PERTH (miningweekly.com) – Lithium developer Lake Resources has come out in defence of the technology selection at its Kachi lithium brine project, in Argentina, as well as the progress made to date.
A report by short seller J Capital Research earlier this week cast doubt about the direct lithium extraction (DLE) process selected by Lake Resources, and whether the technology, being provided by Lilac Solutions would even be functional.
“Investors still have no evidence that the Lilac DLE technology works at scale and if so at what cost. If the DLE technology works then the number of “cycles” for which the extraction medium can be used will be a key cost driver. If the medium can only be used for a few hundred cycles then the costs may be prohibitively high,” the report warned.
Furthermore, J Capital criticised the development timeframe for the project, stating that the delivery of a pilot plant had been promised for 2019, and that a definitive feasibility study had been promised for 2020, with both of these yet to be delivered.
Additionally, J Capital raised concerns around the offtake negotiations with Ford and Hanwa, saying that the company had only announced memorandums of understanding (MoUs) to negotiate offtake agreements, and that these in no way de-risked the project, as claimed by the company.
Following the release of the J Capital report, Lake Resources shares dropped from 71c a share to 63c a share.
In response to the report, Lake Resources on Thursday told shareholders that the description of the DLE process in the report did not pertain to Lilac’s ion exchange technology, and that the company had considered a number of different processes in order to select Lilac Solutions.
The ASX-listed company also noted that Lilac had worked extensively with the Kachi brine, and had generated the data needed for engineering studies.
Lilac’s operating team arrived at the Kaci project site on July 14, and the demonstration plant modules will be delivered on site later this month, with commissioning expected to start shortly thereafter.
Furthermore, Lake Resources defended its development timeline of the Kachi project, saying the onset of the Covid pandemic had delayed the pilot plant, however, as soon as international borders were opened, the modular demonstration plant was built in California, and shipped to Argentina.
Regarding its MoUs with potential offtake partners, Lake said that they had been entered into with "globally recognised companies", and that the nature of the MoUs and the negotiation and ongoing dialogue towards terms of agreement gave Lake “reasonable confidence” that there would be outcomes that would assist in progressing Kachi.
A previously completed updated prefeasibility study estimated that the Kachi project could produce 25 500 t/y of lithium carbonate over a mine life of 25 years, with capital costs estimated at $540-million.
The company said earlier this year that the definitive feasibility study (DFS ) would consider a production case of 50 000 t/y, given the increased demand from potential offtakers. The DFS is due for completion in mid-2022.