Lake Resources (ASX: LKE) (OTCQB: LLKKF) shares are up 16% today. LKE shares rose on the back of their report about the hydrology of wells at the Kachi Project. This is interesting, yes, in the sense that it is a necessary confirmation along the road to actually being able to produce lithium there. But we should perhaps point out that it’s not a huge surprise. It’s a confirmation of what was generally thought to be true rather than a revelation. That it didn’t work would have been that truly price changing information, not that it did.
The announcement: “Clean lithium developer Lake Resources NL (ASX: LKE; OTC: LLKKF) (“LAKE” or “the Company”) announces successful testing that has proved the concept of extraction and injection to support the production of high purity battery grade lithium carbonate at the Kachi lithium brine Project (“Kachi” or the “Project”) in Catamarca Province, Argentina. “The extraction and injection testing confirms highly favourable reservoir hydraulic properties and allows us to optimise the future wellfield,” Lake CEO David Dickson said.”
The point here is that Lake Resources is trying a third method of lithium mining. Instead of pumping up brine which is then evaporated, or mining for spodumene to be crushed, they want to pump up the brine, extract the lithium then pump the wastewater back down again. This is known as DLE, direct lithium extraction. The extraction part works, that’s known. What was really tested here was the ability to pump the waste back down again - this is possible, good yet unsurprising news.
Lake Resources share price from Google Finance
We’ve talked before about Lake Resources, and here about LKE shares. ““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.”
We’ve no real doubt that DLE works, or that there’s lithium in economic quantities in those brines. We’re also entirely happy with the idea that someone’s going to bring that material to market in the fullness of time. We have slight doubts about the Lake Resources management - see above about timescales etc - and as we’ve long said we think the lithium boom will end soon enough. Those who are late to market are likely to miss it that is.
