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The Lake NL Resources. (ASX: LKE) the stock price drops on Thursday.
In morning trading, shares of the lithium developer are down 2% at 99 cents.
What’s next for the Lake Resources stock price?
Today’s decline in Lake Resources’ stock price may be short-lived according to a broker’s note on Bell Potter this morning.
The rating reveals that the broker remains very positive on the lithium developer following the announcement a new direct debit agreement and an equity investment.
This allowed Bell Potter to maintain its Speculative Buy rating with a slightly reduced price target of $2.52.
Based on the current Lake Resources share price, this suggests investors could more than double their investment over the next 12 months.
However, Bell Potter warns that its speculative risk rating recognizes a higher level of risk and volatility of returns.
What did the broker say?
Bell Potter points out that Lake Resources has signed a conditional offtake of 25 ktpa and a 10% equity agreement with SK On. This follows a recent agreement with WMC Energy, which is also conditional, for the same levy and capital.
He was happy with the deals and is now waiting for a successful demonstration of DLE technology to reduce risk.
LKE’s Kachi lithium project in Argentina is strategic in terms of scale, applied technology and no-commitment product purchase. Demonstrating the feasibility of lithium extraction by ion exchange is essential to reduce project risks; with a success likely to disrupt traditional lithium-in-brine production. The technology also brings significant ESG benefits, including reduced ground disturbance and water consumption. Key near-term value drivers include the performance of the Kachi demonstration plant and a definitive feasibility study by the end of 2022, followed by progress towards product qualification, compulsory levy and financing from early 2023 for a subsequent final investment decision.