Lake Resources pursues swift $20 Million

Company News

by Glenn Dyer

Lake Resources (ASX:LKE) is seeking a rapid $20 million infusion just a week after announcing a second round of cost reductions to safeguard its prized Kachi lithium project in Argentina.

Shares of Lake were placed on a trading halt before Friday's market opening as the company disclosed its intention for a capital raising. On Monday, the details of the heavily discounted $20 million raise emerged, with 224 million shares to be issued at 7 cents each—a 39% discount.

Reports suggest that $15 million will be raised through a placement, while an additional $5 million will be sought from shareholders—a challenging task in the current economic climate.

Despite a notable 28% surge in share price leading up to Thursday's close, Lake's stock remains down nearly 18% year-to-date and a staggering 80% over the past year.

In efforts to fortify its financial position, Lake previously announced cost reductions of up to 60%, including staff layoffs and scaled-back exploration activities, with focus primarily on advancing the Kachi prospect.

Media reports indicate that this latest fundraising initiative aims to bolster Lake's financial stability while it finalizes arrangements for financing the Kachi project. Lake has engaged Goldman Sachs to identify potential major partners and secure a financing deal, with the prospective partners potentially acquiring a 30% stake in Kachi.

However, given the current challenges in global lithium markets and development, this stake may prove insufficient. Additional efforts are underway, with groups like JPMorgan and Citi reportedly collaborating with state-owned export finance entities to secure the remaining 70% of funding required for the Kachi project.

Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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