What happens to Core Lithium after Ganfeng retires its substantial shareholder status?

Core Lithium's (ASX: CXO) substantial shareholder, Ganfeng, has decided to retire that status after a partial selldown on Wednesday.

The Australian Financial Review first reported a suspicious 46.4m block trade that afternoon, which was done at $1.05 a share or a 14% discount to the stock's last close.

The selldown likely exacerbated the weakness in Core Lithium shares on Wednesday, down -7.6% to a two-month low.

Ganfeng's statement

Ganfeng's Vice Chairman Wang Xiaoshen said the "decision to divest a portion of our Core shareholding was driven by portfolio weighting considerations and the opportunity to monetise a portion of the investment."

"We remain a supportive partner of Core by virtue of our existing shareholding and binding offtake arrangement and look forward to seeing Finniss progress towards first commercial production," he added.

Core signed a binding offtake agreement with Ganfeng back in August 2021 for 75,000 tonnes per annum over four years.

In addition, Ganfeng invested $34m or approximately 100.6m shares via an equity placement into Core at 33.8 cents.

Selldown implications

Now, Ganfeng no longer qualifies as a substantial shareholder, defined as anyone who holds 5% or more of an ASX-listed company.

As a result, Ganfeng is no longer required to disclose any additional or future selldowns. In other words, it can quietly disappear from the register without anybody noticing.

The ASX 200 bounced sharply on Thursday, up almost 2% before noon. The lithium sector is also following through on this strength, with large cap names like Pilbara Minerals (ASX: PLS), Liontown (ASX: LTR) and Allkem (ASX: AKE) all up around 2-4%.

Core Lithium, which is usually up there with the majors, is struggling for upside, trading flat at the time of writing.

Fundamentally, nothing has changed, with Core reaffirming its schedule to deliver its first lithium spodumene concentrate production in the first-half of 2023. But with the Ganfeng selldown, there's a bit more noise and uncertainty with what it'll do with its outstanding shares.

Core Lithium share price chart