The company has received an official expression of interest from the UK’s official export credit agency, UK Export Finance, to cover approximately 70% of the total financing needs of the Kachi project.
Lake Resources NL (ASX: LKE, OTCQB: LLKKF) has taken a big step forward in securing financial support for its flagship Kachi Lithium project after receiving a strong expression of interest to fund the project at around 70% of total needs .
The clean lithium developer uses direct mining technology for the production of sustainable, high purity lithium from the Kachi project, located in Catamarca province, in Argentina’s lithium triangle.
Interest in UK export finance
A formal expression of interest (EOI) has been received from the UK’s official Export Credit Agency (ECA), UK Export Finance (UKEF), to cover a significant portion of the total project finance needs – subject to standard project financing conditions.
Over the past five years, UKEF has provided £ 14 billion (AU $ 26.4 billion) in support to UK exports and international trade.
The EOI comes just two weeks after LKE appointed Peter Neilson as CFO to help drive the financing and development of the Kachi Lithium project.
Want clean energy
Any support from UKEF would be a big step forward for the Kachi project and reflect LKE’s commitment to deliver ESG benefits and support the global clean energy campaign towards net zero emissions.
Funding the project would offer several benefits, including:
- A cost of capital significantly lower than that of traditional financing structures, the principal being repaid over a period of 8.5 years after construction;
- The lower interest rate and longer repayment terms associated with ECA financing minimize the financial risks with this level of financing; and
- He will lead the development of the project in the province of Catamarca, Argentina.
It should be noted that the Expression of Interest is non-binding and is subject to a series of standard project funding conditions and due diligence, including appropriate structured direct debit contracts, successful completion of the Kachi’s final feasibility study, which is scheduled for the first quarter of 2022, and an Environmental and Social Impact Assessment (ESIA) according to Equator Principles.
However, the EOI indicates the attractiveness of the project.
Additionally, while the EOI is non-binding and has stipulated minimum content requirements in the UK, UKEF welcomes the participation of other ECAs, with whom Lake Resources is already in discussion.
For Lake CEO Steve Promnitz, the expression of interest is a defining moment.
“Having a top-tier ECA ready to indicate financial support for Kachi provides a huge vote of confidence in our clean energy project,” Promnitz said.
“The support reflects not only Kachi’s strong financial position, but also its significant ESG benefits, such as a low environmental footprint, meeting a number of defined sustainability goals.
“We recognize that we have significant work to convert this expression of interest into a committed funding agreement. We are delighted that a number of international banks have already approached us who have expressed interest in being part of Kachi development and their interest is dependent on having a strong ECA like UKEF.
“Basically this EOI says that if Lake does what he says he’s going to do in the DFS and the ESIA, the project will be funded. Combined with the support of potential international buyers, investors will see more and more progress towards the successful production and expansion of Kachi, perfectly synchronized to meet the needs of a decarbonizing world. ”
UKEF provided a very strong expression of interest, in line with the OECD arrangements for officially supported export credits. The EOI includes the possibility of a portion of direct loans at OECD CIRR rates linked to UK content.
VE’s demand for LKE
The accelerated demand for battery metals from electric car manufacturers (and projections of a growing structural supply deficit) is now having a major impact on suppliers of battery metals, especially those like LKE who could supply products. of high purity.
The positive funding environment for green-focused metals suppliers follows an increased focus by electric vehicle manufacturers on supply chain sustainability, as required by UK and UK regulations. the European Union.
In essence, there is now a requirement for high-quality, battery-grade products to support Europe’s climate goals: by 2050, Europe aims to become the world’s first climate neutral continent.
In the case of LKE, the EOI said total funding could be increased to include 70% of a production plant expanded to 50,000 tonnes per year of high purity lithium carbonate equivalent – a crucial ingredient in EU objectives.
In a joint statement, Gabriel Buck, of GKB Ventures Ltd. and David Buckle, of SD Capital Advisory Ltd. said, respectively, “The quality of this project with its strong SDG credentials and foreign currency income were decisive factors in securing this exceptional level of support.
With A $ 26 million in cash and cash equivalents at the end of the June 2021 quarter, Lake is well funded until the Final Investment Decision (FID) on financing the construction of Kachi, scheduled for mid-2022.