Lake Resources N.L. has updated its Kachi Phase One DFS Addendum, showcasing improved lithium brine grades, enhanced extraction technology, and stronger project economics, positioning the Kachi lithium project closer to development.
- Capital expenditure reduced to US$1.157 billion, a 16% cut from original DFS
- Operating costs lowered to US$5,895 per tonne lithium carbonate equivalent
- Pre-tax net present value (NPV) of US$1.5 billion and pre-tax internal rate of return (IRR) of 22.5%
- Measured and indicated lithium resource increased by 12% to 11.1 million tonnes LCE
- Environmental Impact Assessment approval expected in 2025, with strategic partnerships progressing
Enhanced Lithium Grades and Technology Drive Cost Efficiencies
Lake Resources N.L. has released amendments to its Definitive Feasibility Study (DFS) Addendum for the Kachi Phase One lithium project in Argentina’s Lithium Triangle. Central to the update is a significant improvement in lithium brine grades, now set at 249 mg/L compared to the original 205 mg/L, with indications of even higher grades at 268 mg/L. This upgrade underpins a more efficient lithium extraction process using Lilac Solutions’ next-generation Gen 4 ion exchange technology, which boosts lithium recovery rates from 80% to 90% and reduces capital and operating expenses substantially.
The advanced Direct Lithium Extraction (DLE) technology not only enhances recovery but also shrinks the plant footprint by 15-20%, cuts reagent consumption, and lowers the number of wells and processing modules required. These efficiencies translate into a 16% reduction in capital expenditure to US$1.157 billion and a 3% decrease in operating costs to US$5,895 per tonne of lithium carbonate equivalent (LCE), placing Kachi among the lowest-cost lithium brine projects globally.
Robust Financial Metrics Amid Conservative Price Forecasts
Despite adopting a more conservative lithium price forecast and a higher discount rate of 10%, the DFS Addendum projects a pre-tax net present value (NPV) of US$1.5 billion and an internal rate of return (IRR) of 22.5%. The post-tax NPV stands at US$1.01 billion with a 19.7% IRR and a payback period of 4.5 years. These figures reflect a resilient project economics profile, supported by Argentina’s new RIGI incentive regime, which offers tax and customs benefits, regulatory stability, and accelerated depreciation, enhancing the project's attractiveness to investors.
Lake Resources’ strategic focus on cost control and execution efficiency is evident in the streamlined single-phase plant construction approach and the completion of the power supply Front End Engineering Design (FEED) with YPF-Luz, which secures a technically viable and cost-effective grid power connection. This development eliminates the need for interim power solutions, accelerating project commissioning by six months.
Resource Expansion and Regulatory Progress Reduce Project Risks
The company has increased its measured and indicated lithium resource by 12% to 11.1 million tonnes LCE, further underpinning the project’s long-term scalability. The updated ore reserve statement confirms a high average lithium concentration of around 268 mg/L, supporting robust production targets. Meanwhile, the Environmental Impact Assessment (EIA) approval process is advancing, with technical reviews nearing completion and public consultation expected by the end of 2025, a critical milestone for project development.
Lake Resources continues to engage with strategic partners and financial advisors, maintaining a disciplined approach to liquidity and cost management. The company reported cash holdings of approximately A$12.37 million with no debt, and anticipates a 35-40% reduction in cash expenditures for 2025 compared to the previous year, reflecting operational efficiencies and a right-sized cost structure.
Looking Ahead – Strategic Partnerships and Market Dynamics
With the DFS Addendum amendments now published, Lake Resources is positioned to advance towards a final investment decision (FID) as it continues to optimize technical and commercial power solutions and awaits regulatory approvals. The lithium market’s projected growth, with demand expected to double over the next five years and structural supply deficits emerging post-2029, adds a compelling backdrop to Kachi’s development trajectory. Investors and analysts will be watching closely how Lake navigates strategic partnerships and financing to capitalize on these market dynamics.
Bottom Line?
Lake Resources’ Kachi project update sharpens its competitive edge, but execution and market timing remain key to unlocking value.
Questions in the middle?
- How will Lake Resources finalize and finance the power supply to optimize operational costs?
- What is the timeline and certainty around Environmental Impact Assessment approval and its impact on project scheduling?
- How might evolving lithium market prices and supply-demand dynamics affect Kachi’s long-term profitability?