Why the Lake Resources (ASX:LKE) share price is shooting 10% higher today

The Lake Resources N.L. (ASX:LKE) share price is shooting higher on Wednesday following the release of an update on its Kachi operation…

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The Lake Resources N.L. (ASX: LKE) share price is on the move on Wednesday following the release of an update on its Kachi Lithium Brine Project.

At the time of writing, the lithium producer’s shares are up over 10% to 38.5 cents.

What did Lake Resources announce?

This morning Lake Resources announced that it has refreshed its flagship Kachi Lithium Brine Project Pre-Feasibility Study (PFS) based on revised lithium price estimates.

According to the release, this has increased the project’s net present value (NPV) to US$1.6 billion (A$2.1 billion). This compares to its previous NPV estimate of US$748 million (A$1.18 billion). In addition to this, Lake is assessing a potential expansion to the production of lithium carbonate equivalent (LCE) from Kachi. 

The release explains that the Kachi Lithium Brine PFS is now based on 25,500 tpa of lithium carbonate production with an average price of US$15,500 per tonne for high-purity battery grade lithium carbonate (CIF Asia). This compares to its original estimate of US$11,000 per tonne.

Management advised that it made the decision to lift its estimates following ongoing discussions with potential off-takers for high purity lithium carbonate and recent projections from Benchmark Mineral Intelligence.

Lake’s Managing Director, Steve Promnitz, commented: “Updated lithium prices demonstrate just how financially robust the Kachi project is, which could potentially be enhanced with a production expansion. Significant new production is required to meet the forecast growth in demand from EVs and energy storage over the next 10 years.”

“The Kachi project remains highly scalable and the Company is working towards an expansion which would make it globally significant in terms of high purity lithium carbonate production, and well-positioned to supply the expected deficit in battery grade product over the next few years.”

“This is an important differentiator of Lake as it continues to engage with major participants in the battery materials supply chain and electric vehicle makers. These participants are seeking high purity product, that can be scaled up to meet demand and has a measurable ESG benefit. Lake ticks all those boxes,” he concluded.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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