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Compelling Pre-feasibility Study for Lake’s Kachi Project

Lake Resources NL (ASX:LKE; OTC:LLKKF) has completed a compelling and robust Pre-Feasibility Study (PFS) into the technical and economic viability of Lake’s Kachi Lithium Brine Project in Catamarca, Argentina.

Update: Click here for the webinar recording

Compelling Pre-Feasibility Study (PFS) results for Lake’s Kachi Lithium Brine to produce sustainable, high purity, low impurity lithium carbonate to attract premium pricing to meet growing demand from battery makers.

  • Long-life, low cost operation with annual production target of 25,500 tonnes of battery grade lithium carbonate by direct extraction using efficient Lilac Solutions technology, based on the Indicated Resource of 1.0 million tonnes LCE1 at 290 mg/L lithium (22% of current total resource).
  • Unlevered post-tax NPV8 of US$748 million (A$1,180m) and IRR of 22%; with EBITDA of US$155 million (A$245m) in first full year of production, using forecast of US$11,000/t Li2CO3 CIF Asia.
  • High margin project with EBITDA margin (operating margin) of 62%, using forecast prices.
  • Competitive capital cost (capex) estimate of US$544 million including contingency, and
    operating cost (opex) of US$4178/tonne Li2CO3.
  • Next steps involve delivering product samples from the pilot plant to potential off-takers, targeting lower up-front costs, and further resource development to extend project life. Financing and off-take discussions continue.

Lithium explorer and developer Lake Resources NL (ASX:LKE; OTC:LLKKF) has completed a compelling and robust Pre-Feasibility Study (PFS) into the technical and economic viability of Lake’s Kachi Lithium Brine Project in Catamarca, Argentina. The study demonstrates the project’s potential to deliver high purity product required by battery makers, based on a sustainable and scalable process (refer project details in Tables 1, :2 and 3).

The study focused on the engineering and costing of preferred process design options supported by direct lithium extraction test work by Lilac Solutions, with Hatch appointed to provide engineering and design services.

Lake’s Managing Director Steve Promnitz said: “This is a major milestone for Lake that allows us to ramp up project development initiatives. The PFS highlights the cost competitive nature and scale of the flagship Kachi Project using direct extraction, but has the benefit of producing high purity product capable of attracting premium pricing, while being a leader in sustainable lithium desired by Tier-1 electric vehicle makers. The PFS together with samples from the pilot plant will help advance discussions with off-takers and financiers.”

Lilac Solution’s CEO Dave Snydacker said: “Kachi is a globally important lithium project with its large brine resource and environmentally-friendly process. With this PFS, we have demonstrated a non-utilities OPEX of US$2,500 per tonne of lithium carbonate. The remaining 40% of OPEX is primarily due to energy from natural gas at US$21/mmBTU. Given the excellent solar resource on site, we have a great opportunity to incorporate solar PV and reduce OPEX. Looking at the capital cost structure, we see that 51% of CAPEX is related to site works and contingency, so opportunities exist for cost reduction in upcoming engineering studies. The Lilac team is excited to continue working closely with Lake to progress the development of Kachi.”

Financing discussions are underway. The potential for premium pricing for a preferred high purity product assist this process. The results and the data of the PFS provide a solid basis for these discussions as well as for a definitive feasibility study (DFS).

Financially Robust Project

The key conclusions of the PFS of the Kachi Lithium Brine Project’s commercial viability are presented in Table 1. The unlevered project delivers an attractive prospective financial performance, with conservative long term future price assumptions of US$11,000/t for battery grade lithium carbonate, with a pre-tax NPV8 of US$1050 million and an 25% IRR and post-tax NPV8 of US$748 million and an 22% IRR based on an annual production target of 25,500 tpa LCE which is supported by the Indicated Mineral Resource for an initial 25 years. The annual EBITDA for the project is US$155 million, with life of project EBITDA of US$3,890 million.

Operating and capital costs are presented on Tables 2 and 3. These are in October 2019 United States dollars, and estimated to an accuracy of about minus 20% to plus 30%. Australian dollars are for comparison only. Capital costs exclude owner’s costs whereas operating costs exclude corporate overheads, taxes and royalties. All costs associated with the direct extraction process were provided by Lilac Solutions, with the remainder based on engineering designs supported by OEM quotation, industry enquiries and supplier databases.

Project Location and Mineral Resource

The Kachi Lithium Brine project is based on the Salar de Carachi Pampa, which is part of the endorheic Carachi Pampa basin, located in La Puna region of north-western Argentina. More specifically, it approximately 50 km south of the town of Antofagasta de la Sierra, in the Province of Catamarca and 100km south of the lithium brine operation at Hombre Muerto, owned by Livent (previously FMC).

The explored area of the salar was 175 km2, hosted in a 700 to 880 metre deep fault-bounded north-west orientated depression filled with brine saturated sands, interbedded with silt and clay, capped by a salt crust and small lake. It is partially obscured by a basalt shield volcano and associated debris fan.

Lake Resources controls 100% of the project, which comprises 70,000 hectares of mineral concessions over the salar through its wholly owned Argentine subsidiary Morena del Valle Minerals S.A. Previously untested, Lake drilled 3150 metres in 15 holes into the salar, down to 400 metres depth, resulting in a maiden JORC resource reported to the ASX on 27 November 2018 of:

  • 1.0 million tonnes LCE1 at 290 mg/L lithium (Indicated), and
  • 3.4 million tonnes LCEat210mg/Llithium(Inferred).

This resource remains open at depth and laterally, and further drilling is expected to expand and upgrade it. It has low impurities as indicated by a Mg/Li ratio of 3.8 to 4.6, and an average drainable porosity at 8%. The 25,500 tpa LCE production target for the PFS was based on the full utilization (100%) of the JORC Indicated Resource. No Inferred Resource was used in the study.

Plant Design and Extraction Method

The plant design targets production of 25,500 tpa of battery grade lithium carbonate through the treatment of brine with direct lithium extraction technology based on ion exchange (IX) with the concept shown in Figure 1. The process involves the annual treatment of about 23 million cubic metres of brine at 250 g/L lithium, with an overall plant recovery of 83.2%. The eluate from the process is further concentrated and purified and fed into a conventional lithium carbonate plant. No solvent extraction plant is required to remove boron. While the study was based on 24,000 mg/L feedstock to the lithium carbonate plant (LCP), subsequent development by Lilac has shown that concentration to 60,000 mg/L lithium feedstock is possible for shipping of the lithium concentrate off site. No evaporation ponds are used. The lithium-depleted brine is free of any contaminants and can be reinjected underground to support the salar’s water balance and protect the environment.

The purified lithium concentrate was reacted with sodium carbonate to produce lithium carbonate. The plant layout is shown on Figure 2. Extraction test work has demonstrated that a 99.9% lithium carbonate product with low impurities (battery grade) can be produced by the Lilac process (Table 4) within several hours of extraction as opposed to 18 to 24 months for conventional evaporative concentration processes.

Next Steps

With this PFS, a robust engineering and cost case has been demonstrated. Further engineering studies will be focused on reducing operating and capital costs for the project. The operating cost can be reduced by partially replacing gas with a solar PV and storage system for 8-12 hours per day. The capital cost can be reduced by optimizing the plant layout to minimize earth works, concrete, and steel and by completing a pilot project to reduce contingency.

The next steps involve delivering product samples from the pilot plant modules to potential off-takers and further engineering work to reduce up-front capital and on-going operating costs. Further resource development would extend project life. Studies will be initiated to consider staged development commencing indicatively at 10,000 tpa LCE.

The PFS provides a solid basis for a definitive feasibility study and Lake is confident of progressing the project further based on these latest results.

Footnotes:
1 LCE = lithium carbonate equivalent, which is calculated as lithium metal content times 5.323

Cautionary Statements

General Statement and Cautionary Statement

This report has been prepared by Lake Resources N.L (Lake) for information and planning purposes, but may be received by sophisticated and professional investors, institutional investors and brokers and not any particular party. The information in this report is based upon public information and internally developed data, and reflects prevailing conditions and views as of this date, all of which are accordingly subject to change. The information contained in this report is not intended to address the circumstances of any particular individual or entity. There is no guarantee that the information is accurate as of the date it is received or that it will continue to be accurate in the future. No warranties or representations can be made as to the origin, validity, accuracy, completeness, currency or reliability of the information. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation. Lake Resources NL accepts no responsibility or liability to any party in connection with this information or views and Lake disclaims and excludes all liability (to the extent permitted by law) for losses, claims, damages, demands, costs and expenses of whatever nature arising in any way out of or in connection with the information, its accuracy, completeness or by reason of reliance by any person on any of it. The information regarding any other projects described in this report are based on exploration targets, apart from Kachi project’s resource statement. The potential quantity and grade of an exploration target is conceptual in nature, with insufficient exploration to determine a mineral resource and there is no certainty that further exploration work will result in the determination of mineral resources or that potentially economic quantities of lithium will be discovered.

Forward Looking Statements

Certain statements contained in this report, including information as to the future financial performance of the Kachi Lithium Brine Project are forward‐looking statements. Such forward‐looking statements are necessarily based upon a number of estimates and assumptions that, while considered reasonable by Lake Resources N.L. are inherently subject to significant technical, business, economic, competitive, political and social uncertainties and contingencies; involve known and unknown risks and uncertainties and other factors that could cause actual events or results to differ materially from estimated or anticipated events or results, expressed or implied, reflected in such forward‐looking statements; and may include, among other things, statements regarding targets, estimates and assumptions in respect of production and prices, operating costs and results, capital expenditures, reserves and resources and anticipated flow rates, and are or may be based on assumptions and estimates related to future technical, economic, market, political, social and other conditions and affected by the risk of further changes in government regulations, policies or legislation and that further funding may be required, but unavailable, for the ongoing development of Lake’s projects. Lake Resources N.L. disclaims any intent or obligation to update any forward‐looking statements, whether as a result of new information, future events or results or otherwise. The words “believe”, “expect”, “anticipate”, “indicate”, “contemplate”, “target”, “plan”, “intends”, “continue”, “budget”, “estimate”, “may”, “will”, “schedule” and similar expressions identify forward‐looking statements. All forward‐looking statements made in this report are qualified by the foregoing cautionary statements. Investors are cautioned that forward‐looking statements are not guarantees of future performance and accordingly investors are cautioned not to put undue reliance on forward‐looking statements due to the inherent uncertainty therein. Lake does not undertake to update any forward-looking information, except in accordance with applicable securities laws.

Competent Person Statement

The information contained in this report relating to Exploration Results, Mineral Resource estimates, and the associated Indicated Resource, which underpins the production target utilised in the Pre-Feasibility Study, have been compiled by Mr Andrew Fulton. Mr Fulton is a Hydrogeologist and a Member of the Australian Institute of Geoscientists and the Association of Hydrogeologists. Mr Fulton has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a competent person as defined in the 2012 edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Andrew Fulton is an employee of Groundwater Exploration Services Pty Ltd and an independent consultant to Lake Resources NL. Mr Fulton consents to the inclusion in this presentation of this information in the form and context in which it appears. The information in this presentation is an accurate representation of the available data to date from initial exploration at the Kachi Lithium Brine project.

Click here for the full press release.

Featured
Lake Resources CEO Stephen Promnitz: Scaling Lithium Supply with $150 Million Series B Funding

Lake Resources Managing Director Stephen Promnitz

Lake Resources (ASX:LKE,OTCQB:LLKKF) Managing Director Stephen Promnitz says Lake Resources has secured robust financing to scale up lithium production in preparation for the electric vehicle revolution.

Lake Resources has recently established a technology and funding partnership with Lilac Solutions, and the latter has announced $150 Million Series B to scale lithium supply for the electric vehicle era.

Lake Resources: Scaling Lithium Supply with $150 Million Series B Funding www.youtube.com

"Lilac Solutions are actually going to work with us and progressively earn into our flagship Kachi project, and then provide $50 million towards the development of that project. So come the end of October, we should have somewhere around $70 to $80 million in the bank, plus this $50 million commitment from Lilac going forward. And then if we have some additional $75 million options in June next year. Essentially, we can now see a pathway to the entire project being financed," Promnitz said.

Lake Resources and Lilac Solutions signed a partnership agreement wherein Lilac is able to achieve an equity stake in the Kachi project with project funding obligations while providing its leading technology to advance the project.

"There's a real deal here, and now value opportunity. But on top of that, we've de-risked it from the debt side and from the equity side. This project is going to happen, and not only that, we're going to be scaling it up to 50,000 tonnes per annum soon after we get into production. That will make us one of the top five producers in the lithium space."

Watch the full interview of Lake Resources Managing Director Stephen Promnitz above.

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kangaroos in front of the sunrise

Silver is on the rise in Australia, with new silver mines opening, production potential booming and the precious metal's valuation reaching new heights.

Analysts have been bullish on gold for the better part of the past decade, but now it's silver's time to shine. While the price of silver tends to rise and fall alongside that of gold, silver's valuation is generally more volatile — slower to move in either direction, but more prone to abrupt spikes and plunges.

Considering the market's longtime gold rush, silver is due for a major price hike. In 2020, silver hit a seven year high with 27 percent year-over-year growth, climbing faster than gold. Silver was on the rise again in February 2021, bolstered by WallStreetBets fervour. Though prices have stabilised since, they remain elevated compared to the past decade. Additionally, at only a fraction of gold's valuation, silver is a much more attainable buy.

Shrewd investors are looking to Australia for their silver picks. A country whose silver mines continued to flourish even when most of the world was in a precious metal slump, Australia has emerged from the COVID-19 pandemic as a major player in the global silver market.


A look at Australia and silver mining

When you think of mining in Australia, you may not think of silver, especially since the country is a top global producer of several other metals, including gold and iron ore. Nevertheless, silver is on the rise in Australia, with new silver mines opening, production potential booming and the precious metal's valuation reaching new heights.

This may be surprising news, especially since 2020 was an erratic year for silver. Global silver-mining production plunged by 5.9 percent in 2020 — its biggest drop in over 10 years —⁠ following four years of steady decline.

Output from primary silver mines plummeted by 11.9 percent year-over-year, while silver by-product suffered a more modest drop, with production from gold and lead-⁠zinc mines falling by 5.7 percent and 7.4 percent, respectively. Note that silver is largely produced as a by-product of other metal-mining processes, with 72 percent of silver production taking place at non-silver mines.

This production downturn was the result of COVID-19 restrictions that forced mines to suspend operations temporarily. Silver mine closures hit certain places harder than others, with extended closures in top silver-producing countries such as Peru, Mexico, Argentina and Bolivia causing major production drops.

Australia, however, was an exception to this rule, with production increasing by 3 percent. The reason for Australia's success is that it remained relatively untouched by COVID-19 restrictions. While other countries were forced to shut down production facilities, Australia was able to avoid these closures, continuing — and even upgrading — regular operations.

Australia is now the fifth largest silver producer globally, with an annual output of 43.8 million ounces in 2020. While the output of silver-mining giants such as Mexico and Peru (178.1 million and 109.7 million ounces produced in 2020, respectively) continues to far exceed that of Australia, global demand for silver is on the rise, hitting 900 million ounces annually and making room for a new silver-mining powerhouse.

What should investors know about silver investing in Australia?

Silver remains a relatively untapped resource in Australia, which means that investors have plenty of major mining companies to choose from.

Australia's largest mine is the Cannington mine owned by South32 (ASX:S32,OTC Pink:SHTLF). It is ranked as the ninth largest silver-producing mine worldwide, with 11.6 million ounces produced in 2020.

The country's second biggest silver-producing mine is the Mount Isa zinc mine. It is owned by Mount Isa Mines, a subsidiary of Glencore (LSE:GLEN,OTC Pink:GLCNF), and produced around 5.8 million ounces of silver in 2020. The Tritton copper mine, owned by Aeris Resources (ASX:AIS,OTC Pink:ARSRF), followed closely behind with nearly 4.5 million ounces produced in the same year.

Other notable Australian silver mines include the Golden Grove mine, which is owned by 29Metals (ASX:29M), and the Dugald River mine, which is owned by Metallic Minerals (ASX:MMG,TSXV:MMG,OTCQB:MMNGF). In 2020, these mines produced around 2.9 million and 2 million ounces of silver, respectively.

Australia's impressive silver-mining industry is well-positioned for further expansion, with Silver Mines (ASX:SVL,OTC Pink:SLVMF) planning to launch its Bowden silver project in 2023. This New South Wales-based silver mine is projected to produce around 6 million ounces of silver annually, which would make it the country's new second largest producer. The company hopes to capitalise on the promising solar panel market, which currently accounts for about 5.5 percent of all silver demand worldwide.

Moreover, Australian company Thomson Resources (ASX:TMZ,OTC Pink:TMZRF) bought the New South Wales-based Webb and Conrad silver projects from Silver Mines earlier this year in a transaction worth around US$8.6 million. The deal closed on March 31, and will enable Silver Mines to concentrate on its flagship Bowden project.

Investing in silver in Australia

There are many ways to invest in silver, including physical silver, stocks, exchange-traded funds (ETFs), mutual funds, options and futures. Choosing which investment route to take is all about balancing risk and reward.

Investing in physical silver is the most straightforward option: you simply buy a tangible piece of the precious metal in the form of bullion, official coins or medallions. Bullion is a bar or 1 ounce coin of solid silver with at least 99.9 percent purity. Official silver coins are currency produced by a government mint, while silver medallions resemble coins, but lack monetary value, .

The price of physical silver rises and falls alongside the metal's market value. Physical silver is a relatively safe investment, since its value can't be affected by third-party interference or bad business practices (risks characteristic of mining stocks). However, if you plan to trade often, the added costs of buying, selling and storing physical silver may make the investment not worth your while.

Investments in physical silver rose by 8 percent last year, boosted by silver's status as a safe asset and market bullishness on gold. In Australia, coins and medals fabrication increased by 35 percent year-over-year, making physical silver a smart choice for any risk-averse investor.

Of course, low risk often means low reward. If you're looking for a bigger payday, consider investing in silver-mining stocks instead. After all, when silver's market price goes up, it is often the case that the value of a mining stock could spike far higher than that of the physical metal. The disadvantage is that mining stocks are always risky — even when the silver market is strong, a mining endeavour can fail to pan out.

ETFs offer investors the best of both worlds. ETFs are a basket of varied equities, including physical metals and shares in mining companies. Much like individual stocks, they are liable to rise or fall in price according to the market, though they tend to be less risky than stocks.

In 2020, ETF investments were at an all-time-high, though Australia only has one silver ETF that includes the physical precious metal. Stocks are a much more common means of investing in silver in Australia. The country boasts over a dozen silver-mining companies, including South32 and Silver Mines, as well as Newcrest Mining (ASX:NCM,TSX:NCM,OTC Pink:NCMGF), Golden Deeps (ASX:GED) and Investigator Resources (ASX:IVR).

Don't forget to follow us @INN_Australia for real-time news updates.

Securities Disclosure: I, Isabel Armiento, hold no direct investment interest in any company mentioned in this article.

carbon emissions

Following international pressure, the Australian government has promised to reach net zero emissions by 2050.

In a last-minute commitment after months of debate, the Australian government has promised to reach net zero emissions by 2050, expecting to meet the goal largely through technology development.

The move comes following international pressure as Australia had previously refused to join countries in pledging to meet the target ahead of the United Nations' COP26 climate conference in Glasgow.

However, the plan unveiled on Tuesday (October 26), which includes a government investment of AU$20 billion, does not strengthen the target set for 2030, with Prime Minister Scott Morrison saying Australia is on track to beat its Paris Agreement goal, cutting emissions by 30 to 35 percent by that decade.


"We will do this the Australian way," Morrison said ahead of a press conference, announcing investments in new energy technologies like hydrogen and low-cost solar.

An Australian hydrogen industry could be worth more than AU$50 billion in 2050, according to the government. Meanwhile, expanding production and processing of metals like lithium, nickel, copper and uranium could together be worth around AU$85 billion in exports in 2050.

That said, Australia will continue to be heavily dependent on fossil fuels as the plan will not shut down coal or gas production. The country is a major coal player, with the third largest reserves in the world, but its reliance on coal-fired power makes it one of the world's largest carbon emitters per capita.

"We want our heavy industries, like mining, to stay open, remain competitive and adapt, so they remain viable for as long as global demand allows," Morrison said. "We will not support any mandate — domestic or international — to force closure of our resources or agricultural industries."

Australia's desire to achieve net zero emissions by 2050 is a step in the right direction, Prakash Sharma, Wood Mackenzie's Asia Pacific head of markets and transitions, said.

"Our analysis shows that Australia can reach net zero emissions by 2050," he said. The country's major trading partners — China, Japan and South Korea — are already in transition towards that goal.

According to Wood Mackenzie, nearly 83 percent of Australia's power generation will come from solar and wind by 2050, as compared to about 20 percent last year. Natural gas, bio energy, geothermal and small modular reactors will supply the remaining 17 percent in power output. Coal into power is expected to be phased out by 2035.

"Although the pathway requires complete transformation of its traditional energy and export sectors, there are significant opportunities to capitalise on and protect future revenues," Sharma said.

"This will require Australia to become a significant player in low-carbon hydrogen trade as well as being able to offer carbon storage and offset services."

Meanwhile, the Australian Conservation Foundation has welcomed the prime minister's commitment to reach net zero by 2050, but said the mid-century goal is only meaningful with deep cuts to climate pollution this decade.

"Unless the government sets the wheels in motion to cut our emissions in half by 2030, it is making climate change worse and turning its back on the opportunities," said Chief Executive Kelly O'Shanassy.

"Australia can become a global clean energy superpower in the next decade by replacing coal and gas with renewable energy," she added. "We have abundant clean energy, tools and talent, but we cannot delay any longer."

Don't forget to follow us @INN_Australia for real-time updates!

Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.