I, too, was wondering if someone had any thoughts on the Lilac process. Conveniently for me, the AGM was held in Sydney so I travelled down from the Central Coast to attend for the following main reasons:
- I was interested in meeting the board face-to-face
- I wanted to get a feel for what the board felt was the true 'prize' project
- I had questions regarding the Lilac process, as the Kachi project is likely more dependent on this type of approach than Cauchari or Olaroz
- I wanted to listen in on questions that others may have raised that I hadn't thought about myself
The gathering was very small. Steve, Stu and Nick from Lake, along with Andrew Bursill (company secretary), Kamal Thakkar (the company auditor) and a couple of others from Andrew's firm. There was about five shareholders all up.
Steve is a very capable presenter and did a great job of running through the AGM presentation (the slides for which are accessible through the company website, ASX announcement or posted on HotCopper). I've heard and watched other recorded presentations with him previously, and had thought that he speaks well back then. He's quite a personnable guy and was happy to talk with the few SH's following the meeting.
As the gathereing was small, I was able to hog his attention and ask some questions along with a general discussion on the projects etc.
I have thought for a while now that Kachi is the prize jewel in the company treasure chest - for the same reasons that the company has previously put forward (size/scale, 100% ownership and lack of competitors in the basin, relatively low impurities etc). Sure, the Li concentrations aren't as high as some salars, but then again, they aren't that poor either. Others will disagree with me on that - I've seen disparaging comments on Lake threads in the past about the 'low grades' at Kachi. In this regard, Steve said that the Chinese, Japanese and Korean firms that they have been in contact with are much more drawn to the Kachi project - "they just want to hear more about Kachi - they are less interested in the other projects" or words to that effect.
With the Lilac process, he mentioned that the general extraction process was well established, but that Lilac was a different take on that. He said that there were about five other direct extraction options that they considered, but that Lilac was more appealing due to simplicity (less complex process than some of the others) and some of the consumables are able to be sourced locally in Argentina.
He added that:
- the Lilac process uses small clay pellets (I suspect these are the 'beads' that I've seen referred to somewhere else - can't remember where I've seen that though)
- Lilac can adjust their extraction flowsheet for different brines
- if this extraction method is adopted, then Lake would need to source some of the consumable materials (the clay pellets) from Lilac as this is partly where their IP is tied up
I'm aware that Lilac has also produced Li (I think in the form of lithium hydroxide LiOH) for Anson Resources from a brine concentrate sourced from their Paradox Basin project in USA. Without looking up the Anson announcements, I think that the measured Li concentration from either Clastic Zone 29 or 31 (which is their exploration target zone) so far is around 100 mg/L. It is a 'supersaturated' brine, with very high 'impurities' such as magnesium, iodine, bromine - although I think these could realistically be recovered as a potential marketable products in conjunction with lithium. Partly in conjunction with the Lilac test work, Anson's share price had a second strong surge not too long ago.
My point with the above comments about Anson is that there has been a number of comments regarding the 'unproven' nature of the Lilac process in the Lake threads - sure, it's commercial viability is uncertain, but I think that the Lilac process is actually somewhat 'proven'. The main hurdles for this and Lake will be the scalability of the process and, perhaps, some further refinements for the Kachi 'blend' of brine, but the overall direct extraction method has existed for a while now. In the presentation (refer also to Slide 8), Steve mentioned that they are expecting to have (and presumably announce to the market) figures regarding Lilac's opex and capex costs. The timeline for this is Nov 2018, so I'm sure they would have recieved some ballpark indication on where these figures sit by now. He gave nothing away on this, but the fact that it still forms an important part of the presentation, I read into it that they would probably be commercially viable figures.
I asked about the reinjection of brine rather than complete loss of water by using evaporation ponds. He said that the matter regarding water loss from an arid environment is actually something that is gaining more attention over there. He thinks that concerns will only get stronger with time, possibly to a point that ponds might be frowned upon (or even ruled out in favour of replacing the water back into the aquifer).
After the discussion on the brine projects, I asked Steve about the Catamarca pegmatite project. He indicated that there are so many potential targets in this formation, that it is difficult to rationalise which ones to prioritise. There is less focus on this for the time being (obviously the brines are getting the majority of the attention), and the timeline on Slide 8 also has no mention of anything hard-rock oriented at least until after mid-next year. He said that they were looking at different modelling/concepts to give clues to where the main exploratory work should be focused.
Coincidentally, aside from Lake, this long belt of pegmatite formations is also largely held by Latin Resources (LRS) a company which I also was a shareholder in, albeit for only a few months. I don't buy to trade for short term profit, but I'm grateful that I did on that occasion as things turned very smelly over there. Again, without going back through their announcements, I recall that Latin had repeatedly informed shareholders that permitting for drilling was slow/delayed due to government/bureaucracy, but they expected to receive approvals and be drilling in 'x' weeks etc. These timeframes kept sliding and the same excuses were rolled out. Getting to my point, I was concerned that Lake might be up against the same bureaucratic system with obtaining exploration approvals and would have resulted in endless delays. I didn't mention Latin Resources by name, but it was clear that Steve knew who I was talking about. He did not anticipate any protracted delays, and, in his opinion, the approvals process needed here was just normal provided that you follow the system.
All my questions were well answered by Steve and he didn't avoid or duck around things. He made it clear that there were some things that couldn't be discussed (e.g. the particulars of the Lilac process due to IP issues), which is fine, and I expect that approach from all companies I've invested in.
All-in-all, I've come away from the AGM with greater confidence that there is a big future for Lake.
Hope this helps other holders, particularly the long term ones.
(20min delay)