Updated: Apr 9
Lake Resources NL (ASX: LKE) and (FRA: LK1) is a clean lithium developer utilising clean, direct extraction technology for the development of sustainable, high purity lithium from its flagship Kachi Project, as well as three other lithium brine projects in Argentina.
The projects cover 200 square kilometres in a prime location within the Lithium Triangle, where 40% of the world’s lithium is produced at the lowest cost.
Lake aims to become an efficient, responsibly sourced, environmentally friendly and cost competitive supplier of high-purity lithium.
The shares of Lake Resources surged in February 2024 after a venture capital fund headed by Bill Gates invested in the company’s technology partner – Lilac Solutions.
Lilac Solutions is developing a low-cost lithium production technology based on ion exchange technology enabling lithium producers to accelerate project development, boost lithium recovery, streamline operations and unlock new resources. Lithium a key ingredient in Lithium-Ion Batteries is produced from wither rock (spodumene) or salt-heavy water (brine). The brine lithium is most common in aquifers in parts of South America.
Lithium in brine is generally processed by pumping large volumes from underground aquifers to the surface. Then the remaining liquid evaporates leaving the material to be processed and produced into high-grade lithium. The process developed by Lilac pumps the brine through the network of processing modules. The modules extract the lithium from the liquid as it passes through.
The benefits of the Lilac process are reduced time, reduced water loss and land use. The Lilac facility in Argentina has the capacity to produce up to 10 tonnes of lithium a year. Lake Resources plans to eventually have the technology deployed at its Kachi lithium project.
By using the direct extraction process developed by Lilac Solutions, the company can avoid any mining and returns virtually all water (brine) to its source without changing its chemistry. The environmental footprint is far smaller then for conventional brine evaporation processes or hard rock mining – providing a better outcome for local communities and the environment. This especially applies in arid regions where lithium brine producers are facing growing community pressure to change traditional extraction processes.
In a pre-feasibility study using the Lilac direct lithium extraction process a physical footprint of approximately 0.5-1 sqm against recent brine evaporation projects with a 10-15 sqm of evaporation ponds plus processing plant.
Currently “incredibly undervalued”
A research report from Orior Capital in December 2020 noted that Lake Resources “looks incredibly undervalued”. The report noted “Lake Resources is developing 5 lithium projects in Argentina. The company has the largest lithium lease holding in the country, amounting to more than 2,000 kms, all of which it owns 100%. The most advanced of the 5 projects is Kachi, where the company announced a maiden resource of 4.4 million tonnes lithium carbonate equivalent (LCE) in November 2018”
According to the Orior report “The Kachi project has a post-tax, unlevered NPV of US $748 million (AUD $1,148 million) and a post-tax IRR of 22%...this suggests a valuation of AUD $0.29 per share…this is 9 x share price in December 2020”.
A copy of the report can be downloaded here
A November 2020 Lake Resources presentation can be downloaded below
In April 2022 Elon Musk from Tesla tweeted that "Tesla may have to get into the lithium business as costs are insane". This is likely to lead to early stage investment in quality global lithium exploreres and producers such as Lake Resources.
Stu Crow, The Chairman of Lake Resources, commened on Elon Musk Announcement "Nice to see OEM’s finally “getting it” after five years of kidding themselves the tooth fairy or another has them covered! No batteries, no sales! Security of supply across all battery raw materials is key, to rely on battery makers to deliver at scale required is pure folly".
Looks like the lithium sector set for some interesting investment and M&A action in 2022.