LKE 1.96% 5.2¢ lake resources n.l.

Ann: Investor Webinar Alert, page-22

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    IMO Dicko and Katz, didn’t provide much new content to the webinar. It was left to The Don to provide the new detail. Here’s a rough transcript of The Don’s input .


    “It's a real honor to be here today with everybody. This is my first webinar since joining Lake in mid-December. We've been incredibly busy since that time and we've got some great news to kind of walk you through. I thought before I got into the details of our capital raise, which was the news of last week and leading to the SPP, which is being launched today, I would step back because we had several releases kind of back to back. First, really want to talk about some of the good work that was done around reducing our expenditures as David referenced with the conclusion of the DFS in December, we had a natural dual roll off at expenditures and cost into Q1. And as we had previously announced, those expenditures from quarter to quarter were projected to be down around 40%. So we continue to focus on those items that we can control, that being cost and liquidity. And so we were very focused on winding down and reducing expenditures when and where we can. That was subsequently followed up just in the last week or two with another announcement that was really more focused on additional cost cutting up and above what was naturally related to the completion of the DFS. And so as part of that, we announced a very dramatic 50% reduction in our headcount across the organization impacted us globally in every region that we operate. And then along top of that, more typical kind of G&A expenditures will be focused on what we needed to do to complete this joint venture process over 2024. So with that, we were able to actually further announce a differential reduction from Q1 into Q2 as we pursue this joint venture process. And just to reassure you those costs, we were very careful of what cost we took out, although dramatic, they aren't going to impact our EIA submission. And they're also certainly not going to impact the joint venture process, which is really the big focus for Lake. And it's an exciting time in 2024. In addition to those cost cuts, we'll also be continuing to look at other assets. We might be able to rationalize. And again, the focus on all of this is further extending our runway into 2024 to give us the time to go run this Goldman Sachs, as David mentioned, Goldman Sachs process to find a joint venture partner to help fund the development of the Kachi asset. With that, I'll go into our equity raise, which was announced last week. There were really two components to it. One was an institutional lead raise, and the other is the SPP. And all the SPP supporting documentation will be going out this week, actually think today. And so you should be receiving that in one form or another. I would encourage you to take a look at that. It's a great opportunity for our existing shareholders to participate, particularly if it fits with your investment profile. So again, as we think about our liquidity and the importance of maintaining appropriate runway in liquidity through 2024, to put us in the best position to execute on the joint venture, and ultimately, our target of developing Kochi with a strategic partner, we did announce an institutional placement as well as the SPP. But focusing on institutional placement, it was a $15 million capital raise. And fortunately, we're able to add a number of new investors to our new institutional investors to our register. And it really reflects the great work that Karen and David have been doing since both their arrivals to broaden our investor base, both from the retail side, as well as the institutional side. But if you take our pro form of liquidity at the end of 2023, which was a little over $31 million, and then add in the $15 million from the institutional placement, that puts us a little under $50 million on a pro form or basis as of 1231. And again, those proceeds do not include our targeted $5 million proceeds from the SPP. So again, all this is geared towards providing the liquidity that we need to go out and appropriately pursue this joint venture as we go into the market sourcing our new strategic partner. As we think about the strategic delivery of Kochi over the next 12 months and even beyond, first and foremost, we really had to focus on the liquidity at the lake parent level, which we have done. And this is part of this. The SPP is an important part of this as well. And once that's complete, in parallel, we have been running this joint venture process, which I'll get into a little bit more with Goldman Sachs. But the way to think about the project level versus Lake parent is at the project level, the project being Kochi again, working with Goldman, our focus is raising both debt and equity from a strategic partner. And I'll get into kind of the characteristics of a potential strategic partner that we're looking to bring into Kachi. But the focus is, again, raising both debt and equity at Kochi. And there's plenty of precedent in the market where once you find that strategic partner who would come in as perhaps equity and a long-term offtake, that then those partners would turn and also provide additional capital to fund the activities related to FID, perhaps other activities in advance of actual project development. So I would say the potential strategic partner and selection of that partner at Kachi is incredibly important for our shareholders at Lake the parent. And so our success there is paramount as we move through 2024. Combined with that, though, and what makes Kachi so attractive has been, again, I inherited a lot of great work when I got here and the engagement around UCF and EDC and other ECAs to help support what hopefully will be a longer term, multi-year project finance to the at Kachi. And again, earlier this year, we had an announcement in the market about Citibank and JP Morton. They signed up in effect and signed up in the sense of providing support, openly supporting Kochi projects several years ago, and then posted DFS in the recent elections in Argentina. They came back around and reaffirmed that support. So between the equity that will be focused on raising and the debt, we feel good about the prospects for developing Kachi and bringing Kachi to full production. Lastly, I want to just step back and also highlight the structure of our strategic partner process. And so those that might be familiar with M&A merger acquisition type process is very familiar process, kind of a typical two-step process run by Goldman Sachs with assistance from the company in terms of all the information. But first, looking at our potential partner universe, I would say it really falls into five key buckets. Some of these are natural companies that, in many ways, would be what I would describe as short lithium in the out years, meaning they're going to be selling cars or batteries, and they'll be selling cars that have obviously a lithium-powered battery as part of them. So they know at some point in the future they're going to need vast amounts of lithium, and that's what would make Kachi so appealing to them. And then on top of that, there's lithium producers on other oil and gas companies, again, with the broad nature of Kachi, it's a very natural, it's a very familiar type of type development and extraction for oil and gas companies, then sovereign wealth funds and private equity funds, which would primarily be looking at this more from an investment perspective, perhaps. But a very wide net, they were reaching out to four potential partners for Kachi, and I say partner or partners, so you can actually end up with multiple partners coming in into the equity at Kachi. From a timeline perspective, these processes typically aren't measured in days or weeks, but they're actually measured in months because what you really want to do is go out and canvas the potential investor universe, make sure you've got a very competitive process, make sure you've got all the interested parties involved. So you really want to run a very robust process. From a launching perspective, we announced late November, the engagement of Goldman, that followed a lot of time spent with Goldman by the management team to make sure that Goldman was the right partner for us to go out and canvas the market, obviously they're very active in the space, but officially launching in January of this year, multi-processed to go out to the market, test appetite, bring people into the process, sign them up under a non-disclosure agreement, give them access to, need information through a virtual data room and engage with management when and where needed, leading to then early indications, non-binding indications, and from that then, you typically move into round two, which involves selecting, you know, down selecting a number of potential partners and carrying them through, hopefully then, to conclusion, which we estimate to be some time each three or Q4, which then again, matches very well with the liquidity, our starting liquidity balance that we had at 12 31, matched with the funds raised through our institutional placement, as well as then our SPP.”


    DYOR


 
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