The Lake Resources NL (ASX: LKE) share price is plummeting this morning after the company hit back at a cutting short attack.
The stock was put into a trading halt on Tuesday following a scathing report from short-seller J Capital.
Today, the company has responded, saying the report "puts forth incorrect information on technical matters and inaccurate assertions on Lake Resources' progress to date".
At the time of writing, the Lake Resources share price is 57 cents, 15.56% lower than it was at Monday's close.
Image source: Getty Images
A quick refresher
J Capital slammed the company's Kachi Project in South America's Lithium Triangle earlier this week.
It claimed the project won't reach production in 2024 as expected. It also alleged direct lithium extraction (DLE) technology – owned by partner Lilac Solutions and integral to Kachi's planned lithium extraction – won't work as intended or avoid damaging environmental impacts.
Finally, the short-seller criticised the company's management for selling shares and handing out options to institutions.
Lake Resources share price falls as company responds
Lake Resources has hit back at J Capital's claims against its Kachi Project, saying the short-seller is "criticising the wrong [extraction] process" and noting the project's commissioning should begin later this month.
"There are over 50 direct extraction processes in use across industries and Lake examined a number of different processes in order to select Lilac Solutions," the company said.
"The report's description of DLE processes does not pertain to Lilac's ion exchange technology."
It also noted Lilac has worked with brine from the project to conduct engineering studies and disputed claims the project will be environmentally damaging. The company said: "Assertions of high costs, high water usage, and toxic waste do not pertain to the Lilac technology."
Lilac's technology uses ceramic beads to extract lithium from brine in a process Reuters describes as "akin to a laundry machine". Acid is then used to strip the beads of lithium.
J Capital claimed the beads only last 150 cycles. However, Lake Resources says tests have found they can stand more than 500 cycles and have been found to exceed 1,000 cycles.
Response to share trading and options claims
The company's response to allegations its management has unreasonably sold stock could also be weighing down Lake Resources shares.
The company said former CEO Steve Promnitz had once inadvertently failed to obtain written clearance to sell shares during a close period.
It has since reviewed its agreements with directors. It's working on updating agreements to ensure directors and senior management are aware of statutory and ASX listing rule-related obligations.
On allegations of issuing options to institutions in return for publishing favourable research, the company said:
Lake has as a listed company from time to time, appointed brokers and corporate advisors. In accordance with what is common practice, the agreed mandates involved the provision of options as part of the fee arrangements.
Lake expects these brokers to comply with their market and regulatory disclosures when issuing research.
Lake Resources share price snapshot
The Lake Resources share price fell 6% on Monday before it was halted on Tuesday morning.
Today's tumble included, the company's stock is 47% lower than it was at the start of 2022. Though, it has gained 63% since this time last year.
