Lake Resources share price sinks a further 21% to a new 52-week low

Look out below! This lithium share is falling heavily again on Tuesday.

| More on:
A man holds his head in his hands, despairing at the bad result he's reading on his computer.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Lake Resources N.L. (ASX: LKE) share price is having another tough session on Tuesday.

In morning trade, the struggling lithium developer's shares are down a further 21% to a new 52-week low of 30 cents.

This means the Lake Resources share price is now down a massive 78% since this time last year, as you can see on the chart below.

Why is the Lake Resources share price crashing?

Investors have been heading to the exits in their droves this week after Lake Resources released a very disappointing update on the Kachi lithium project in Argentina.

That update has reset expectations for the company's production plans and costs. And as you might have guessed from the share price weakness, this reset hasn't been a positive one.

Instead of delivering 50,000tpa of lithium carbonate production by 2024, management now expects 25,000tpa three years later in 2027.

Making things even worse, the company is also guiding to significantly higher costs than previously planned. Management estimates that its phase one plan has a capital cost of US$1.1 billion to US$1.5 billion with a run rate operating cost of US$4.70 to US$7.10 per kg.

Whereas its pre-feasibility study results for 25,500tpa had a capex of US$544 million and lower costs per kg.

Twice the cost and three years later than planned is not a good look for management. Not that short sellers will mind. As one of the most shorted shares on the Australian share market, short sellers have won big time on this bet.

Some shareholders will no doubt be wishing they had sold their shares back in March when the company's chair, Stu Crow, offloaded just under $4 million worth of Lake Resources shares through a series of on-market trades.

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.

More on Materials Shares

two men in hard hats and high visibility jackets look together at a laptop screen that one of the men in holding at a mine site.
Materials Shares

Own Rio Tinto shares? Here's your quarterly update preview

What is the market expecting from this mining giant?

Read more »

A young woman lifts her red glasses with one hand as she takes a closer look at news about interest rates rising and one expert's surprising recommendation as to which ASX shares to buy
Materials Shares

Why is this ASX lithium stock rocketing 32% today?

Investors are cheering on a big announcement.

Read more »

A couple sits on a sofa, each clutching their heads in horror and disbelief, while looking at a laptop screen.
Materials Shares

These ASX lithium stocks could crash 20% to 40%

Analysts are feeling bearish about these lithium stocks.

Read more »

A man looking at his laptop and thinking.
Materials Shares

What could $1,000 invested in Pilbara Minerals shares become in 1 year?

Is it worth investing in this lithium miner's shares?

Read more »

a man in a hard hat and high visibility vest smiles as he stands in the foreground of heavy mining equipment on a mine site.
Broker Notes

Up 15% in 13 days, is it too late to buy South32 shares?

South32 shares have risen 1%-plus per day for the past 13 trading days. Have investors missed the boat?

Read more »

A female miner wearing a high vis vest and hard hard smiles and holds a clipboard while inspecting a mine site with a colleague.
Materials Shares

Own BHP shares? Here's your quarterly update preview

The Big Australian is releasing its quarterly update next week.

Read more »

A bearded man holds both arms up diagonally and points with his index fingers to the sky with a thrilled look on his face over these rising Tassal share price
Materials Shares

Guess which small-cap ASX mining stock is rocketing 16% on 'outstanding' discovery

This lithium stock is catching the eye today. But what's going on?

Read more »

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

Why is this ASX lithium stock racing 15% higher today?

Investors have been impressed with an announcement this morning.

Read more »