Lake Resources closer to ‘revolutionising’ lithium chemical industry with ‘disruptive’ technology

Lake Resources’ (ASX: LKE) has stepped to the forefront in its plan to “revolutionise” and “disrupt” the global lithium-ion battery sector with its technology partner Lilac Solution’s unique “clean”, highly efficient, low cost and scalable technology on lithium brine.

According to Lake, Lilac’s direct extraction technology is an adaption of a known water treatment method and involves returning 99% of the brine back to its source without changing the chemistry.

The technology does not require evaporation or mining, which are currently used to procure lithium from either brine or hard rock projects. As a result, it has a much smaller environmental footprint and consumes much less water.

Lilac’s technology effectively involves removing the lithium from the brine. Lake claims it is also more efficient and faster – taking days, not months or even years to recover the lithium.

Compared to a traditional lithium brine operation, the Lilac technology enables higher recoveries, and purity, with the process also competitive on cost and easily scalable.

Leading business leaders back Lilac technology

In February this year, Bill Gates-led Breakthrough Energy Ventures backed Lilac in a US$20 million investment round together with MIT’s Engine fund.

Breakthrough Energy’s investors include Amazon founder Jeff Bezos, co-founder of Alibaba Jack Ma, and Bloomberg founder Michael Bloomberg.

The $1 billion fund was established to support companies with promising technology that could reduce greenhouse gas emissions and environmental impacts.

“This is quality, third party validation in Lake selecting Lilac as our technology provider – providing increased efficiency in recoveries and a shorter time to market with sustainable lithium products and a smaller environmental footprint without expansive evaporation ponds,” Lake managing director Steve Promnitz said at the time.

Mr Promnitz added the Lilac process has been de-risked with test work and successful operation of a pilot plant.

“This process isn’t really new – just an adaptation of a well-used water treatment method, but now focused on lithium.”

Recent advances in lithium carbonate production

During the September quarter, Lake has taken the clean lithium chloride product produced by Lilac’s pilot plant and created a 99.97% high-purity lithium carbonate from brine at its Kachi project in Argentina.

This conversion, completed by Hazen Research, an independent renowned group, uses a simple flowsheet that doesn’t make any significant change to the estimated low operating cost.

According to Lake, the lithium carbonate generated by Hazen had a 70% reduction in the overall impurity levels compared to Lake’s earlier 99.9% lithium carbonate product.

It also has a 94% decline in impurities compared to the market’s widely accepted “battery grade” 99.5% lithium carbonate material.

“This process optimisation was a critical step prior to production of larger volumes of high purity lithium carbonate samples,” the company stated.

Hazen is continuing to produce lithium carbonate samples for offtake parties, starting with 5-6kg sample in its current round of processing.

Further brine from Kachi will be sent to Lilac to produce additional samples.

Lake’s lithium carbonate strategy

Using Lilac and Hazen technologies to create the high purity lithium carbonate, Lake’s strategy is to source brine from its wholly-owned Kachi project in Argentina’s Catamarca province.

Kachi comprises 37 mining leases spanning 70,400 hectares and hosts a 4.4 million tonne lithium carbonate equivalent resource.

The resource is open laterally and at depth, with Lake estimating an exploration target of 8-17Mt lithium carbonate equivalent.

The project controls an entire salt lake in the renowned “lithium triangle” and is close to Livent’s Hombre Muerto operation, which is the longest running lithium brine project in Argentina.

At Kachi, Lake will use Lilac’s technology, with Hazen’s input, to create a superior lithium carbonate product for the market that can attract a premium price without any significant changes to the operating cost set out in the prefeasibility study released in April.

Lake anticipates the superior lithium carbonate product will attract “substantially higher prices” than it previously envisaged.

The prefeasibility study, produced by a tier one engineering firm, Hatch, indicated the company would secure US$11,000 per tonne of lithium carbonate equivalent based on the 99.9% purity product.

Hazen’s refinements, along with updated price expectations, will be incorporated into the definitive feasibility study.

Lake chairman Stu Crow noted that the high purity lithium carbonate currently commands between US$15,000-25,000/t.

At the lower US$15,000/t price this would more than double Kachi’s post tax net present value to US$1.6 billion and have a cash flow each year around half of the capital costs

Although the prefeasibility study was “compelling” – estimating a 25-year low cost operation that could produce 25,500t annually of lithium carbonate using Lilac’s technology – Lake expects the definitive feasibility study will offer even more upside.

The prefeasibility study is based on an indicated resource of 1Mt lithium carbonate at 290 milligrams per litre lithium – only 20% of the total resource.

Capital expenditure of US$544 million was estimated, with operating costs of US$4,178/t.

The study predicts earnings before interest tax depreciation and amortisation of US$155 million (A$245 million) in the first full year of production which would increase significantly with a premium price for the product

“Lake’s ambition is to sustainably produce the cleanest quality lithium carbonate at scale for use in the fast-growing battery market,” the company stated.

As well as Kachi as a lithium brine source, Lake owns Olaroz and Cauchari, which are also close to major lithium brine operations or advanced projects.

High tech end users test Kachi lithium carbonate

Lake’s lithium carbonate samples have been sent to Novonix’s (ASX: NVX) subsidiary for testing.

Novonix is at the forefront of battery technology and has worked with tier one battery makers including CATL, Panasonic, LG Chem, SK Innovation, Bosch, Honda and Dyson.

The company is currently developing “million mile” battery technologies and will test Lake’s material in nickel, manganese cobalt batteries.

Novonix is currently preparing to begin testing Lake’s lithium carbonate with the preliminary cathode precursor lithiation followed by full pilot scale evaluation.

Lake’s samples will be used with commercial cathode precursor materials to from a NMC622 cathode, which will then be processed into NMC622 batteries for testing.

This will enable direct and relevant comparisons of Lake’s lithium product’s performance in familiar battery chemistries.

It is expected the testing process will take at least four months, with initial results anticipated two months after the cathode material is produced.

Mr Promnitz said the company was confident Novonix’s testing will “clearly demonstrate” its lithium carbonate will have the necessary specifications tier one battery markets require.

First production from Kachi to target growing demand

It is estimated demand for lithium carbonate will grow from 300,000tpa to 1.8Mtpa by 2028 – underpinned by battery demand for electric vehicles.

Mr Promnitz noted Tesla’s electric vehicle sales have outstripped internal combustion engine sales in the UK and EU – despite the global pandemic – and the EU is now a bigger market for EV’s than China.

He added Lake is positioning itself to supply this demand as a “consistent and sustainable” lithium carbonate source with the ability to scale up production as demand increases while maintaining consistent product quality.

Lake is planning to begin producing from Kachi by 2023.

“Demand for such a sustainably produced and responsibly sourced product is growing in North America and Europe as electric vehicle makers look to bolster their ESG credentials and the use of gasoline engine vehicles are phased out,” Mr Promnitz said.

“Lake is able to provide a high purity product, consistently, due to both a clean brine and a clean technology, with a smaller environmental footprint and better community and water balance outcomes. Right product, with ESG benefits, in the right market that’s growing rapidly,” Mr Promnitz added.