Lake Resources NL (ASX:LKE, OTCQB:LLKKF) and technology provider Lilac Solutions, Inc have cemented their relationship by finalising a partnership for technology and funding to develop the Kachi Lithium Brine Project in Argentina.
Under the terms of a partnership earn-in, Lilac is now able to achieve an equity stake in the project in return for providing its leading technology and expertise to advance the project.
The partnership is poised to become a producer of some of the highest quality lithium on the market, with recovery rates of 80-90% and lithium carbonate purity of 99.97%.
This will be made possible by utilising Lilac’s efficient direct extraction method that sets a new industry standard for environmentally friendly production methods that don’t require sacrificing quality.
Market responds
The market responded quickly and decisively as Lake returned to normal market trading, raising the share price to A$0.63, a change of 22.4%, within an hour of opening, a clear demonstration of investor confidence in the technology partnership.
More than 18 million shares changed hands within the first hour while Lake's market cap pre-open was approximately A$574.7 million.
"Technology truly disruptive"
“We have progressed methodically through testing and pilot stage work and are now pleased to have the partnership established,” Lake’s managing director Steve Promnitz said.
“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.”
Under the terms of the deal, Lilac Solutions will first provide its modular processing technology, engineering teams and an on-site demonstration plant in return for a 25% stake in Lake’s Kachi project.
Following the completion of those performance-based milestones, Lilac is expected to provide funds of approximately US$50 million; equivalent to its pro rata share of future development costs.
Lilac’s chief executive officer Dave Snydacker said the Kachi project was 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.
“We’re thrilled to be partnering with Lake, and the Lilac team is excited to demonstrate our technology on site at Kachi and advance the project,” Snydacker said.
Research from Macquarie University and JP Morgan indicates the lithium market is now likely in a perpetual deficit, with supply to struggle to keep up with demand past 2030 unless more projects are defined by the industry.
Export Credit Agency Expression of Interest
Lake Resources has secured an Expression of Interest from the UK’s Export Credit Agency representing 70% of the total finance required to expand annual production to 50,000 tonnes of high purity lithium carbonate equivalent.
The company's chairman Stu Crow said: “With a successful capital raising; partnering with a leader in lithium processing that will place us in the bottom quartile on the cost curve; and getting an Expression of Interest for debt funding from the UK’s Export Credit Agency - it has been a busy few months for Lake.
“We have all worked hard to align Lilac’s industry leading technology and our project funding in order to accelerate development and production of the resource.
“We are closing the gap to being fully funded when you assume the DFS and other requirements for UKEF are met. There aren’t many near term lithium projects that can say they are funded to production.”
ESG policies promote local relationships
According to chairman Crow, all levels of the Argentinean government are invested in the development of lithium production and advancement of local communities, but rely on companies like LKE and Lilac to provide technical innovations that benefit both community and environment.
“The words ESG means one thing to investors, but to our people on the ground and local communities in Catamarca Province, the Lilac processing technology means a much more efficient use of limited water resources, better recovery rates, and less impact on the land surface,” he said.
“We’ll also be adding renewable power to the project as part of the DFS.”
With 25 years of production at 25,500 tonnes per annum LCE using only 20% of the project’s lithium resources and finance to expand the annual production rate to 51,000 tonnes LCE already secured, Lake Resources and Lilac Solutions are well positioned to take advantage of the burgeoning lithium market.