ghana were obtained through what appears to be textbook corruption.”

According to Atlantic Lithium, Blue Orca stands to profit from the fall in Piedmont’s share price because it is short selling shares. Shorting involves borrowing a stock in the hope that it will decrease in value.

One thing that is not in dispute is that Atlantic Lithium needs the Ghanaian parliament to ratify the mining license. Otherwise, it will not be possible to develop the flagship Ewoyaa Lithium Project. Blue Orca doubts an agreement will come.

Given this uncertainty, I don’t think the company’s stock is a bargain.

government relations

It is not uncommon for mining and oil exploration companies to have a difficult relationship with the government. Here are two examples.

Metal GreenX Kab recently sued the Polish government for £ 737m. The company claims that Poland violated its obligations under international agreements by blocking the development of two Green X coal mining projects. The decision has been made by the court, but neither side knows what the outcome will be. The company has a market cap of just over £100m. A decision in favor is therefore likely to significantly boost its share price.

Rockhopper Exploration has successfully sued the Italian government after it introduced a ban on offshore oil and gas drilling. The decision meant that the company could not exploit oil fields in the Mediterranean. The company has been awarded €190m in compensation plus interest – this is six times more than the company’s initial investment. Unsurprisingly, Italy is working hard on the decision.

What do I think?

Making an investment in that company would be too speculative for me.

I prefer stocks of more established companies, such as ing FTSE 100. Some investors find this unpleasant and, perhaps, boring. But as Warren Buffett once said: “Be careful with investment activities that generate applause; big movements are usually greeted by yawns“.

There are many mining and oil and gas companies in Footsie. Many have licenses and drilling rights that are not subject to legal action, or in dispute. If I had some cash, I would be looking to invest in some of these stocks. Especially those that pay generous dividends.