A busy day for Lake Resources has seen the company unveil two major milestones for the development of its globally-significant Kachi lithium brine project in Argentina.
The company has announced robust definitive feasibility study (DFS) results for phase one of the Kachi development and also unveiled a maiden ore reserve statement.
Chief executive officer David Dickson said the phase one DFS and maiden ore reserve confirms Kachi as a tier one project, backed by a significant resource.
“Kachi commands a net present value of $3.4 billion and an internal rate of return of 21% with targeted $31.3 billion revenue and $23.8 billion earnings before interest, tax, depreciation and amorisation for phase one. These are very strong and competitive economics,” Mr Dickson said.
“Demand growth is expected to continue with strong forecasts for the next two decades – at the time our top tier project comes into production. Kachi will be producing a high-quality, high-specification battery grade product to match this increasing demand.”
“This project will bring much needed lithium into the expanding electric vehicle automotive and energy storage systems markets,” he added.
“Currently, lithium demand is on pace to grow from less than one million tonnes lithium carbonate equivalent (LCE) in 2023 to over 4Mt LCE in 2040, a 9% compound annual growth rate.”
Maiden ore reserve
The newly-completed ore reserve statement is a key component for the Kachi phase one DFS.
The basis for the ore reserve statement is hydrogeologic modelling completed for the project that incorporates the recent mineral resource estimate (MRE) and extensive hydrogeological characterisation work completed in 2022 and 2023 including extraction and injection testing.
In late November, Lake unveiled a 250% increase for the measured and indicated resource for Kachi, which climbed from 2.9 to 7.3Mt of LCE defined to a depth of 600m over 143.8 square kilometres.
In total the updated resource estimate now exceeds 10.6Mt of LCE.
Lake’s director of geology and hydrogeology Michael Gabora said the ore reserve for the 25Ktpa operation extracts just a small percentage of the MRE.
“All the ore reserve for the first seven years of operations is in the proved ore reserve category which demonstrates the high level of confidence in the data and modelling work completed to date,” Mr Gabora said.
“More than 90% of the lithium brine continues to be derived from the measured resource through the life of mine, but the competent person has allocated this to the probable ore reserve category.”
“Continued data collection and model updates will most likely result in further upgrades to the Proved Ore Reserve, given the favourable conditions,” he added.
Next steps towards development
The critical next steps for the Kachi project involve investigating opportunities to further improve overall project capital expenditure and operational expenditure, with a final investment decision targeted for Q1 2025.
The completion of the DFS has triggered the commencement of new corporate activity involving leading global investment banking firm Goldman Sachs.
In late November, Lake appointed Goldman Sachs as financial adviser to help explore a potential strategic partnership for Kachi upon completion of the DFS.
Lake currently owns 80% of Kachi Lithium Pty Ltd, with ion exchange direct lithium extraction technology provider Lilac Solutions owning the remaining stake.
The partnership plans to consider a range of funding alternatives including, but not limited to, the introduction of a strategic partner, project finance, pre-payments from potential customers and royalties.
In particular, the strategic partner process will widen the aperture of funding opportunities beyond the current conditional framework agreements.
The companies believe this approach will allow them to better optimise the economics of the offtake, in accordance with what has been seen in the market over the past year.
The search is on for a strategic partner that can provide equity capital, as well as assist in mobilising third-party project financing to fund the development capital expenditures for Kachi.
