Lake Resources (LKE) - $20M Raised to Develop Lithium Carbonate

March 30 2021, 08:37 GMT+01:00

Lake Resources

  • ASX: LKE
  • Shares Outstanding: 1.02B
  • Share price A$0.325 (24.03.2021)
  • Market Cap: A$323M

Lake Resources is an Australia-based company listed in the US and Australia. Their major projects are based in northern Argentina and North Chile.

Lake Resources listed 5 years ago. They visited Argentina in 2015 and 2016, back when a limited number of companies were exploring the lithium market. A huge property package was put in place which has now evolved into 4 different projects with 220,000 hectares (550,000 acres) of allotted land. This project is located in the Lithium Triangle, an area that accounts for 40% of the world's low-cost Lithium production.

Lake Resources  - Redefines Sustainable Lithium Extraction

We spoke with Stephen Promnitz, Managing Director, Lake Resources who gave us updates on their upcoming projects and the status of the Lithium market.

Stephen has a background in science, a double major in geology and chemistry, and later finance, making him an invaluable asset for this ambitious project. Stephen had worked in South America and nearby countries in the 1990s and possesses the knowledge of technical and commercial capabilities of the local workforce.

Company overview

Lake Resources has multiple large assets which enables the company to expand based on the market needs. This is done through the development of multiple projects simultaneously. The company has the property package and now the financial backing to take on a project of this scale.

Lake Resources (LKE) - $20M Raised to Develop Lithium Carbonate

The Cauchari project (2019) is planned in case the market continues to grow and intends to add another 20,000t yearly production capacity, bringing Lake Resources and Lilac Solutions one step closer to being a recognized name in the battery and electric vehicle marketplace. 

After meeting with battery and cathode makers, it was concluded that they needed a product with low impurities and consistent quality. This combined with the quest for a large, sustainable project led them into the path of Direct Lithium Extraction (DLE). It's a not much known about technology, but one that could unlock the economics and timing of the technical recovery process.

Kachi (2018) is the flagship project which aims to deliver over 25,000t per annum in 2024 which accounts for 8% of the current parking share. They intend to double their production capacity to 50,000t by 2025, which would still account for 8% of the market given the exponential rise in demand.Lake Resources (LKE) - $20M Raised to Develop Lithium Carbonate

Partnership with Lilac

Lake Resources partnered with Lilac Solutions, California for 3 years. Before this, Lilac Solutions was working on projects in the Continental US, where the major focus is on strategic and critical materials extraction. Lilac Solutions received backing from the Breakthrough Energy Fund, backed by Bill Gates and MITs The Engine Fund in February 2020. The company has also received backing from other major players in the industry in the past 3 years.Lake Resources (LKE) - $20M Raised to Develop Lithium Carbonate

Sustainable extraction with exceptional purity

Lake Resources has utilized the existing water purification and ion-exchange technology to extract Lithium with a high sought after 99.97% purity.

Since the North Chile and North Argentina area does not possess an excess of water, the process allows the restoration of all the water back to its original source without changing its temperature or pH and causing minimal damage to the surrounding flora and fauna.

The pre-feasibility study (PFS) carried out in April 2020 looked at 25 years of production which would consume under 20% of the total available resources, making it a sustainable project while providing opportunities to scale up based on the market needs. The company also plans to venture into Lithium Hydroxide production in the future.

Lithium with high-purity can be extracted using this process. Although there is a use of reagents in the extraction methodology, making it more energy-intensive, however, the end result is a consistent product.

The company successfully processed Lithium with 99.97% purity in October 2020 at scale. And then in February 2021, the company demonstrated the use of purified Lithium in batteries.

Lake Resources is planning an on-site demonstration plan in 2021 using the existing ion-exchange and water treatment technologies for Lithium extraction. This would be for the benefit of potential off takers and strategic partenrs. Currently, the company is involved with procuring finances for expanding the projects through the support of export credit agencies.Lake Resources (LKE) - $20M Raised to Develop Lithium Carbonate

Lake Resources partners with Novonix

The company demonstrated the use of their DLE product in Novonix batteries which are tested in Nova Scotia in February 2020.

Novonix has been working with Lake Resources since 2020 to carry out extensive battery testing for Lake Resources. The company was formed by a group of technical experts from the Dalhousie University headed by Dr. Jeff Dahn. They are known for testing batteries for major brands including Panasonic, SK, Dyson, Honda, and more.

Growing demand towards sustainable energy

The EU has legislated the whole electric vehicles and battery sector, while China is expected to be on board in the coming years. The Biden administration has also promised a major shift towards renewable energy and reducing their overall carbon footprint under their Green Plan. Auto manufacturers such as General Motors also coming on board, announcing exclusively producing Electronic Vehicles by the year 2035.

The economic relationship

Lake Resources has bagged exclusive rights over large chunks of land in Argentina for Lithium extraction. The company has successfully raised USD$20M. They are currently in the process of assigning intermediate parties to assist with project finance throughout the complete development process. They are collaborating with the cathode, battery, and electric vehicle manufacturers to ensure a product with consistent quality that can be vertically integrated into the supply chain.

The company has identified 3 provinces in the North West region of Argentina which has shown stable growth and support from the local government when it comes to Lithium-based projects.

When is DFS due?

DFS is planned for Q1/22 for which Lake Resources has invested USD$10M over a period of 12-18 months to ensure on-site demonstrations along with social and environmental impact assessment. These studies are scheduled to conclude by mid-2022.

The company has secured an export credit partner group from the UK which has led to a lower price debt arrangement as they head into production.

Lake Resources plans to work with tier-1 battery manufacturers which allows them to endure the market turbulences which establishing their brand as a household name within the industry. These partnerships can lead to sharing of financial resources, technical know-how to improve the product further while integrating as a key part of the developing supply chain.

This is one of the more advanced lithium projects that we interviewed and seems to set to deliver some meaningful catalyst into the market this year. We are intrigued to see how they progress. 

To find out more, go to the Lake Resources Website

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