Lake Resources (ASX:LKE; OTC:LLKKF) has announced the results of its Definitive Feasibility Study (DFS) for Phase One of the Kachi lithium brine project in Argentina. The study underscores the Kachi Project's status as a tier one project with robust resource potential and impressive financial figures, positioning it competitively within the global lithium market.
Financial Highlights
- Post-tax NPV8 of US$2.3 billion and an internal rate of return ("IRR") of 21%.
- Targets battery-grade lithium carbonate revenue of US$21 billion and US$16 billion EBITDA over the project's 25-year life.
- Aims for an annual average EBITDA of US$635 million with an EBITDA margin of 76%.
- Initial Capex for Phase One estimated at US$1.38 billion, in line with previous operational updates.
- Estimated run rate Opex for Phase One at US$6.05/kg of lithium carbonate equivalent ("LCE"), also consistent with previous updates.
- Lake Resources CEO David Dickson emphasized, "Kachi commands an NPV8 of US$2.3 billion and an IRR of 21% with targeted $21 billion revenue and $16 billion EBITDA for Phase One. These are very strong and competitive economics." He further highlighted the rising demand for lithium, driven by the expanding electric vehicle automotive and energy storage systems markets.
Growing Lithium Demand
The Kachi Project is poised to address the surging demand for lithium, projected to grow from less than one million tonnes LCE in 2023 to over four million tonnes LCE by 2040, reflecting a 9% compound annual growth rate ("CAGR").
Sustainable Lithium Production
Kachi's innovative approach to lithium brine extraction utilizes ion exchange Direct Lithium Extraction ("DLE"). The process, developed in partnership with Lilac Solutions, focuses on sustainable and responsible lithium production while minimizing disruption to the local community and natural resources.
Project and Resource Highlights
- Total resource estimated at 10.6 Mt LCE, establishing Kachi as a globally significant resource.
- A 25-year mine life supported by a maiden Ore Reserve statement.
- Phase One targets a production of 25 ktpa over the LoM to meet battery market demands.
- DLE process designed to mitigate environmental impact.
- Targets production of consistent battery-grade lithium carbonate (>99.5% purity) at the site.
- Kachi aims to commence lithium production in 2027 with ramp-up to full capacity by the end of 2028.
- Proven Process from Brine Extraction to Battery-Grade Lithium Carbonate
- The Project has successfully operated demonstration plants, processing brine and producing lithium chloride eluate. Lilac's proprietary ion-exchange DLE technology eliminates the need for traditional evaporation ponds, reducing the project's environmental footprint significantly.
Next Steps
The next crucial steps for the Kachi Project include initiating a strategic partnering process, negotiating offtake agreements, submitting the Environmental and Social Impact Assessment ("EIA"), selecting engineering and construction contractors, engaging Independent Power Producers ("IPP"), and continuing discussions with financial institutions for project financing. The Final Investment Decision ("FID") is targeted for Q1 2025.
Lake Resources' Phase One DFS represents a significant milestone in the Kachi Project's development, showcasing a credible, de-risked execution plan to support the project's successful delivery. The project is poised to play a pivotal role in meeting the surging global demand for lithium and advancing sustainable lithium production practices.
