Lake revises PFS amid lithium rally

LAKE Resources has updated its April 2020 prefeasibility pricing assumptions, to dramatically improve the outlook for its flagship Kachi lithium brine project in Argentina.
Lake revises PFS amid lithium rally Lake revises PFS amid lithium rally Lake revises PFS amid lithium rally Lake revises PFS amid lithium rally Lake revises PFS amid lithium rally


Haydn Black


The refreshed PFS made a single change after a tumultuous year in the lithium space, increasing the original conservative price of US$11,000 tonnes of lithium carbonate, with the expectation of a price of $15,500/t.
Its new pricing assumptions are based on ongoing discussions with potential offtakers and recent projections from Benchmark Mineral Intelligence, managing director Steve Promnitz said.
Lithium prices have rallied some 80% over the past three months.
The simple change has increased the post-tax net present value of Kachi by 110% to A$2.1 billion, based on a 25,500t per annum operation, with expected operating costs of US$4178/t.
In addition to boosting the NPV, the internal rate of return is up from 22% to 35%, while annual EBITDA rises from A$245 million to $350 million.
Promnitz says the demand for lithium chemicals and batteries is expected to be one of the largest 21st century growth stories.
In anticipating a rise in demand for battery-grade chemicals, Lake has started work on looking to double production from Kachi, with production of both lithium hydroxide and lithium carbonate on the table.
A second stage would likely reduce total operating costs and deliver economies of scale in capital cost savings.
Lake's selling point is its new technology, licenced from Lilac Solutions, which is expected to deliver reduced water usage that returns the brine to the aquifer, land use and a carbon footprint.
Promnitz said the company was at the vanguard of a new process, that was adapting a direct extraction water processing technology that has been around for decades, which has been proven at the pilot scale in California, generating a 99.97% purity product that has been demonstrated by Novonix to functions well in a NMC622 battery half-cell.
Promnitz said the process had an environmental footprint was around 90% less than traditional brine producers, with a much lower CO2 footprint than hard rock production, while it produces a final product in a fraction of the time of evaporation.
"Direct lithium extraction is going to be the way of the future, and it is highly scalable, it's just adding modules," he said.
The company is funded through construction of its on-site demonstration pilot, with full production planned for late 2023 or early 2024, pending finalisation of finance, but Promnitz said there was plenty of interest from the funding sector.
"We're going to need seven producers the size of SQM each year for the next 10 years," he said.
Stage one of Kachi is expected to need US$544 million, but payback is now targeted two years earlier at just three years.
It also has two other products within the Lithium triangle that were similarly scalable. 
Lake shares were up 2% today to A35.5c, with the stock almost double January's $21 million placement price of 16.5c, which was priced at a premium.
The stock has traded as high as 47.5c this year.