Why is the Lake Resources share price rocketing 19%?

This lithium share is having a strong day…

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A young male ASX investor raises his clenched fists in excitement because of rising ASX share prices today

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Key points

  • Lake Resources shares are rocketing higher on Monday
  • This follows the release of an update on the Kachi Lithium Project
  • The pilot plant is coming along nicely and is expected to produce its first product in the very near future

The Lake Resources N.L. (ASX: LKE) share price has been a strong performer on Monday morning.

At the time of writing, the lithium developer's shares are up a massive 19% to $1.11.

Why is the Lake Resources share price racing higher?

Investors have been bidding the Lake Resources share price higher today after the company released another update on its Kachi Lithium Project in Argentina.

This follows an update last week which revealed that its partner, Lilac Solutions, was disputing the date that it is due to achieve key milestones relating to the Kachi Pilot Plant. Lilac believes it has until the end of November, whereas Lake Resources says it is until then end of September.

This is important because Lilac will earn a 25% stake if it achieves these milestones by the agreed date.

Today's update

This morning Lake Resources attempted to allay concerns that the previous update alluded to problems at the project.

According to the release, Lake has advised that ongoing work is being done by Lilac at the Kachi Project and all parties are confident that on-site operations will be successful.

Construction of the facility to house the Lilac demonstration plant is now complete and dry commissioning of the demonstration plant commenced last Wednesday.

Furthermore, Lilac has advised that, subject to completion of dry commissioning, it expects to begin wet commissioning of the plant on Thursday September 22. Once wet commissioning is complete, Lilac then expects to begin onsite processing of Kachi brines in the first week of October.

Management also notes that while the test program is based on operating the demonstration plant for 1000 hours, it is anticipated that the first 2000 litres of lithium concentrate produced from the demonstration plant will be sent for conversion into lithium carbonate once delivered. Lake proposes that this final lithium product will then be qualified by a tier one battery maker to validate product specifications.

Finally, Lake revealed that offtake discussions continue to advance and new appointments to the Lake board are in final stages of consideration.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. 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 Scott Phillips.

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