In continuation with the announcement of 20,000 litres delivery of brines at its technology partner Lilac Solutions, lithium explorer and developer Lake Resources NL (ASX: LKE) revealed on 18 March 2020 that the testing of lithium brine samples from Lake’s Kachi Lithium Brine Project is progressing at direct extraction ion exchange pilot plant in Oakland, California.
The testing of Kachi brine samples is being done for the commissioning of Lilac's direct extraction ion-exchange pilot plant module, wherein brine is processed to produce high-purity lithium chloride for the transition to battery-grade lithium carbonate which is expected to be available by April for prospective off-takers.
Whenever there is a new technology the concern arises with its commercialisation, making investors cautious while investing. Hence, one question may arise that what is the scene around the Lilac Solution's direct extraction ion exchange pilot plant?
The credibility of the direct extraction ion exchange can be measured by the backing of many renowned dignities, namely Bill Gates or Jeff Bezos to mention few via Breakthrough Energy Ventures.
Optimism is further strengthened with the company astonishingly upsizing the Private Placement (PP) and Share Purchase Plan (SPP). The initial PP of A$1.5 million increased by 245% to reach the value of A$3.68 million by 13 March, 2020 and SPP increased by 167% from its initial offering of A$1.5 million to A$2.5 million due to the overwhelming response by the shareholders.
Uniqueness of Direct Extraction Ion Exchange Technology
The uniqueness in the technology and extracting Kachi lithium from brines gives an edge over conventional technique in terms of recovery, efficiency, sustainability and scalability. The slow and low environment-friendly traditional technology of evaporating pond to recover lithium at 50% or below in 9 to 18 months is likely to be overtaken in near term by ion-exchange technology depicting ~80-90% in a few hours.
Also, in evaporation pond, the concentration of material takes natural time depending on the weather to evaporate the water leaving behind the brines along with the impurities for further process. However, in case of direct extraction ion-exchange, the lithium is extracted using the ion-exchange method without using any reagent, allowing the brine to be reinjected back to the aquifer without changing any chemical composition.
All these characteristics demonstrate ability of Lilac’s technology to produce high grade, low impurity battery-grade lithium carbonate (99.9% purity), preferable for battery or cathode producers and capable of drawing premium pricing.
Further, it also caters the needs of ongoing electric vehicle (OEM's) and battery makers’ interest, providing access to a sustainable, scalable raw materials supply chain.
Lake’s Partnership and Outlook
In a recent interview with INN, Mr Stephen Promnitz (Managing Director) and Mr Nick Lindsay (Non-Executive Director) expressed optimism around the partners of Lake Kachi process for commercialisation, i.e. Lilac Solutions and engineering provider Hatch.
In the interview, it is mentioned that the success of the commercialisation of the project depends on the five key points: -
- Resources: The scalability of resources is required to meet the demand of the product in future. For the same, LKE has projects in the Lithium Triangle of Argentina where Kachi depicts total 4.4Mt of lithium carbonate (LCE) resources in a consolidated mining lease of 70,000 hectares. Lake Resources believes to have a life of operation of around 20-25 years, which is easily scalable due to its very nature of water resources capable of delivering the same result, say at 100-400 meters.
- Technology: Lake’s technology partner’s credibility is clearly demonstrated by its competitiveness with strong funding backing.
- Engineering Firm: Hatch Pty. Ltd. is continuing with the pre-feasibility study (PFS) for Kachi, which is expected to be available by next 2-3 weeks. Also, it is worth mentioning that the production cost is anticipated to occur on the lower side of the cost curve of Industry.
- Off-takers: The offtake agreement is quintessential for any product for Company’s continue revenue stream and positive cash flow.
- Finance: LKE seems to be well financed for scalability, working capital, and maintaining the team for continuing operations and growth.
Lake Resources Product- Lithium Carbonate or Lithium Hydroxide?
The Company is planning to offer a different range of product such as lithium carbonate or lithium sulphate (lithium hydroxide) to the off takers. LKE intends to be market-driven with the customised product as per the needs since the business has moved from industrial mineral to high-tech mineral industry, fulfilling the need of supply chain. Having said that in a base case scenario, the Company is likely to produce lithium carbonate for low-risk contingency and finance ease due to its already demonstrated results.
Apart from raising equity in case of PP and SPP, the Company is looking forward to the fund of US$20 million to raise the project towards full ramp-up and for meeting other administration or miscellaneous costs.
Also, LKE believes to hold all the teams i.e. Lilac and Hatch together and for which finance of US$100-300 million is anticipated in near term. As per the company, a great team is essential for a smooth transition of any project. For instance, Hatch doing future feasibility of Kachi project will be easy as all the engineering is well versed with the infrastructure, and the result of PFS will aid to the optimisation option in Feasibility study benefitting the Company and shareholders in the longer term.
The perfect example quoted by the Mr Promnitz is Orocobre Limited (ASX:ORE) partnering with Panasonic for 6-8 years along with Japanese firm for the efficient transaction.
It is also worth mentioning that the project’s commercialisation is falling in line with future demand from electric vehicles and battery manufacturers.
The upcoming immense gap of Lithium supply and demand is expected to benefit the Company in longer-term, where the Company anticipates starting production by 2023.
Mr Promnitz will conduct a live Webinar on Tuesday 24 March 2019 at 9.30am, focusing on key developments with update on testing of lithium brine samples from Lake’s Kachi Lithium Brine Project using Lilac’s direct extraction ion exchange pilot plant module in Oakland, California.
LKE traded at $0.030 on 19 March 2020 (3:59 PM AEDT).