Lake Resources share price falls 7% to new 52-week low amid second strike AGM vote

Chair Stu Crow described "a year of significant progress" amid an 80% decline in the share price in 2023.

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The Lake Resources N.L. (ASX: LKE) share price fell to a new 52-week low of 13 cents on Thursday.

The ASX lithium explorer has lost 83% of its share price value since the beginning of 2023.

Today's fall follows the annual general meeting (AGM) held this morning, where shareholders lodged a second strike vote against the remuneration report.

Let's look at what happened.

Lake Resources share price tumbles following second strike

A first strike was recorded at last year's AGM, which meant a resolution had to be put forward this year on whether to spill the board if a second strike was recorded.

If more than 25% of votes cast are against the remuneration report, that constitutes a strike. The vote this year was 50.19% against on proxy votes and 49.9% against on poll votes.

However, the board survived the spill motion, with 69.3% of shareholders voting against it on proxy votes and 71.09% voting against it on poll votes.

Company chair describes 'a year of significant progress'

In his address to investors, Lake Resources chair Stu Crow described a range of operational steps as "a stellar achievement for one year".

He cited key steps on resource and project definition, pilot testing and a "bankable DFS with robust project economics" that is now in place.

Crow also claimed a "ringing endorsement" from Exxon Mobil Corp on direct lithium extraction (DLE) technology.

He said:

Exxon Mobil announced that they will be using conventional oil and gas drilling methods to access lithium rich salt water, and will use direct lithium extraction technology to extract lithium from that salt water. That remaining water will be reinjected into underground reservoirs – a process Lake has proved in one of the world's largest field testings.

The DLE process produces fewer carbon emissions than hard rock mining and requires significantly less land. With DLE being a critical part of the forecast global battery grade lithium carbonate supply in 2030, we are pleased to be part of the future of sustainable lithium supply.

While falling lithium prices are a major headwind for all ASX lithium shares these days, Crow commented that the spot China lithium price "is not an accurate reflection of the private market".

He said:

On the lithium price, it is my firm belief that the bulk commodity price, so often quoted in supplying lithium to China, is not an accurate reflection of the private market (excluding China) that exists between lithium producers and long-term offtakers.

It is in this private market, where security of long-term supplies is being evaluated and here the real price points are being negotiated.

The chair said Lake Resources would benefit from industry delays in building battery manufacturing plants, which is typically a two to three-year process.

From the remarks made at earnings announcements over the last few months from major lithium producers, they have forecast delays and cost overruns in these projects.

This places Lake in the key position of bringing on supply in 2027 when supplies will be tight and those long-term private supply contracts will be much sought after.

As Lake Resources investors know, that timeline is three years late.

Back in June, the company revealed that it now expected to achieve lithium carbonate production three years late and at half the volume.

Lake Resources expects to deliver lithium carbonate production of 25,000 tpa in 2027. This compares to its previous plan of delivering 50,000tpa of lithium carbonate production by 2024.

The company also released an investor presentation today.

Crow commented:

So reflecting on where Lake is now, compared to where it was last year, it has been a year of significant progress.

What else is happening with Lake Resources?

In other news, Lake Resources announced yesterday that it has appointed Goldman Sachs as financial advisor for the Kachi Project. Its key role will be to find a partner for the project.

Last week, Lake Resources announced a 250% increase in its JORC Measured and Indicated Resource at Kachi. It increased from 2.9 Mt to 7.3 Mt of Lithium Carbonate Equivalent (LCE) at a depth of 600 metres over 143.8 square kilometres. The updated total resource estimate now exceeds 10.6 Mt of LCE.

The news failed to excite investors though, with the Lake Resources share price unmoved on the day.

Motley Fool contributor Bronwyn Allen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Goldman Sachs Group. 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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