Lake Resources (ASX:LKE) completes $2m cap raise


by Anna Napoli

Lake Resources Limited (ASX:LKE) Managing Director, Steve Prominitz provides an update on progress across the company's project portfolio.

Anna Napoli: Hello. I'm Anna Napoli for the Finance News Network and joining me now from Lake Resources (ASX:LKE) is managing director Steve Promnitz. Steve, welcome back to FNN.

Steve Promnitz: Thank you very much.

Anna Napoli: Lake Resources is developing a number of lithium projects in South America. How's progress?

Steve Promnitz: Things have been at a brisk pace and we're going to see another busy six months coming up. So in the last three and a half years, we've gone from pegging areas in the hearts of the lithium triangle to advancing one project up to prefeasibility study and the final results called Kachi. Another project called Cauchari, where we announced a major discovery. And we hope to emulate that soon at Olaroz. So things progressing well. The lithium sector itself is actually refocusing now on lithium brines from South America. Lithium pricing has come off this calendar year, but the lithium brines that are producing in South America are at the low part of the cost curve. So we've actually seen renewed interest in our company, in our projects from the downstream players.

Anna Napoli: Turning to your projects in more detail, can you tell us a bit more about Cauchari?

Steve Promnitz: Cauchari, we recently announced a major discovery. Right next to us is one of the largest defined resources of lithium brine on the planet, Gangfeng and Lithium Americas. And we were fortunate to show the extension of that area, of that resource into the area we drilled. More than 300 meters, we actually got up to 500 meters of actual water column. And with that very similar grades. Now we could go and drill north and south of that and to find a resource. But what we're thinking of doing is moving the rig up to Olaroz and we'll be talking about that quite soon.

Anna Napoli: What about Kachi?

Steve Promnitz: So Kachi, we defined a resource in November last year, and a way to develop that using a new extraction technology. The company is Lilac, out of the Silicon Valley and they have a way of extracting that lithium in a very environmentally friendly way and a very efficient way, quite low cost.So we're just in the process of finishing a prefeasibility study. Probably around November, we should have that out. Then within sort of eight weeks or so, we should have the pilot plant that showing this new direct extraction technology working on site and then we'll be able to provide product to various downstream parties who we've had interest.And as you would reasonably expect, because batteries are made out of South Korea, Japan, China, that's where we've had the most interest and more recently out of the United States as well.

Anna Napoli: And you mentioned Olaroz before, what's happening there?

Steve Promnitz: We're the only junior that actually has leases next to current production of Orocobre (ASX:ORE), a Brisbane based company, but they've been producing since early 2016. We're fortunate to have those areas. It's taken a while to actually get the permitting, but because of our success in demonstrating how we can drill at Cauchari, we have to emulate that at Olaroz. And then we'll have three projects and that'll be quite unusual for a junior company.

Anna Napoli: Steve, turning to finances and your share price. Can you give us a bit more detail around that, starting with your finances?

Steve Promnitz: So recently in August, September, we closed a capital raising, a vanilla equity, capital raising for $2 million. Unfortunately, it was at a price that was lower than where we were trading. It's not something we necessarily wanted to do, but you've either got to make a decision as to whether you close the hatchets and you don't do much and then you see your share price falter because you don't have any news, or do you keep at it and actually keep delivering news flow. And we've decided to go onto the second stream.

So we've raised $2 million. That sets us up to continue the work at Olaroz and continue our work at the prefeasibility study and the pilot plant, initiating the pilot plant at Kachi. Across the resources sector, if we leave out gold and nickel. There was a report by Bernstein Alliance just the other day that actually said that resources companies are tracking at about the lowest price they've seen since 1999, 2003.So it is unfortunate. We're in this bit of a funk in the markets, but the good thing is that in the medium term, the demand is there for lithium. And so hopefully with continued news flow, we'll see a rebound. We're aiming to engage with somebody downstream, that should also help with the reevaluation.

If we look at companies that have a prefeasibility study on a proven resource at the moment in the market, there are about an $80 to $120 million market cap, we're around $25 million, so hopefully we can get a rewriting over the next four or five months as we move through that process.

Anna Napoli: Final questions, Dave, where do you see this company in 12 months’ time?

Steve Promnitz: In the next three months, we will deliver a prefeasibility study. Then a couple of months after that, we aim to have our pilot plant operating on site. And following on from that, then producing product to go to downstream users. So in the early part of next calendar year, have product that can go into qualification for various different battery makers. That then sets us up well to have a development partner to get Kachi moving.

Simultaneously, the fact that we've announced a major discovery, Cauchari, we'll probably come back and drill some more holes there. We've certainly had a lot of interest in that project because it is next to such a major project going into production next year. Then if we can emulate the same in Olaroz, looking forward 12 months, we'll have a partner at Kachi, getting that in development. We'll probably have something advancing on Cauchari and probably a new discovery at Olaroz. Then two years out, production or two and a half years out, production at Kachi. So it's a pretty exciting time in a pretty exciting space.

Anna Napoli: It was a very busy time for Lake Resources as well. Steve Promnitz, thank you so much for the update.

Steve Promnitz: Thank you, Anna.