Kachi Lithium Project Faces Price Volatility and Regulatory Hurdles Despite Cost Cuts

Updated Feasibility Study Highlights Cost Efficiencies

Lake Resources N.L. has unveiled a Definitive Feasibility Study (DFS) Addendum for its flagship Kachi lithium brine project in Argentina, delivering a material update to its December 2023 study. The addendum showcases a 16% reduction in capital expenditure (CAPEX) to US$1.157 billion and a 3% cut in operating expenditure (OPEX) to US$5,895 per tonne of lithium carbonate equivalent (LCE), positioning Kachi as one of the lowest-cost lithium producers globally.

These savings stem from a series of engineering optimizations, including a higher average lithium brine concentration of 249 mg/L used in the updated design basis, compared to 205 mg/L previously. This improvement alone enables the elimination of several extraction wells and associated infrastructure, reducing both upfront and ongoing costs.

Technological Advances Drive Performance Gains

Central to the cost reductions is the adoption of Lilac Solutions’ Generation 4 direct lithium extraction (DLE) technology. This latest iteration doubles the lifespan of ion exchange media and boosts lithium recovery rates from 80% to 90%, while significantly cutting water and reagent consumption. The technology’s enhanced efficiency allows for a smaller plant footprint and lower energy demands, contributing to the overall CAPEX and OPEX improvements.

Complementing this, the project has optimized its wellfield layout and pipeline network, switching to high-density polyethylene (HDPE) piping to reduce material costs and simplify installation. The elimination of the ultrafiltration system in favor of pressure filtration further streamlines operations.

Robust Resource and Reserve Base Underpins Project Economics

The updated mineral resource estimate now totals 11.1 million tonnes of LCE, with the measured and indicated resource categories increasing by approximately 10%. The ore reserve update reflects an average lithium grade of 268 mg/L over a 25-year life of mine, slightly higher than the DFS Addendum design basis, indicating potential for further cost optimizations.

Financially, the project demonstrates strong resilience with a pre-tax net present value (NPV10) of US$1.47 billion and an internal rate of return (IRR) of 22.5%. Post-tax figures remain robust with an NPV10 of US$1.01 billion and IRR of 19.7%. The project targets steady production of 25,000 tonnes per annum of battery-grade lithium carbonate, supported by a streamlined single-phase construction approach enabled by anticipated grid power availability.

Environmental and Strategic Outlook

Environmental approvals are progressing, with the final Exploitation Environmental Impact Assessment (EIA) approval expected in the second half of 2025. The project’s design incorporates sustainable water management and reinjection strategies to maintain aquifer pressure and minimize ecological impact.

Lake Resources is concurrently advancing a strategic alternatives process, exploring options such as partial or full sale of its interest, partnerships, or mergers. This reflects a proactive approach to preserving financial flexibility and maximizing shareholder value amid evolving market conditions.