Lake Resources Limited (ASX:LKE) Managing Director, Steve Promnitz, discusses the company's lithium brine project’s agreement in Argentina, sitting it on the same basis as SQM and Orocobre.
Jessica Amir: Hi, I'm Jessica Amir, for the Finance News Network. Joining me from Lithium Explorer Lake Resources is Managing Director Steve Promnitz. Hi, Steve, welcome back.
Steve Promnitz: Great to be here.
Jessica Amir: So, congratulations, you've just announced a major milestone in a key, tightly-held, world-class, lithium province. What does that mean for shareholders?
Steve Promnitz: It is a major announcement, and why it's important is that we'd actually picked these areas up two years ago. Back when Argentina when was a no go destination, so, it wasn't a focus. It was before the real lithium boom. Unfortunately, their province has had a few issues it's had to deal with, with their properties, getting them resolved. Essentially, we've been frozen out for two years. The fact that we've actually got this agreement signed with the province means that we've now got confirmation of the tenure, and so, now we go through our last process, to actually get down on the ground.
The good part about it is, it's 45,000 hectares, right amongst the majors. It's a very small group of people, very select. We're inside their tent now, and it's looking pretty promising for the future.
Jessica Amir: So, Steve, the leases seem to be located around the border of the salt lake. Does that make it less interesting?
Steve Promnitz: First of all, the majors are in the middle of the salt lake, anyway. But, secondly, when we went there two years ago, we specifically targeted the margins of the salt lakes. Because what happens -they're fog bounded, and that's where you'll get an aquifer extending outand possiblysome really good trap sites to go and drill. It's interesting that since then, some of the players there are actually targeting those things. So we're going out underneath alluvial cover. All of the resources that have been currently developed, they're all spreading out to the margins, looking for these things. We were just ahead of the curve there two years ago. So that's going to be our target.
Jessica Amir: Moving to another lithium project, at Kachi, things seemed to be going a little bit slower there. Just tell us what's happening.
Steve Promnitz: So we put a rig on there in November. We were going just fine before the Christmas break. Perversely, we've actually had issues with exactly the horizon we're after. When you're drilling lithium brines in a salt lake, you want to get nice, sandy horizons, brine in them. So we've intersected that, but it was a combination of the rig, and change in shift, and what have you. We were not able to get any samples out of it.
So we've changed rigs. We've got a rotary rig there now, we've got another one starting in the next couple of days, and so, with two rigs there, we're hoping to get some results out. Somewhere in the next couple of months, we'll see some decent results. Then we'll be back on track. It was a bit of a shame, right in the first few holes, but at least, we're actually finding the horizons we want.
Jessica Amir: Steve, of course, junior companies are always asked about money, but what's happening for you in space?
Steve Promnitz: Obviously, we're drilling at the moment. That consumes money. It's interesting, that our particular situation, we've got a number of options coming due this calendar year. Just in the coming month, we've got a whole bunch of 5 per cent options. They're deeply in the money, so, obviously, as they come to expire, and people are going to convert those, and then, as we look over the whole year, we've got somewhere between $8 and $9 million, just out of the conversion of options, as they expire. On top of that, we've got some pretty exciting projects there, some scale. So I don't think that's going to be too much of an issue.
Jessica Amir: Steve, there's been a lot of oversupply fears and rumours. Is this analyst spin, or are these concerns justified?
Steve Promnitz: It's always hard to know, because we're forecasting, but it's very interesting to note, that if you spent any time in China, it's very hard to imagine that there's actually oversupply issues. We're seeing cars coming out that don't have batteries. We're seeing people who use small products here, even in Australia.
They can't get their lithium battery products for their handheld devices. It's always possible, of course, but it's interesting that every time a major has come out and said: "We're going to deliver, there's not an oversupply, there's not an undersupply issue," they've never delivered on those time frames. Or it's taken longer, and honestly, the demand is stratospheric, so... Time will tell, but I suspect this is just a bit of a shakeup in the market, and then, we'll see it take off again.
Jessica Amir: Steve you're, of course, one of the largest landholders in Argentina. Is scale really a differentiator?
Steve Promnitz: Well, we think it is, and I continually get that supported, when I go to China, to Korea, to Japan. Why? We're seeing Gangfeng, we're seeing CATL, and the other majors in the battery space, out there doing IPOs, rating billions of dollars. So, clearly, they're interested in the battery space. There's demand there.
On top of that, what does that demand mean? They want to see security of supply, and security of supply's becoming a major issue. So when you want security of supply, you go to people that have scale, that have big landholdings, that have projects that are going to be producing, for 10-20 years. That's what people are after. We set this thing up, a couple of years ago, for scale, and as we're seeing the whole sector develop, I think that's the right space to be in.
Jessica Amir: Steve, of course, traders are really enjoying your share price movementof late. Where to next?
Steve Promnitz: Look, we've been at 30 cents, on the back of some of this news. That's no reason why we shouldn't go there, but looking forward, it's interesting that where we are in Hluhluwe all of the majors next to us have market caps that are 20-40 times more than us, so I think there's plenty of potential upside, and that's just on one project. We have another three.
Jessica Amir: Well, Steve Promnitz, congratulations on the announcement, and thank you so much for your time.
Steve Promnitz: It's always a pleasure. Cheers.