Initiating Coverage
We are initiating coverage on Lake Resources NL, with a BUY rating and A$1.25/sh target price. Lake Resources has the largest land package in the Lithium Triangle with a total of four lithium brine projects in Argentina, including its flagship Kachi project. In conjunction with its partner, Lilac Solutions, the company has developed a direct lithium extraction (DLE) technology. This uses ion exchange (IX) methods to produce a high purity (99.97%) Li carbonate from its flagship Kachi project in under a few hours and with little environmental impact as compared to traditional extraction methods. Lake Resources has already demonstrated its path to production from Kachi through testing at its 2020 pilot plant. With commitments received to cover 70% of the capital costs of Kachi via debt, the company can continue advancing the project, ahead of securing offtake partners and commencing construction activities in H2/22, before beginning production of 25,500tpa LCE in H2/24.
