Lake Resources shares sank this week after the lithium miner announced production at their Argentinian Kachi mine will be delayed significantly and will cost a lot more to achieve.
Lake Resources also said their target 50,000 tpa lithium production would not be achieved until 2030 – six years later than the originally guided the 2024 date.
As a result of Lake Resources delays, questions will be asked of London-listed CleanTech Lithium, which is operating in the same geography and pursuing similar lithium extraction methods.
CleanTech Lithium and Lake Resources operate in the ‘Lithium Triangle’ of Argentina, Bolivia and Chile. CleanTech Lithium is focused on Chile, while Lake Resources’ Kachi asset is located in Argentina.
Both companies are pursuing lithium production from lithium brines by employing direct lithium extraction (DLE). The DLE process is experimental and requires companies to employ chemical extraction techniques that avoid environmentally damaging evaporation processes used by the world’s largest lithium brine producers.
Lake Resources delays
It appears those hoping for a quick buck have pulled their cash out of Lake Resources.
Achieving the first production in 2024 would have provided cash flows to support further development of the mine. This is now firmly off the table.
An increase in estimated costs accompanied the dramatic change in the production commencement date. In the 2021 Pre-feasibility study, a capex of $544m was estimated to be required to facilitate the production of 25,500tpa.
Lake Resources now expects capex to be $1.1B -$1.5B for Phase 1. Some investors aren’t hanging around to find out how they will fund this.
Lake Resources CEO David Dickson spoke of managing the vision and reality of taking Lake Resources through to first lithium in 2027. There are huge lithium resources in the lithium triangle but significant work is required to extract them.
“There’s not a huge amount of experience” in building chemical plants required to facilitate direct lithium processing, Dickson said in an investor presentation and added they were bringing in specialists to lead construction.
He also discussed maintaining credibility during their journey to production, which is now considerably longer than first thought.
Highlighting the sheer size of the task in achieving first lithium through DLE, lithium mining giant Albemarle with all its resources and expertise, is targeting 2028 to commence its Chile DLE operation.
CleanTech Lithium
CleanTech Lithium shares fell in the session following Lake Resources announcement in Australia at the beginning of this week.
Although CleanTech Lithium is pursuing DLE lithium production, their specific techniques differ from Lake Resources. This eliminates direct comparison based on respective technology, but questions remain about CleanTech’s implementation timelines and extraction efficacy at scale.
Evaluation of their DLE techniques is ongoing, and investors await further updates.
CleanTech Lithium’s had targeted production in 2024; this has already been revised to 2026 and should alleviate the chance of a nasty surprise similar to Lake’s.
CleanTech released a JORC-compliant resource estimate for their Laguna Verde project of 1.51mt LCE in late 2022, and brokers Fox-Davies estimate CleanTech’s assets could have a collective 4mt resource estimate by H2 2024.
