Lake Resources NL Shows Strong Interest in Debt Financing Amid Electric Vehicle Boom


With a final investment decision still a year away, Lake Resources is marshalling financial support for its lithium project as demand for battery metals takes off.

Lake Resources NL (ASX: LKE) (OTCMKTS: LLKKF) (FRA: LK1) is getting closer to securing debt financing to develop its flagship Kachi Lithium project, from which it aims to produce cleaner lithium and greener to meet growing global demand.

The developer of clean lithium said more than half a dozen major international banks have expressed interest in providing a cash injection for the lithium game as the electric vehicle industry takes center stage.

Of course, a bank’s participation is subject to the approval of the Export Credit Agency, which is why SD Capital and GKB Ventures have been appointed to facilitate any approval on financing leads.

In the meantime, Lake’s Kachi project remains funded until a final investment decision on construction finance is expected in the middle of next year.

A focus on sustainable development

Speaking on the progress of debt financing, Lake Managing Director Steve Promnitz said: “Export credit agencies and project finance banks have embarked on the new energy transition and projects presenting an environmental, social and corporate governance advantage that includes sustainable development objectives.

“As a company focused on the direct and sustainable extraction of lithium to produce a high-quality, battery-grade product, Lake is uniquely positioned to help achieve these goals.

“We look forward to moving these talks forward, with potential international buyers, as we move forward on the definitive Kachi feasibility study to a positive outcome.”

Extended financing facility

Recently, Perth-based investment bank Acuity Capital expressed greater confidence in Lake’s operations by expanding its funding trail.

In July 2018, Acuity entered into a controlled placement agreement with ASX-lister. Since then, however, the investment bank has expanded the size of the placement to A $ 30 million, giving Lake access to a larger pool of capital.

To date, Lake has drawn nearly A $ 4.76 million under the placement facility, with around A $ 25 million still available as relief funding until January 2023.

The Debt Financing Path

In order to advance discussions on lower cost financing, SD Capital and GKB Ventures have chosen to focus on Export Credit Agencies (ECAs).

ECA-led financing would lead to longer-term debt at lower cost, typically representing around 70% of the financing required and involving a 10-year repayment plan.

Commenting on Kachi’s potential funding in a joint statement, David Buckle of SD Capital and Gabriel Buck of GKB Venture said, “We are greatly encouraged by the progress made and the rapid positive response from project finance banks.

Ultimately, Lake said estimates regarding the potential size and duration of a debt financing program would be provided in the coming months after receiving expressions of interest.

Meanwhile, the lithium developer is confident that it has enough capital to move the work forward until a final investment decision in Kachi is made.

At the end of the March 2021 quarter, Lake had AU $ 24 million in the bank to support its operations.


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