The Lake Resources N.L. (ASX: LKE) share price is pushing higher on Tuesday afternoon.
At the time of writing, the lithium developer's shares are up almost 3% to $1.29.
This means the Lake Resources share price is now up 19% since the start of the year.
Where next for the Lake Resources share price?
While opinion is fiercely divided on this heavily shorted lithium share, one top broker that is sitting well and truly on the bull side of the fence is Bell Potter.
According to a note released this morning, the broker has retained its speculative buy rating with a trimmed price target of $2.54.
Based on the latest Lake Resources share price, this implies a potential return of almost 100% for investors over the next 12 months.
What did the broker say?
Bell Potter notes that Lake Resources is currently transitioning into project development and has appointed a new CEO to lead the charge. It said:
LKE's near-term outlook centres on delivery of the Kachi project definitive feasibility study, demonstrating larger scale success of the ion exchange direct lithium extraction technology which the project will employ, and ultimately coordinating binding lithium offtake and debt financing arrangements. The March 2021 prefeasibility study pointed to 25ktpa lithium carbonate production at a capital cost of US$544m; the DFS is now assessing a project with 50ktpa production. LKE has sufficient funds to take Kachi to development with cash at 30 June 2022 of $175m at 30 June 2022. A new Managing Director has been appointed to transition the company into development.
However, given the doubts over the company's direct lithium extraction technology, the broker acknowledges that demonstrating that it works will be very important in the near future. As this is not guaranteed, it explains why Bell Potter's buy rating has a speculative warning.
The broker commented:
LKE's Kachi lithium project in Argentina is strategic in terms of scale, applied technology and uncommitted product offtake. Demonstrating the feasibility of ion exchange lithium extraction is key to de-risking the project; success will disrupt traditional lithium brine production. The technology also brings significant ESG benefits including less land disturbance and water consumption. […] LKE is an asset development company with prospective operations and cash flows. Our Speculative risk rating recognises this higher level of risk and volatility of returns.
