Up 58% in 2023, can the Kodal Minerals share price climb higher?

Among UK lithium stocks, one strong player in the new year has been Kodal Minerals (LSE: CODE). Kodal Minerals share price has increased by more than 150% in five years. That’s up 58% so far in 2023 alone.

Is it possible to continue – and can I add stocks to my portfolio?

Improve your prospects

One of the reasons why Kodal has a strong start to 2023 is the deal announced with the Chinese mining group. The conditional funding package is set to boost Kodal’s coffers by around $118m, with a $7m deposit payment already received.

That is positive news, as it will help Kodal develop its flagship Bougouni project in West Africa. You should also help Kodal as it seeks to develop more projects.

Today, Kodal updated the market on its progress. He said that the plan “to quickly move to the construction phase after the transaction is completed and all funds are received“.

The company has continued to carry out site preparation engineering before the full funding is received. Now, it is expected to happen before the end of April. As usual in such situations, however, finalizing the deal subject to regulatory approval needs to be accepted.

Where next for Kodal

One thing about the announcement that would make me not invest in Kodal at this time is that it seems like the current funding package is central to the company’s plans.

That makes sense and explains why Kodal Minerals’ share price soared when the deal was announced. But it also highlights the risks involved if, for whatever reason, the deal falls through. I have no particular reason to expect that to happen. But such an event is always possible until the agreement is completed and the money is in the bank.

If the deal is finalized and Kodal’s main project development moves forward quickly thanks to the funding, I think the share price could increase. What happens depends in part on how successful the test drills are and what they indicate about the commercial prospects for the mine.

With lithium supply in short supply, I expect prices to remain attractive for years to come. This may mean that, with positive test results and commercial scale development, Kodal Minerals share price will rise.

Risk factors

However, I have no plans to invest in Kodal right now.

The Chinese investment shows that Kodal is attracting smart money that understands the lithium sector. But as a private investor, my goals may be different from a strategic investor looking to increase access to lithium.

Kodal’s fortunes are now high on a project in an area with high political risk. It’s not a risk profile that matches your own appetite. So, even though I think the price could go higher, I won’t be on board.