Lake Resources (ASX: LKE) (OTCQB: LLKKF) shares are down 19%. The LKE shares are down as they, well, they rather shuffle their feet, go red in the face, as they have to clarify, for the regulator, their previous announcements to the market. It is true that everything they’ve been saying can be derived from the earlier things they’ve been saying. But it’s also true that it is possible, maybe, to not quite grasp the intricacies of what they’ve been saying. Regulators don’t like this sort of information release. It needs to be simple, easy to understand and to the point. If you’ve got to use several paragraphs to explain the earlier releases then, no, you weren’t as clear as you should have been first time around.
The release: “Are the references to 25,000 tpa and 50,000 tpa of battery grade lithium carbonate in the Announcement production targets as defined by the Listing Rules (i.e. projections or forecasts of the amount of lithium carbonate to be extracted from the Kachi project)?
No.”
And then comes the long explanation. Kachi is all too far in the future, too uncertain, to be a projection. It’s, umm, a wish list. Sorta - thus the red faces and so on.
Lake Resources share price from Google Finance
We did grasp the meaning of those earlier announcements from Lake Resources: “Lake Resources (ASX: LKE) shares are down 20% on the release of an operational and planning update. The news from which is not good, thus the decline in the LKE share price. Effectively, there's going to be less lithium, the lithium's going to be later and the profit margin is being squeezed. These are not things that anyone really desires. It's also possible to go one stage further and start to think that Lake Resources might miss the boat entirely. Lithium brines should still be fine, but to miss the current roaring market for the output would be, let us say, a shame.
The announcement by Lake Resources: “Lake Resources Announces Two Phase Development to Targeted Production of 50Ktpa Battery Grade Lithium Carbonate” and so on.
What people might have thought was an announcement that the plant was going to be larger was, in fact, an announcement of less and later. So, it’s possible to see why the regulator would insist upon a clarification. The fall in LKE shares that time lasted another day too.
The important point to note here. LKE is being accused of not being entirely clear, not of being deliberately misleading. But there are plenty of people in the junior mining space who would happily be deliberately misleading - which is why the regulator is so tough on such clarifications.
