Lake Resources boosts Kachi lithium resource amid sale talks

Lake Resources (ASX: LKE) has expanded the lithium resource at its flagship Kachi project in Argentina’s Catamarca province, as it weighs strategic options including a partial or full sale of the asset—or even the company itself.

The revised resource estimate follows drilling and test work completed in early 2024, which lifted Kachi’s total lithium carbonate equivalent (LCE) resource to just under 11.1 million tonnes. Of that, 8.2 million tonnes are now classified as measured and indicated. The previous estimate, in November 2023, had total resources at 10.6 million tonnes, with 7.3 million in the measured and indicated categories.

The update comes amid a flurry of activity in Argentina’s lithium sector. Several companies with assets in the region have received takeover offers at premiums well above their market value, while global miners like Rio Tinto (ASX, LON: RIO) continue to ramp up interest in South America’s Lithium Triangle.

The Andean southwest corner of the continent, spanning the borders of Argentina, Bolivia and Chile, holds about 60% of global lithium deposits. 

Lake’s strategic review also follows its decision last year to sell three non-core brine assets in Argentina for $9 million, part of a broader effort to focus on Kachi’s development.

The project’s future, however, now hinges on navigating a shifting lithium market. Lake had previously aimed to begin production by 2028, in time to meet a forecast global shortfall. But those projections have changed. Speaking this week at Wood Mackenzie’s Future Facing Commodities Forum, lithium research director Allan Pederson said the firm now expects a market surplus to persist through the next decade.

That surplus, coupled with falling prices, presents headwinds. Lithium carbonate hit its lowest point since August 2021 in April, dragged down by sluggish demand growth from the electric vehicle sector. Analysts warn that even brief price recoveries could quickly trigger fresh supply, putting renewed pressure on the market.

Lake Resources noted that Kachi remains effectively shovel-ready, with final environmental approvals anticipated in the coming months. The company also points to recent advances by its technology partner, Lilac Solutions, whose latest iteration of direct lithium extraction technology could boost recovery rates and reduce the number of injection wells needed.

The lithium developer argues the project — and the company — remain materially undervalued given Kachi’s scale and strategic role in the global energy transition. Investors appear to be taking notice. Shares in Lake Resources rose nearly 10% on Wednesday in Sydney, closing at A$0.034 and valuing the company at A$63.4 million ($41 million).