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Lithium Investing
Lake Resources Inks Lithium Deal with Ford, Shares Surge
Apr. 11, 2022 01:55PM PST
The lithium junior saw its share price spike more than 14 percent following the news.
Ketut Subiyanto / Pexels
Australia’s Lake Resources (ASX:KLE,OTCQB:LLKKF) kicked off the week by signing a deal with US carmaker Ford (NYSE:F) for a potential lithium offtake from the Kachi project in Argentina.
The non-binding memorandum of understanding is for approximately 25,000 tonnes per year of lithium, an essential raw material used in electric vehicle (EV) batteries.
“Both Lake and Ford see this as an opportunity for a potential long-term agreement with the ability to scale up environmentally responsible production and participate in Lake’s other projects to ensure high-quality lithium products are available to Ford,” Steve Promnitz, Lake’s managing director, said.
Ford’s move comes at a time when carmakers are trying to secure supply of lithium, which has seen its price increase over 480 percent in the past year. The Michigan-headquartered company expects half of its vehicles to be electric by 2030, and it’s looking to sell more than 2 million EVs worldwide by 2026.
“As we’ve shared, Ford is sourcing deeper into the battery supply chain,” said Lisa Drake, Ford’s vice president, EV industrialization, in Monday's (April 11) press release. “This is one of several agreements we’re exploring to help us secure raw materials to support our aggressive EV acceleration.”
Following the news, shares of Lake jumped more than 14 percent, climbing to AU$2.11 on Monday from a closing price of AU$1.85 this past Friday (April 8).
This is the second non-binding agreement for Kachi, which is expected to produce 50,000 tonnes per year, according to a 2022 definitive feasibility study. On March 29, Lake inked a similar deal with Japanese trading company Hanwa (TSE:8078) for 25,000 tonnes of lithium carbonate per year over a 10 year period. These two agreements further de-risk the project for financiers and investors.
Lake Chairman Stu Crow said that the offtakes, together with an indicative provision of debt finance for around 70 percent of the Kachi project’s capital requirements, provide a framework of support for Lake’s Target 100 program. The program's goal is annual production of 100,000 tonnes of high-purity lithium chemical by 2030.
Aside from its flagship Kachi project, Lake’s other projects include the Olaroz and Cauchari brine projects, which are located within the Lithium Triangle, where 40 percent of the world’s lithium is produced at the lowest cost.
The company’s technology partner is California-based Lilac Solutions, whose technology has been backed by the Bill Gates-led Breakthrough Energy Fund and the Engine Fund at the Massachusetts Institute of Technology.
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Securities Disclosure: I, Priscila Barrera, currently hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: Lake Resources is a client of the Investing News Network. This article is not paid-for content.
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