Lake Resources share price dives 9% following explanation to the ASX

This lithium share has just hit a new multi-year low.

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A man in a suit face palms at the downturn happening with shares today.

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It's a case of another day, another multi-year low for the Lake Resources N.L. (ASX: LKE) share price on Monday.

At the time of writing, the lithium developer's shares are down 9.5% to 19.5 cents.

This means that Lake Resources shares are now down over 80% since this time last year.

Why is the Lake Resources share price diving again today?

Investors have been hitting the sell button again on Monday after the company responded to a query from the Australian stock exchange.

Among the queries that the stock exchange operator made was one in relation to Lake Resources' production targets. In June the company said:

Phased approach of 2 x 25Ktpa plants de-risks project execution and accelerates time to first lithium production with clear milestones. […] The plans announced today to the ASX show a clear path to battery grade lithium carbonate production in 2027 and phased expansion to a target of 50ktpa by 2030.

Well, it turns out that what most investors understandably interpreted as production targets were not actually that. Instead, the company was referring "to maximum plant capacity" according to today's response. It explains:

The references to 25,000 tpa and 50,000 tpa of battery grade lithium carbonate in the Announcement refer to targeted maximum plant capacity, not projections or forecasts of the actual amount of lithium carbonate to be extracted from the Kachi Project in any time period.

This appears to have left the market with the feeling that it might (yet again) be expecting too much from Lake Resources in the coming years.

That's if the company's definitive feasibility study (DFS), expected later this year, can even create a compelling reason to actually develop the Kachi project given its rising costs and low production.

It certainly will be an interesting period for this ASX lithium share.

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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