Lake Resource (ASX:LKE) Managing Director Steve Promnitz discusses positive drill results from its Cauchari Lithium Brine Project which adjoins global major projects, what it means for the company and what to expect next for LKE.
Jessica Amir: Thanks for tuning into the Finance News Network. With me today from Lake Resources (ASX:LKE) is Managing Director Steve Promnitz. Steve, welcome back and thank you so much for coming in on a very special day, you've just announced results that I suspect the market has been waiting for, for some time. First results from the Cauchari lithium brine project. Tell us about the news.
Steve Promnitz: Thank you, Jessica. Key takeaways are that we got 480 milligrams per litre lithium. Now, that probably doesn't mean much gobbledygook, but just to put it in context, there's basically three takeaways. First of all, they're similar results from similar horizons as the project right next door to us, and the project right next door to us, is called Cauchari, as well. Ganfeng, the number two lithium producer, has just paid nearly US$400 million to buy half of that, and the best of all is that it's proof positive of a long-held theory of ours. That we can drill alongside these major projects on the margins, and actually find the same sort of results.
Look, we could get 400, we could probably get better numbers or actually targeting deeper horizons, but it's like game on. We've finally demonstrated after more than three years, we've got the same sort of brines as right next door, so yes, it's exciting times.
Jessica Amir: So just remind us, how did you come to acquire this site in such a tightly held region, right next to a major?
Steve Promnitz: If we go back to early 2016, people weren't that interested in lithium. They weren't that interested in Argentina. Just had a change in government. We turned up with a couple of lithium brine experts from Chile and Argentina, and we looked at where could we find a major project, and we fortunately did in Kachi, and when can we find something that's near the majors?
The long-held theory back then was that these things looked like a saucer, so deep in the middle, and thin out on the margins, so you want to be up in the middle. An oil and gas guy that I'd worked with back in the 1990s said, "No, that's not the case. These things look more like rectangles, like swimming pools, steep sides." So, if we drill in the margins, that's going to be the same as drilling out in the middle.
We were fortunate those areas were available, we pegged them. Look, it has taken three years to get to this stage, but now we've actually got results that prove that and next step is then to go and drill at Olaroz as well. It's been a long time coming, but it's good to see those expiration theories come into play.
Jessica Amir: What about Kachi, Steve? Your flagship project. What's the latest there?
Steve Promnitz: As mentioned last time, we're in a pre-feasibility study. We've actually announced an international engineering firm that's assisting us, Hatch. But best of all we're underway with our pilot plant. We're in the design and engineering phase at the moment, getting to construction, and we aim to have a pilot plant showing this direct extraction process operating onsite towards the end of this calendar year. It's traveling well. Now we've got Cauchari underway as well, and then next will be drilling at Olaroz.
Jessica Amir: And Steve, you've just returned from a pretty significant conference on electric vehicles, so you've got your ear really close to the ground. You know what's happening in the sector. What can you tell us? What's the latest?
Steve Promnitz: Bloomberg New Energy Finance, together with UBS and Benchmark Mineral Intelligence held a conference in New York recently, and part of their roadshow around North America. It's interesting that not only are they talking about the real demand, we're seeing more Gigafactories being built, we're seeing more electric vehicle suppliers seeking batteries, we're seeing shortfall on those batteries, but the key news is actually outside of that conference. It's just what's happening in the market.
So Ganfeng back in early April moved in next to us at Cauchari and have moved up to 50 per cent in that project. Since then, in May, they've moved into a project in Mexico, Sonora, and they've purchased I think it's around nearly US$30 million, it's in pounds, but nearly US$30 million for 30 per cent of the company and 20 per cent of that project. So the lithium suppliers are buying projects.
Then on the demand side, we're seeing Volvo sign up a 10-year agreement with LG Chem, and with CATL on providing batteries for 10 years, and we're seeing Volkswagen sign up with Ganfeng lithium on lithium supply for 10 years. There's quite a lot happening.
On top of that, we've had Ford stump up with half a million dollars for a start up SUV producer out of San Francisco, after Amazon, have put $700 million into it. There's a lot happening, and quite often the markets can be a little bit soft, and battery minerals, and we think, "Oh, maybe it's not happening." Like it's coming down the pipe, the big players are moving, the automakers are moving.
So the great thing for Lake Resources (ASX:LKE) is we have a large project which is scalable, those projects are in the best part of the world for lithium brines, they're at the lowest cost, and we continue our discussions, we're quite advanced both in Asia and in North America, in finding the right development partner to take them into production in the near term. It's an exciting time.
Jessica Amir: Very exciting indeed. Well, thank you so much for the update on the sector and congratulations on the drill results, Steve Promnitz.
Steve Promnitz: Thank you.