Lake Resources NL (ASX: LKE) - Lithium - Argentina

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Lake has defined a large Mineral Resource Estimate (“MRE”) of 4.4 Mt lithium carbonate
equivalent (“LCE”) at a grade of 211 mg/L Li, and is now working towards a Pre-Feasibility
Study, due for completion in late 2019. The key to the possible technical and commercial viability
is the utilisation of ion exchange technology for the direct extraction of lithium from the brines.
An Engineering Study, undertaken in conjunction with US-based and Silicon Valley backed Lilac
Solutions, and using ion exchange technology developed by the same, has been successful and
has shown the potential for the extraction of lithium from Kachi brines at a cost of US$2,600/
tonne (+-30%), comparable with the lower quartile of operating costs of current evaporative
brine operations in South America.
Recoveries of up to 90% have resulted, significantly higher than that for evaporation operations,
as well as production of lithium within a few hours of commencement of processing, as
compared with up to 24 months for traditional operations. The viability of the process given
the altitude and arid conditions at Kachi will be further tested through a pilot plant, due to start
operating on site in late 2019.
Ion exchange is a well understood and widely used separation, purification and decontamination
process (the orange juice you drink has probably been through an ion exchange filter), however
has only recently been looked at for treating lithium brines. It has the potential to be a disruptive
technology should it prove viable.
Other brine projects include Cauchari and Olaroz, where the Company has pegged ground on
the margins of the salars and adjacent to the world class resources of Orocobre (ASX: ORE),
Lithium Americas Corporation (TSX: LAC), Advantage Lithium (TSX: AAL) and Ganfeng - these
two salars host Resources totalling ~36 Mt LCE at a grade of ~580 mg/L Li.
The strategy here is to test, through drilling, an interpretation that the aquifers hosting the
Resources extend under the alluvial fans and that basin margins are sub-vertical. Initial assay
results from a recently completed hole at Cauchari have supported the concept, with these
returning values of between 340 to 538 mg/L li (comparable with grades from the neighbouring
properties) from a 144 m thick zone from 172 to 316 m. This zone also has low Mg/Li ratios
of 2.7 to 3.0 and high brine flows, with detailed sampling now underway. Ongoing drilling
success could lead to the estimation of significant Resources at Cauchari and Olaroz, with the
drilling rig now to move to Olaroz.
Finally, Lake holds ~80,000 ha over ground with known pegmatite hosted spodumene
mineralisation near the capital of the Province of Catamarca. This is early stage, has seen no
modern exploration and provides blue sky potential.
KEY POINTS
�� Large MRE and control of the salar at Kachi: Work by Lake has defined a major brine
Resource at Kachi, with significant upside potential - a key point is that Lake controls the
salar.
�� Disruptive technology: Successful commercial implementation of the Lilac Solutions ion
exchange technology could be a game changer in the lithium brine business.
�� Transport infrastructure: Areas are all well served by transport infrastructure.
�� In the right commodity: Although there are differing demand forecasts for lithium, the
fundamentals look strong over the medium to long term with the expected +20% CAGR
growth largely in electric vehicle (“EV”) battery markets, with Lake ideally situated to take
advantage of this.
�� Strong management and committed personnel: Company personnel, including
consultants, have extensive industry experience in varied regions (including Argentina)
and commodities. In addition directors hold significant share holdings, and thus will be
motivated to producing strong returns for shareholders.
�� Steady activities and news flow: Ongoing activities including drilling (four holes planned
at Olaroz, with the current Cauchari hole recently completed), and the PFS and ion exchange
pilot plant at Kachi should provide steady news flow over the next six to 12 months.
�� Value uplift with success: We see significant upside in the value of Lake, with this to
be driven by a positive PFS, successful ion exchange pilot plant and drilling success - the
Company has an EV/tonne LCE value significantly lower than peers.