Sayona Mining Ltd (ASX: SYA) shares have been in a tailspin this year. They are currently trading at 2.55 cents each – a painful 64% drop this year to date.

Despite this downward spiral, Sayona Mining shares have rallied 11% in the past week of trade.

Have the tides started to turn for this lithium producer? Or are we simply looking at the result of magnified percentage changes in such low share prices?

Let's see what the experts think about the broader lithium market and the outlook for Sayona Mining shares.

What's driving Sayona Mining shares

The recent uptick in Sayona Mining shares is likely tied to the company's latest investor presentation.

The update touched on its North American Lithium (NAL) operations, confirming an anticipated production of 190,000 to 210,000 tonnes of lithium in FY25.

According to my colleague James, investors also took note of the upbeat commentary surrounding the Moblan project.

Management stated that "the exceptional increase in mineral resources" at the Moblan site reflected the decision to revise its geological model.

This renewed optimism offers a glimmer of hope for Sayona shareholders, who have endured a challenging year largely due to falling lithium prices.

Is there a light in the tunnel?

Lithium prices have been perhaps the biggest drag on Sayona Mining shares this year. Lithium carbonate is down a jaw-dropping 85% from its peak in November 2022.

The decline has been exacerbated by broader market conditions and an oversupply of lithium, which has pressured Sayona shares.

But Sayona's financials haven't exactly been encouraging either.

In the first half of 2024, even though Sayona sold 142% more concentrate than the previous period, it did so at a 34% discount per tonne to its production costs.

This resulted in a cash burn, as its reserves dwindled from $158 million at the end of 2023 to less than $100 million by the end of Q1 2024.

Consequently, it finished the first half with a $32 million loss after tax.

But this has already happened. In investing, we get paid for what happens in the future. And to that note, there's cautious optimism in the air.

Citi's recent forecast of a 20-25% rise in lithium prices over the next few months, following Chinese electric vehicle maker CATL's suspension of its lepidolite mines, could give Sayona shares a much-needed boost.

Meanwhile, those at Tribeca Investment Partners think the recent uptick in lithium stocks is "almost 100% short covering" rather than sector fundamentals.

Sayona has been one of the top 10 shorted stocks since August and was on the list at the start of this week.

Time will tell if lithium prices begin to strengthen.

Foolish takeout

The future for Sayona Mining shares remains uncertain, but there are glimmers of hope if broker targets on lithium come true.

The stock has fallen 74% in the past year, underperforming the broad market by 87% during that time.