Lake Resources Share Price Soars 25% on Lilac Deal (ASX:LKE)

The Lake Resources NL [ASX:LKE] entered a partnership with Lilac Solution for technology and funding to develop Lake’s Kachi Lithium Brine Project in Argentina.

Under the agreement, Lilac will provide technology, engineering teams, and an on-site demonstration plant.

This will earn Lilac a maximum 25% stake in LKE’s Kachi Project in Argentina based on performance-based milestones.

After earning its interest, Lilac will then be expected to fund roughly US$50 million, equivalent to its pro rate share of future development costs.

ASX LKE - Lake Resources Share Price ChartSource: Tradingview.com

Lake Resources NL [ASX:LKE] share price have increased almost 750% over the last 12 months but today’s funding arrangement with Lilac may see further price action ahead as LKE continues to derisk its project finance.

Lake Resources partners with Lilac Solutions

After extensive test work, Lilac and Lake Resources have finally entered a partnership for technology and funding to develop LKE’s flagship Kachi Lithium Brine Project in the lithium triangle.

The arrangement will place project funding obligations on Lilac in return for a minority stake in the project.

This no doubt played a part in the steep share price hike today.

Developing mining companies like LKE require significant up-front funds to develop their mines before they can begin recouping capex outlay.

So Lilac’s involvement — and project funding obligations — take some of the pressure off.

LKE said it will benefit from Lilac’s production process, which is lower-cost and backed by higher lithium recovery rates of around 80% to 90%.

Lilac also aims to produce a better-quality lithium carbonate of 99.97% purity, while also protecting the local environment, including water resources.

Lake’s Managing Director Steve Promnitz said:

We have progressed methodically through testing and pilot stage work and are now pleased to have the partnership established.

Lilac’s technology is truly disruptive as it has taken a non-mining tech solution which cuts operating costs and boosts lithium recovery from our brines.

The process is modular producing high purity lithium and can be ramped up quickly through pilot to commercial stages – this equity stake ensures a rapid commercialization of the Lilac technology at the Kachi site.

A Definitive Feasibility Study (DFS) and an Environmental and Social Impact Assessment (ESIA) covering the Kachi Project are well advanced and targeting completion in Q2, 2022.

Lake is funded to the final investment decision (FID) on construction finance for Kachi, anticipated in mid-2022.

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Lake Resources: the next steps

As end users of high purity battery materials are demanding more environmentally friendly production methods, LKE’s Lilac partnership can cater to this demand.

Lilac’s Chief Executive Officer Dave Snydacker said the Kachi project is a globally significant lithium resource.

With the Lilac technology we can efficiently deliver the large volumes of high-quality lithium chemicals needed by battery makers.

Importantly, this will be done in a way that is environmentally-friendly.

We’ve worked extensively with this brine, generating the data needed for engineering studies, and it is a fantastic fit for the Lilac technology.

Today’s announcement follows LKE securing an Expression of Interest from the Export Credit Agency of the United Kingdom to provide project finance for the first stage of the Kachi Project.

This Expression of Interest is expected to cover approximately 70% of the total finance required to expand production to 50,000 tpa of high purity lithium carbonate equivalent.

Bottom line being that significant developments are being made by LKE to compete in this competitive industry.

So, lithium stocks are on a lot of investors’ minds.

But with so many news items coming out almost daily, it’s hard to keep up and know where to look for lithium investment ideas.

I think this free report on ASX lithium stocks is a great place for anyone who wants further information and ideas.

Additionally, governments and private interests alike are converging on electric vehicles and renewable energy.

But if you’re wondering exactly what this trend means for savvy private investors, I recommend reading our free report on the renewables revolution.

There, our energy expert Selva Freigedo reveals three ways you can capitalise on the US$95 trillion renewable energy boom.

 

Regards,

Kiryll Prakapenka,

For Money Morning

PS: How to Find Promising Energy Stocks — Discover why the energy market is ripe for massive disruption and how to identify innovative energy stocks. Click here to learn more.


Kiryll Prakapenka is an investing autodidact who is passionate about conducting in-depth research on investments. Kiryll brings sound analytical skills to his work, courtesy of his Philosophy degree from The University of Melbourne. A student of legendary investors and their strategies, Kiryll likes to synthesise macroeconomic narratives with a keen understanding of the fundamentals behind companies.


Money Morning Australia