Substantial resource upgrade fails to curb Core Lithium sell-off

Not even a substantial resource upgrade could help Core Lithium (ASX: CXO) escape the broad-based selloff across lithium stocks on Tuesday. The company's stock is down -6.5% at noon.

Ongoing drilling and exploration efforts has extended the flagship Finniss Lithium Project’s Life of Mine to 12 years.

The project's Stage 1 Definitive Feasibility Study announced last July outlined an initial Life of Mine of 8 years.

More specifically:

• Measured and Indicated mineral resource increased by 61% to 13.3m tonnes 1.40% Li2O

• Approximately 70% of the mineral resource estimate is in the higher confidence Measured and Indicated categories

• Ore Reserves Estimate increased by 43% to 10.6m tonnes at 1.3% Li2O

Construction and mining activities are ramping at the Finniss project, with its first lithium shipment slated for the end of 2022.

Why the selloff? 

It's a sea of red for lithium stocks on Tuesday, with most names down between 1-5%.

Another covid outbreak in China has tempered the demand outlook for commodities. At least 6 cites have widespread restrictions, with approximately 30 million citizens facing covid curbs, according to Bloomberg.

Fears of another lockdown has rattled EV shares, with Tesla and Nio down a respective -6.6% and -9% overnight.

Risk sectors such as tech and discretionary headlined losses on Wall Street ahead of the closely watched US inflation report on Wednesday.

In turn, the Rare Earth/Strategic Metals ETF fell -5.4% overnight to a fresh 13-month low.

The ETF is comprised of several major Chines and ASX-listed battery metal stocks and a useful indicator for lithium sector performance and sentiment.

Lynas (ASX: LYC), Allkem (ASX: AKE) and Pilbara Minerals (ASX: PLS) make up approximately 18% of the ETFs net assets.

VanEck Rare Earth/Strategic Metals ETF (Source: TradingView)

It's not a good look when the ETF undercuts recent lows during a time when most ASX-listed names are clinging on recent selloff lows.