Half Yearly Report
During 2016, the Company adjusted its exploration focus to the exploration and development of lithium brine projects and lithium hard rock projects in a prime location amongst the major lithium companies in Argentina, having conducted activities in Argentina previously. In 2017, the Company holds four separate lithium projects in Argentina, each with potential to be a substantial stand alone development project, or colloquially, each "a company maker". Lake holds one of the largest lease holdings of lithium brine and hard rock projects of a listed entity on the ASX.
On 14 November 2016, the Company completed the acquisition of an unlisted company LithNRG Pty Ltd, with exciting lithium brine projects in three large packages of mineral lease applications (over 90,000 Ha) around salt lakes in North West Argentina. The leases had been established prior to the significant interest by majors and investors in lithium in Argentina. Lake controls 100% the subsidiary LithNRG Pty Ltd with its Argentine subsidiaries, Minerales Australes SA and Morena del Valle Minerals SA. The transaction was share based, followed by two private placements in December 2016 and February 2017.
An option agreement was entered into over a large block of mining leases and exploration applications over lithium bearing pegmatites in Argentina in February 2017. Consideration for the transaction are shares in the Company. This agreement was extended into FY2018 to allow completion of the establishment of the local entity, Petra Energy SA, and 19 million LKE shares would be issued if the option is exercised.
An unsecured debt security (note) was announced in November 2017 and raised $1.665 million from sophisticated and professional investors in the form of 1,665,000 unsecured notes at $1. This note will be repaid in the second half of FY2018 as other funds become available.
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About Lake Resources NL
Lake Resources NL (ASX:LKE) is a lithium exploration and development company focused on developing its three lithium brine projects and hard rock project in Argentina, all owned 100%. The leases are in a prime location among the lithium sector's largest players within the Lithium Triangle, where half of the world's lithium is produced. Lake holds one of the largest lithium tenement packages in Argentina (~200,000Ha) secured in 2016 prior to a significant 'rush' by major companies. The large holdings provide the potential to provide consistent security of supply demanded by battery makers and electric vehicle manufacturers.
The Kachi project covers 69,000 ha over a salt lake south of FMC's lithium operation and near Albemarle's Antofalla project in Catamarca Province. Drilling at Kachi has confirmed a large lithium brine bearing basin over 20km long, 15km wide and 400m to 800m deep. Drilling over Kachi (currently 16 drill holes, 3100m) has produced a maiden indicated and inferred resource of 4.4 Mt LCE (Indicated 1.0Mt and Inferred 3.4Mt) within a 8-17 Mt LCE exploration target (refer ASX announcement 27 November 2018).
A direct extraction technique is being tested in partnership with Lilac Solutions, which has shown 80-90% recoveries and lithium brine concentrations in excess of 3000 mg/L lithium and is planned to be trialled on site in tandem with conventional methods as part of a PFS to follow the resource statement. Scope exists to unlock considerable value through partnerships and corporate deals in the near term.
The Olaroz-Cauchari and Paso brine projects are located adjacent to major world class brine projects either in production or being developed in the highly prospective Jujuy Province. The Olaroz-Cauchari project is located in the same basin as Orocobre's Olaroz lithium production and adjoins Ganfeng Lithium/Lithium Americas Cauchari project, with high grade lithium (600 mg/L) with high flow rates drilled immediately across the lease boundary.
Two drill rigs are currently drilling at Cauchari with results anticipated to extend the proven resources in adjoining properties into LKE's area with results anticipated from November into December 2018. This will be followed by drilling extensions to the Olaroz area in LKE's 100% owned Olaroz leases.
Significant corporate transactions continue in adjacent leases with development of Ganfeng Lithium/Lithium Americas Cauchari project with Ganfeng announcing a US$237 million for 37% of the Cauchari project previously held by SQM. Nearby projects of Lithium X were acquired via a takeover offer of C$265 million completed March 2018. The northern half of Galaxy's Sal de Vida resource was purchased for US$280 million by POSCO in June 2018. These transactions imply an acquisition cost of US$55-110 million per 1 million tonnes of lithium carbonate equivalent (LCE) in resources.
The demand for lithium continues to be strong for lithium ion batteries in electric vehicles, according to recent data from the leading independent battery minerals consultant, Benchmark Mineral Intelligence. Supply continues to be constrained suggesting good opportunities for upstream lithium companies.
Lake Resources NL