4 ASX lithium penny stocks to watch in 2023

Whether firmly established blue chips or exploratory penny shares, ASX lithium stocks are hot commodities right now.

With the EV revolution accelerating, lithium carbonate has reached a record $71,315 a ton in China, 1,150% higher than the pandemic lows of July 2020. And Australia already supplies around 60% of the world’s lithium, most of this in the form of spodumene, mined from some of the most plentiful Projects in the world.

Much of this price increase is due to rapidly increasing demand. Stimulus and cash incentives in China have hugely increased the EV market, while the country’s heat wave and lockdown-induced energy crisis have seen many domestic lithium miners limit production.

On the other side of the Pacific, the US Inflation Reduction Act has extended generous tax breaks for EVs, leading larger manufacturers into a bidding war for long-term supply. And fair or not, Australian lithium is widely preferred by procurement departments, as the country’s trusted legal and financial systems make it a reliable partner.

With EV-induced demand expected to eclipse supply over the next decade, dozens of smaller cap ASX-listed lithium stocks are enjoying explosive share price gains. Many of these are exploratory outfits which have purchased mining rights, and fully expect to be bought out by larger fish once they have established feasibility.

Of course, penny stock investing is already fraught with risk, and exploratory mining only exacerbates the chances of losing capital. Extreme share price volatility is par for the course, making the strategy difficult for the risk-averse.

But there is very real potential for exceptional rewards.

NB: In the UK, penny stocks are generally accepted as those trading under £1 with a market cap below £100 million. In the US, it’s those trading under $5, with a market cap under $300 million.

In Australia, penny stocks enjoy a looser definition, and are often regarded as simply those in the early stages of growth.

These are not recommendations, simply five ASX penny lithium stocks that have experienced rapid growth over the past year. All prices are in Australian dollars unless otherwise specified.

Four ASX lithium penny stocks to watch in 2023

• MinRex Resources (ASX: MRR)

Minrex Resources shares are up 120% over the past year to $0.044. The lithium explorer boasts over 1,000 square kilometres of granted exploration licences across prime tier-one Australian mining jurisdictions. It’s exploring most actively for lithium, but also holds gold, silver, and copper projects.

Earlier this year, investors oversubscribed to a multi-million-dollar placement offering to help fund further lithium exploration, which included a $6.8 million investment from a strategic group of Chinese and Australian miners with a track record of backing success.

It holds cash and cash equivalents of $14.2 million, which it estimates will last the penny stock for the next 18 quarters, which may minimise the risk of further share dilution.

• Global Lithium Resources (ASX: GL1)

Global Lithium Resources shares are up 464% over the past year to $2.20. The ASX penny company is a rapidly growing lithium explorer with a focus predominantly on two prospects: its 100% owned Marble Bar Lithium Project in Pilbara, and the 80% owned Manna Lithium project in Goldfields.

The ASX penny stock has attracted the support of Suzhou TA&A Ultra Clean Technology, as well as heavyweight Mineral Resources, leading to speculation of a future buyout if feasibility is established, given the ‘important asset location synergies’ of the two companies.

The ASX lithium stock made headlines recently as it has signed a non-binding memorandum of understanding with Korean battery manufacturer SK On Co, ‘to explore a range of future business opportunities.’

Managing Director Ron Mitchell enthuses that ‘the scope of this partnership has the potential to strengthen and diversify the future of Global Lithium’s projects in Western Australia both in the near term and in the years ahead.’

• Anson Resources (ASX: ASN)

Anson Resources shares are up 228% over the past year to $0.30. The company is exploring multiple sites, including a world class Western Australian project, its Yellow Cat Project, and the Paradox Basin Project.

However, the 95 square kilometre Paradox Basin Project, located in Utah, USA, is Anson’s crown jewel. In the company’s own words, it’s located ‘on Tesla’s doorstep,’ and ‘well positioned to avail of the push into electric vehicles and battery storage from local sources in the US.’

Further, unlike many ASX lithium penny stock mining sites, the Project already benefits from existing infrastructure including electricity, gas, road, and rail, significantly cutting start-up costs.

Anson has seen a recent share price correction after raising $50 million from global institutional investors from the sale of 139 million additional shares priced at $0.39 a share. However, Executive Chair Bruce Richardson advises that ‘the result of the capital raise is an outstanding endorsement of the Paradox Lithium Project and for ‘made in USA’ battery grade lithium carbonate.’

To qualify for the Inflation Reduction Act EV tax credits, 80% of critical materials must be sourced domestically, or from a country with which the US shares a free trade agreement by 2026.

• Ragusa Minerals (ASX: RAS)

Ragusa Minerals shares are up 283% over the past year to $0.34. Investors have recently been attracted to the ASX penny stock by an update on its Northern Territory Lithium Project, which stated that it has made progress towards the commencement of maiden drilling, a significant checkpoint.

In addition, management has advised that there could be significantly more lithium at the Project than had initially been estimated, though further studies will be needed to confirm this.

Chair Jerko Zuvela enthused that ‘this puts Ragusa in a strong position to rapidly accelerate the development of our project...rapidly progress our NT Lithium Project and realise the massive upside value potential in a Tier 1 jurisdiction close to major infrastructure at a time of record lithium prices.’

Of course, like all ASX lithium penny stocks, the high risk matches the potential rewards.

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