The company is working on a pre-feasibility study for what is expected to be a scalable, low-cost lithium brine development at its flagship Kachi project, located south of the long-standing production center of Livent (formerly FMC) in the province. of Catamarca.
By the end of the year, Promnitz expects to have on hand a completed PFS, the pilot plant currently under construction operating on-site and likely a signed development partner for what is described as one of 10 world’s best brine resources.
The company could then focus more on its other potential lithium brine and hard rock projects in Argentina.
The Kachi PFS is investigating both the traditional evaporation method and a direct extraction process, offered by partner Lilac Solutions, which is expected to demonstrate superior recoveries and cost reductions shown in laboratory tests, which should place Kachi in the lowest quartile of cash costs.
Less than a year after drilling at Kachi, Lake Resources had identified a lithium carbonate equivalent resource of 4.4 million tonnes from a pristine discovery.
The company’s rapid progress comes against a backdrop of a global shift towards electric vehicles and an expected growing demand for lithium-ion batteries, as well as a series of significant business transactions in the region as players in the industry are preparing to step up their supplies to power the growing number of gigafactories of planned lithium-ion batteries.
“This time, corporate activity is not just junior speculative money, but the big end of town,” Promnitz said.
Chinese company Ganfeng Lithium agreed in April to pay $ 160 million to Lithium Americas to increase its stake in the Caucharí-Olaroz couple development project from 37.5% to 50% – a project adjacent to Lake Resources’ Cauchari project. , after an investment of $ 237 million in 2018.
In the same month, automaker Volkswagen decided to lock down Ganfeng’s long-term lithium supply and announced a $ 1 billion investment in battery business with Swedish battery maker Northvolt AB, the duo planning to build a giga-factory in Germany.
The clear demand for lithium allows Lake Resources to benefit from the growing interest in the sector, just as it pushes Kachi towards large-scale, low-cost development.
“The big guys can’t produce all the lithium they need, so there will be room for other players – but only those with big, scalable projects and a quality product with few impurities,” said Promnitz.
“There are a lot of lithium companies, but there are only a handful that have a big enough project, scalable, in the right address and with the right appeal to downstream players – and we are there. ‘one of them.
“It’s because we have the right address, we still own it 100%, we are in an area known for its low cost production and we have an extraction method that makes it even cheaper and produces a product. High quality.
“And best of all, Lake is not a one-ride pony.
“We have three substantial projects and we are undervalued relative to our peers, so there is an investment opportunity now – which I think will likely disappear before or shortly after our PFS ends at the end of this year. ‘calendar year .”
Besides Kachi, Lake Resources is drilling on its Cauchari brine project, recently reporting high lithium values of up to 538 mg / L from 261 m.
Cauchari adjoins the pre-production area of the Ganfeng / Lithium Americas and Advantage Lithium / Orocobre joint ventures.
Lake Resources was able to anchor the zone in early 2016, after having proposed a different exploration model, valuing the prospectivity in the same basin but on the edge of the salt lake under a thin alluvial cover.
“You’re either in the basin or you’re not,” Promnitz said, “and we’re getting the results now in Cauchari as expected.
“The idea is to descend to the target horizon at around 400m in July, then take the platform at Olaroz, on the other side of the basin from the producer Orocobre and do the same there.”
Orocobre (ASX: ORE) has a market cap of over A $ 735 million (US $ 0.5 billion), having successfully transitioned from explorer to developer and producer of lithium in Argentina.
Lake Resources also has the early stage Catamarca spodumene project in Catamarca province.
The company was relatively early in Argentina, which allowed it to establish the largest lithium landholding of any ASX or TSX listed entity in the country.
“Six months later there were more Australian geos in Salta than I had met in Australia, it changed so quickly,” Promnitz said of running less than four years ago.
Lake closed an increased placement of A $ 2.7 million in June, with funds slated to accelerate drilling at Cauchari and then its Olaroz project, as well as for the Kachi PFS, pilot plant and working capital.
Promnitz meanwhile builds on his past experience in project finance and banking as the company intensifies project finance discussions and discussions with project partners for Kachi.
“Discussions were quite advanced last year, but easing market conditions forced us to wait for the PFS and the pilot plant,” he said.
However, the pace has picked up since the increase in business activity in the sector, with Promnitz due to hold talks in the coming weeks in China, Europe, Japan and the United States.
He said the talks in Asia were prompted by Lake Resources’ inquiry into direct mining, which has a much shorter production path than the 24 months required for traditional pond evaporation methods.
In another case of fortuitous timing, Argentina recently approved plans for a “no different” direct mining method for a French company’s lithium development project in the province of Salta.
Eramet declared at the end of June that it had received the validation of its environmental and social impact study for the plant proposed in its Centenario brine project.
Promnitz said the approval bodes well for Lake Resources’ plans for Kachi.
A phase 1 engineering study on Kachi brine using the Lilac extraction process demonstrated recoveries of up to 90% and the resulting lithium concentrate could be conventionally processed into battery grade lithium carbonate.
“When we recently visited the construction of the pilot plant in San Francisco, they were even more optimistic that it was running smoothly,” Promnitz said.
He said the only criticism he heard about Kachi was the grade of the deposit, but the most critical factors were its recovered grade, cash margin and low impurities, which were of increasing importance in the field. manufacture of high-end batteries.
Bench-scale testing also showed that the potential lithium production costs were around US $ 2,600 per tonne, compared to the current lithium price of around $ 12,000 / t.
Although lithium prices have come down in recent months, Promnitz believes prices will be sustained over the long term given the anticipated demand for electric vehicles, comparing the fundamental change to the rapid adoption of smartphones.
“Our future will change,” he said.
It also predicts an increasingly differentiated price based on product quality, the question raised at a recent lithium conference in New York City.
“I suppose if Kachi is not treated before the PFS and the pilot plant start to operate, it will certainly be the case in the following months and it will be an important catalyst for a revaluation of the company”, said declared Promnitz.
“By the end of the year this company is going to look fundamentally different and I guess within a few years we will either be a producer with a market capitalization similar to Orocobre or in production with a major partner. and a prosperous mid-level lithium company. “