Sydney, Australia – Clean lithium developer Lake Resources NL continues to demonstrate financial support for its flagship Kachi lithium project after receiving a formal letter of interest from Canada’s official export credit agency, Export Development Canada. EDC’s LOI does not increase the potential project funding available from export credit agencies for the project, but it does increase procurement …
EDC’s LOI does not increase the potential project funding available from export credit agencies for the project, but it does add procurement flexibility, improves access to low-cost direct credit, and reflects additional confidence in the joint funding for a robust project.
The LKE has also received an expression of interest from the UKEF. EDC’s stake is envisaged to run alongside UKEF as lead ECA under a Common Terms Agreement to cover approximately 70% of total Kachi project finance needs, subject to standard project finance terms.
EDC would potentially provide up to $ 100 million directly from OECD-CIRR to the project, subject to procurement requirements. On September 6, 2021, the OECD CIRR US $ interest rate for this type of loan with a repayment period of 8.5 years is fixed at 1.77%. (This coupon excludes the EDC premium, which is subject to OECD rules).
EDC is a financial company dedicated to helping Canadian businesses of all sizes thrive on the world stage. As international risk experts, EDC equips Canadian companies with the tools they need – trading knowledge, financing solutions, equity, insurance and connections – to grow their businesses with confidence. The support is based on the commitment to sustainable and responsible management.
The UKEF and EDC collaboration is warmly welcomed by LKE and shows potential further official support for Lake’s clean lithium project. Project finance would deliver significantly lower cost of capital than traditional finance structures, with the capital repaid over a 8.5 year period after construction.
The Kachi project provides important ESG benefits to key stakeholders, including the local community and the global clean energy drive towards net zero emissions. The lower interest rate and the longer terms of the ECA financing minimize the financial risks with this level of financing.
The LOI of EDC and EOI of UKEF are not binding commitments and are subject to a number of standard conditions for project financing and due diligence, including but not limited to suitable structured purchase agreements, successful completion of Kachi’s Definitive Feasibility Study (DFS), and environmental and social impact assessment ( ESIA) and equatorial principles.
Lake Managing Director Steve Promnitz commented, “The direct lending of Canada, along with government support from the UK, greatly reduces the risk of the project to investors and international banks, who remain keen to participate in Kachi’s development.”
âAdmittedly, Lake has done a significant amount of work to turn these EOIs into binding funding agreements. However, these EOIs are a roadmap and if Lake does what it promises in the DFS and ESIA, the project will be funded. ”
The final feasibility study (DFS) and an environmental and social impact assessment (ESIA) for the Kachi project are well advanced and should be completed in the second quarter of 2022. Lake is well funded pending the Final Investment Decision (FID) on mortgage lending for Kachi. expected in mid-2022, with A $ 26 million in cash at the end of the June quarter of 2021, followed by construction work with a targeted production of 25,500 tons per year (tpa) lithium carbonate (LCE) with commissioning and production in 2024. An expansion study on 51,000 tpa LCE is expected at a similar time as the DFS.
Lake recently announced that Lilac Solutions will contribute technology, engineering teams, and an on-site demonstration facility to achieve a maximum 25 percent stake in Lake’s Kachi project based on performance-based milestones. After acquiring its stake in Kachi, Lilac is expected to fund around $ 50 million, which is its prorated share of future development costs – to align innovation, financing, development and production. (see ASX announcement September 22, 2021).
About Lake Resources NL:
Lake Resources NL (ASX: LKE) (OTCMKTS: LLKKF) is a clean lithium developer using clean direct extraction technology to develop sustainable, high purity lithium from its flagship Kachi project and three other lithium brine projects in Argentina. The projects are in a prime location in the Lithium Triangle, where 40% of the world’s lithium is produced at the lowest cost.
This methodology will enable Lake Resources to be an efficient, responsibly sourced, environmentally friendly and cost effective supplier of high purity lithium that is easily scalable and in demand by Tier 1 EV and battery manufacturers.
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