Lake Resources (ASX:LKE) is looking to the future with drilling and testing beyond the level required for the DFS at its flagship Kachi lithium brine project on the same day that Ford announces its Electric F150 Lightning truck.
The expanded program is aimed at accelerating the conversion of inferred resources into higher confidence measured and indicated resources which will allow for an expansion to double future production beyond the 25,500 tonnes per annum of lithium carbonate planned in the Definitive Feasibility Study.
An initial diamond drill program of four holes totalling 1,600m will be conducted, together with brine and sediment sampling and pump testing to refine the resource estimations for a conversion to reserves, with economic assumptions.
This will be carried out on top of current drilling, which is designed to convert resources into reserves as part of the DFS work.
Lake has good reason to be aggressive given the bullish outlook for lithium that has sent prices soaring.
And it is likely to keep climbing with Benchmark Minerals Intelligence forecasting that with the overall market expected to be in deficit, industry sources were flagging prices to rise above US$15,300 per tonne of lithium carbonate this year.
“This drill program will not only support current production, but also allow for further expansion of Kachi’s resource to potentially double production, making Kachi a globally significant project in terms of high purity lithium carbonate production,” managing director Steve Promnitz said.
“We are witnessing considerable interest from potential off-takers for a high purity, sustainable product like we have at Kachi. Volkswagen alone has flagged moves to consume two-thirds of current lithium production by 2030 with its new battery gigafactories, adding to the investments by other major EV and battery makers.
“There is no question that the billions of dollars being invested in the world’s clean energy drive require an increased supply of the necessary battery materials, sustainably sourced.”
Kachi lithium brines project
The Kachi project covers 74,000 hectares of leases over a salt-lake south of Livent’s lithium operation in Argentina.
It currently has a resource of 4.4 million tonnes of lithium carbonate equivalent with 1Mt of that sit in the higher confidence indicated category.
Less than 20 per cent of this resource is used for the planning of the 25,500tpa lithium carbonate production over 25 years, which neatly highlights the scale of the project as it stands.
Lake recently upgraded Kachi’s estimated post-tax net present value – a measure of a project’s profitability – by 110 per cent to US$1.6bn thanks to projected higher lithium prices compared to the price assumption used in the pre-feasibility study.
The refreshed PFS also increased internal rate of return to 35 per cent and estimated annual operating cashflow at US$260m.
Adding support to the company’s goal of producing the cleanest quality lithium carbonate at scale, test work has resulted in the production of high-purity 99.97 per cent lithium carbonate from Kachi brine through the use of direct lithium extraction in pilot modules.
Argentina itself is also shaping up to be a major lithium player with Ganfeng Lithium planning a battery factory in Jujuy Province while BMW signed a supply deal with Livent.
This article was developed in collaboration with Lake Resources, a Stockhead advertiser at the time of publishing.
This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.