Lithium play Lake Resources secures strategic investor for Kachi
Lithium celebrities have come for ASX-listed Lake Resources.
The company, worth $570 million, has signed a deal with US-based lithium extractor Lilac Solutions, which will help get Lake Resources’ South American project into production and include an expected $US50 million investment.
Lilac, which has ties to Bill Gates and Jeff Bezos, is understood to have committed to stump up technology and engineering plants at Lake Resources’ Kachi project, and will take as much as a 25 per cent stake at the project level for its efforts.
Lilac will also be responsible for setting up an on-site demonstration plant, and help fund capital costs required to get into production.
It’s a coup for Lake Resources, which becomes just the latest Australian-based lithium or battery metals play to cash in on huge strategic interest in the sector. Others include Novonix, Jervois Mining and Vulcan Energy.
Lilac’s commitment (and cash) should take Lake Resources one step closer to producing what it calls the “world’s cleanest lithium”.
For the past few years it has been testing the technology with Lilac, which is backed by Breakthrough Energy and whose board is stacked with who’s who of billionaires including Gates, Bezos and Michael Bloomberg.
The deal, expected to be announced this week, sees California’s Lilac finally commit to working with Lake Resources at Kachi.
Sources said Lilac will also have to fund future development costs of the project, estimated to be about $US50 million. The Kachi lease covers 75,000 hectares, and is among the 10 largest brine resources globally, according to Lake. The company expects 25 years of production to use up 20 per cent of the resource, with production in the first half of 2024 expected to be around 25,500 tonnes of lithium carbonate a year.
Lake has previously told shareholders it could cost $US544 million to get to that stage, while it would cost $US107 million a year to run the project. Annual EBITDA could be worth $US260 million, it has said.
The project sits in South America’s lithium triangle, which includes areas in Bolivia, Argentina and Chile that together produce 40 per cent of the world’s lithium. The world’s five largest lithium producers have operations in the region, including Orocobre.
Lilac uses a patented ion exchange technology, which allows it to produce lithium from brine resources at much lower costs and environmental footprint.
Lake is just the latest of lithium miners heading offshore, as demand from batteries and electric vehicles drives up share prices in the sector.
