Lake Resources

Primary ticker: ASX:LKE
Stage of development: Exploration, Development
Commodity: Lithium
Project to promote: The Kachi Project
Project location: Argentina

Live financials

Cash: A$2M
Debt: A$0.8M

Major shareholders:
Lambrecht Investment Trust – 4.9%
202 Ltd – 2.8%
Acuity Capital Investment – 2.8%
S Promnitz – 2.8%
BNP Paribas – 2.2%
Management ownership – 5%

Lake Resources (ASX:LKE, OTC:LLKKF) is Australian listed, developing lithium projects in the Lithium Triangle, where 40% of the world’s lithium is produced at the lowest cost. Lake has the largest lithium lease holding in Argentina of over 2,000 sq km ,100% owned.

Lake Resources has four lithium brine projects in Argentina, with Kachi as the flagship with a resource of 4.4mt LCE placing it in the global top 10 and a Pre-Feasibility Study with results expected shortly. Cauchari, Olaroz and Paso projects adjoin the majors in Jujuy Province, with Cauchari showing high grade results similar to the Ganfeng/Lithium Americas Cauchari project in construction at present.

Kachi is being developed using a disruptive direct extraction process utilising Lilac Solutions ion exchange technology to produce sustainable high purity lithium with a smaller environmental footprint and without the need for evaporation ponds. Lilac’s technology has been supported by the Bill Gates-led Breakthrough Fund. A Lilac pilot plant has produced battery grade lithium carbonate with 99.9% purity and minimal impurities. Samples are planned to be distributed to potential offtake partners soon for qualification. Electric vehicle makers have expressed a need for high purity, sustainable, scalable lithium with production forecast for a 2023 startup at 10,000 tpa expanding to 25,000 tpa LCE.

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Management Profile

Steve Promnitz, Managing Director

Steve Promnitz joined Lake as Managing Director in November 2016, bringing to bear his broad experience of the resources sector from exploration to production with a focus on South America in particular. Previously, Steve was CEO of gold explorer Indochine Mining, and 2IC of Kingsgate Consolidated, a Pacific Rim gold producer with assets in Chile. He held senior corporate finance roles with Westpac and Citi / Saloman Smith Barney. He started his career as a geologist and chemist with global mining heavyweight Rio Tinto before managing Western Mining Corporation’s operations in Argentina. He holds a Bachelor of Science Honours from Monash University and is fluent in Spanish.

Stuart Crow – Chairman and Non-Executive Director

Stuart has global experience in financial services, corporate finance, investor relations, international markets, salary packaging and stock broking. Stuart is passionate about assisting emerging listed companies to attract investors and capital and has owned and operated his own businesses.

What is your rationale for attending 121 Mining Investment?

Lake Resources is developing its lithium projects in Argentina and is seeking cornerstone investors and development partners for its Kachi project as well as potential off take partners as they distribute samples from the Lilac pilot plant using direct extraction.

What recent news would you like to highlight to investors attending?

On the 18th of March, 2020, Lake Resources announced the advancement of pilot plant testing of Kachi brine samples at Lake’s technology partner, Lilac Solutions’ pilot plant in California, USA. Lilac’s technology was supported by the Bill gates-led Breakthrough Fund on 21 February 2020.

Lake Resources also highlighted in their press release that commissioning has been progressing to be followed by the production of lithium chloride for conversion into high purity, battery grade lithium for distribution to potential off-takers.

What is the focus of your management team for the next 12 months, and what are the key milestones you are looking to reach that you think will add value to the business?

3 Month:

Engage with potential off-take partners after distributing lithium carbonate and lithium sulphate samples from the pilot plant. Close a US$10-20M structured debt facility to fund through to construction finance. Release PFS.

6 Month:

Transport pilot plant to site in Argentina after production of initial samples in the USA. Initiate full studies to allow for construction finance.

12 Month:

Be the first likely future producer of sustainable, low cost, high purity lithium which is in demand by EV makers, together with off-takers confirmed and construction finance discussions underway.

What do you see as the key risks and challenges facing your company at the moment and how are you overcoming these?

Ensuring we have the right partner who requires sustainable, high purity lithium and scalable production to fast track development of our projects to feed into the lithium supply chain.

What do you think makes your company such a compelling investment?

Lake is the only likely future producer of sustainable, low cost, high purity lithium which is in demand by Electric Vehicle makers. The direct extraction technology is supported by some of the best known and largest investors in the world. Lake is currently trading at a significant discount to analyst valuation on our projects from North America and Australia.

Analyst Insight – provided by Independent Investment Research

Lake Resources is an ASX-listed lithium explorer that maintains one of the largest lithium tenement packages in Argentina (~180,000Ha), in close proximity to some of the largest players in the lithium sector. Three key lithium-brine projects are located within an area known as the ‘Lithium Triangle’, which produces half of the world’s lithium.

Lake also holds one large package of lithium pegmatite properties, a somewhat unappreciated source of lithium in Argentina until recently. The three projects – Olaroz/Cauchari, Paso and Kachi – have similar settings to major world-class brine projects being developed in the highly prospective Jujuy and Catamarca Provinces. One project is located next to Orocobre’s Olaroz lithium production and SQM/Lithium Americas Cauchari project.

The Kachi project covers 50,000Ha over a salt lake south of FMC’s lithium operation and near Albemarle’s Antofalla project. Exploration and permitting will provide several catalysts for the company’s growth as these areas are assessed for major discoveries. Lake has defined a large Mineral Resource Estimate (MRE) of 4.4 Mt lithium carbonate equivalent (LCE) at a grade of 211 mg/L Li, and is now working towards a Pre-Feasibility Study, due for completion in early 2020.

The key to the possible technical and commercial viability is the utilisation of ion exchange technology for the direct extraction of lithium from the brines. Lake maintains a partnership with Lilac Solutions to leverage Lilac’s proprietary ion-exchange technology for its Kachi brine project. The shared goal is to establish a rapid, robust and low-cost process for producing lithium at Kachi. Lilac is initiating engineering work to confirm low operating costs for direct production of lithium carbonate or lithium chloride at Kachi, utilising its proprietary technology.

Recoveries of up to 90% have resulted, which are significantly higher than that for evaporation operations, as well as production of lithium within a few hours of commencement of processing, as compared with up to 24 months for traditional operations. The viability of the process, given the altitude and arid conditions at Kachi, is being further tested through a pilot plant, which commenced operating on site in late 2019.