Lake Resources’ Kachi project NPV gets lift to US$1.6b due to higher lithium price forecast

Lake Refreshes Kachi production increase PFS NPV lithium ASX LKE
Lake Resources is also assessing expanding its proposed lithium carbonate production from Kachi.

A pre-feasibility study refresh has boosted Lake Resources’ (ASX: LKE) Kachi lithium brine project’s net present value to US$1.6 billion (A$2.1 billion).

The updated feasibility study uses revised lithium price estimates of US$15,000 per tonne for high-grade battery grade lithium carbonate – up from the previously assumed price of US$11,000/t.

This higher price was developed from ongoing discussions with potential offtake parties along with analyst Benchmark Mineral Intelligence’s recent projections.

Assumed production in this scenario is unchanged at 25,500t per annum of lithium carbonate.

The higher NPV of US$1.6 billion is a 110% increase on the pre-feasibility study that was released in April last year that gave an NPV of US$748 million (A$1.18 billion).

Estimated internal rate of return has also risen on the April figures, with this number up from 22% (post-tax) to 35% (post-tax).

The higher assumed lithium carbonate price has driven anticipated annual earnings before interest tax depreciation and amortisation up from US$155 million (A$245 million) to US$260 million (A$350 million).

Proposed expansion to lithium production

Lake managing director Steve Promnitz said the updated lithium price forecasts demonstrate how “financially robust” the proposed Kachi operation is, adding this could be potentially enhanced with expanded production.

The company is assessing an expanded production scenario to meet forecast lithium chemical demand.

“Significant new production is required to meet the forecast growth in demand from electric vehicles and energy storage over the next 10 years,” Mr Promnitz explained.

“The Kachi project remains highly scalable and the company is working towards an expansion which would make it globally significant in terms of high purity lithium carbonate production, and well-positioned to supply the expected deficit in battery grade product over the next few years.”

He added this was “an important differentiator of Lake” as it continues negotiate with battery supply chain participants.

“These participants are seeking high purity product that can be scaled up to meet demand and has a measurable ESG benefit – Lake ticks all those boxes.”

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