What happened

Shares of Atlas Lithium (ATLX -2.34%) slipped 3.7% through 12:30 p.m. ET on Tuesday despite reporting some modestly good news this morning.

Atlas is a small lithium mining start-up based in Brazil, and that country was the source of this morning's good news. The company's 100%-owned Neves Project mining operating in Brazil's "Lithium Valley" reached "the longest down-drill lithium mineralization of the Company's current exploration campaign," finding "excellent" concentrations of lithium in the rock most recently drilled -- 1.47%, according to a press release. 

The company noted that other sections of the drill site have recorded lithium concentrations as high as 2.31%.

So what

Atlas Lithium is a tiny, preproduction operation, with just $5 million in the bank and a cash burn rate of nearly $5 million a year -- which doesn't sound great for the company. CEO Marc Fogassa noted, however, that Atlas has received an additional $20 million investment from Lithium Royalty that provides it enough cash to fully fund its planned drilling work in the Valley.

In total, management says it has drilled 25,095 meters out of a planned 40,000 meters of holes, as it tries to nail down the best locations for later lithium mining. Thus, the company is approaching the two-thirds mark on completion of this exploration phase.

Now what

All of which sounds like good news. So why is Atlas Lithium stock down today?

That's not easy to say. If I had to guess, I'd say it's probably because while Atlas Lithium has enough money to complete the exploration phase of this work, it may not yet have the money it needs to shift to lithium production -- and could require some stock dilution, or taking on of debt, to finance that next phase.

In the near term, analysts have Atlas pegged to produce only minimal (less than $1 million) in revenue this year, and only about $1.5 million next year. The company's still very early in its work and not yet a viable business.  

Even if you are optimistic about the potential of this lithium mining stock, investors should probably be cautious and not invest too much until we have a better idea of precisely how profitable this company might become after production actually begins.