A large-scale lithium project in Argentina planned by Lake Resources NL will be delayed by six years and cost around twice as much as originally anticipated. Its shares slumped after the announcement.
(Bloomberg) — A large-scale lithium project in Argentina planned by Lake Resources NL will be delayed by six years and cost around twice as much as originally anticipated. Its shares slumped after the announcement.
Lake Resources, which uses a new technology to extract lithium directly from brine, had originally planned to produce 50,000 tons of lithium a year by 2024 but now doesn’t expect to reach that target until 2030. It faces a key challenge in building the processing plant, which will account for more than 50% of capital expenditure, Chief Executive Officer David Dickson said in an interview.
“What the mining industry lacks today is the experience of building a specialist chemical processing plant,” Dickson said. The Sydney-based company said in a separate statement that it expects to reach first production at a lower annual rate in 2027.
Expected capital expenditure for the project, located in remote northern Argentina, is now between $1.1 billion and $1.5 billion for the first 25,000 tons of capacity, at least double the $544 million originally projected, Dickson said. The chief executive, who joined the company late last year, conceded investors would be “disappointed” by the delay, but said the 2024 target promised by his predecessor was “just not feasible.”
Still, Dickson added that Lake Resources had found its lithium brine reserves were greater than initially estimated, meaning production could potentially be extended.
After the announcement of the delay on Monday, Lake Resources’ shares fell 19.5% to the lowest in almost two years. They were trading at 38.25 Australian cents as of 3:15 p.m. Sydney time.
The delay comes as carmakers scramble to secure supply of the valuable battery metal to meet ambitious electrification targets. Lake Resources uses a novel method of extracting lithium developed by Bill Gates-backed US start-up Lilac Solutions Inc.
Other lithium producers including Rio Tinto Group and Allkem Ltd. are developing direct lithium extraction (DLE) technology, which allows them to extract the metal directly from brine rather than wait for it to evaporate.
DLE technology could nearly double lithium production from the equivalent amount of brine, Goldman Sachs Group Inc. said in a report in April. Key challenges included scalability, water consumption, and returning brine to the ground after extraction, it said.
(Updated with quote in third paragraph and details in paragaphs 8 and 9)
More stories like this are available on bloomberg.com
©2023 Bloomberg L.P.