Lilac has been processing various brines for some time, fine tuning the process. LKE alone has been running brine samples for nearly 9 months. ASN ran a large quantity through as well, going so far as to have third parties produce small high quality samples, and had the opportunity to build a Lilac based pilot plant alongside LKE. In my opinion due to the economics of pretreating their brine along with lower Li concentrations and higher impurities, they decided to focus on bromine extraction initially before more recently settling on a preferred design involving production of bromine and lithium through methods that will offset the production costs of both products. Whatever the reason, this has put them behind the LKE Li pilot plant timeframe. LKE has its first module constructed in Oakland California, so credit where credit is due, LKE is getting the attention because it is first cab off the rank. This pilot plant module is being tweaked to ensure it functions well in Argentina. As much as people may argue that LKE is one of several Lilac Solutions partners / customers, this pilot plant is important to prove the Lilac process at scale. They are doing all they can to ensure the modules perform. The LKE pilot plant when commisioned in Argentina will be a real reflection on Lilac. It is their showcase. The recent funding Lilac has procured will allow them to produce the 'beads' at a quantity required for commercial use. It shows a great deal of confidence that Lilac has found the correct ion exchange particle, coating and polymer structure to perform commercially. That means they have found partners that believe Lilac has the right material combinations that will allow the Lithium and Hydrogen ions to exchange without dissolving the coated exchange particles over a short number of cycles along with a resilient polymer structure that allows optimal absorption. This has been the key challenge. Finding an ion exchange particle, along with a protective coating that allows hundreds of uses without greatly impeding the IX properties and the right polymer materials to provide structural integrity while enabling contact channels with the coated particles. No doubt materials and bead component construction may need to differ based on individual brine geochemistry. Some brine may need more resilience in coating, while others with lower Li concentration may need different combinations of materials. I doubt this is a one size fits all solution. So I will repeat, even though Lilac and Lake are separate entities, there is a lot riding on the results of the first pilot plant put into the field. Using a replica of Kachi brine to fine tune the module before the additional 20k litres arrives shows how quickly they are trying to progress this project. They could have waited a couple of weeks. If the Lake pilot plant is a success in the field both companies will stand to benefit. Kachi itself is ideal. Not quite commercially competitive as a brine resource due to low Li concentrations, however pure enough that it requires no pretreatment like oilfield brine, and no significant levels of impurities to be of consequence. This means lower reagent usage and less stress on the polymer structure and coating of the ion exchange particles. This is quite an optimal brine chemistry for Lilac to debut a pilot plant in the field considering it appears their target is to initially make previously uneconomic sources of brine (really talking Kachi chemistry standard and lower) competitive with the top tier Salar resource producers. I have seen some posters say Lilac is just one stage of a complicated process, but that really is an understatement of the Lilac role. A great deal of the conversion of a source, whether leached from spodumene or processed from post evap brine is devoted to removing impurities. With super low impurities in the post Lilac eluate, be it Lithium Chloride or Lithium Sulphate, it is a simple step to produce high quality Li2CO3 or LiOH. If you catch my drift, the lilac stage removes the need for the majority of typical post evap process plant stages and purification circuits. Taking the example of Li Chloride eluate, the additional processing could be limited to dewatering and carbonation to form BG Li2CO3. This simple process could be accomplished offsite in an industrial centre by Lake or a partner, or possibly even by the cathode or cell manufacturer to meet their exacting requirements regarding factors like micronisation etc. if Opex can be competitive with traditional evap pond methods, Lilac has the advantage of flexibility, stability and consistency of production along with much higher recovery rates. Even if Opex is slightly higher than the likes of Livent, the other benefits will outweigh the difference. LKEs Kachi alone has a JORC resource large enough to supply nearly a decade of 2019 global LCE demand assuming an 80% recovery rate and a potential exploration target 4 times larger at Kachi. Then there is Cauchari with proven high grade drilling success and what I consider a more prospective group of tenements nearby to the North East at Olaroz, as yet undrilled. Let me be clear, I'm not suggesting at all that Lilac will put the existing brine producers out of business, but long term it must have most hard rock producers particularly worried. At a $28m market cap, the damage done by poor or desperate financing choices alongside dilution is clear to see. With a high chance of removing that downward pressure - long term holders will know what I mean - there is much to be positive about LKEs future.
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