Finance available to support expanded production to 50,000 tpa of high purity lithium carbonate equivalent
Lake Resources secures financing for Kachi Lithium Project. (Credit: Alex Banner from Pixabay.)
Clean lithium developer Lake Resources NL (ASX: LKE; OTC:LLKKF) has taken a major step forward in securing financial support for its flagship Kachi Lithium Project, after receiving a formal Expression of Interest (EOI) from the United Kingdom’s official Export Credit Agency (ECA), UK Export Finance (UKEF), to cover approximately 70% of the total Kachi project funding requirements, subject to standard project finance conditions.
Together with demonstrating official backing for Lake’s clean lithium project, the project finance would deliver a significantly lower cost of capital than traditional financing structures, with the principal repaid over an 8.5 year period post-construction. The funding also reflects the Kachi Project’s significant ESG benefits for key stakeholders, including the local community and the global clean energy drive towards net zero emissions. The lower interest rate and longer repayment terms associated with ECA financing minimises the financial risks with this level of funding and will drive development of the project in Catamarca Province, Argentina
The EOI has indicated that total funding could be increased to include 70% of an expanded production plant to 50,000 tpa high purity lithium carbonate equivalent. This comes amid accelerating demand from leading battery and EV makers for sustainably produced, battery quality lithium, with increasing projections of a growing structural supply deficit.
UKEF is the United Kingdom’s official export credit agency, which in the last five years has provided £14 billion (A$26.4 billion) of support for UK exports and international trade.
UKEF has provided a very strong EOI which is in line with the OECD Arrangements for Officially Supported Export Credits. UKEF’s support is not conditional on other ECAs participating. UKEF has stipulated minimum UK content requirements but is welcoming the participation of other ECAs, with whom discussions are ongoing. UKEF’s EOI includes the possibility of a portion of direct lending at the OECD CIRR rates linked to the UK content.
The EOI is not a binding commitment and is subject to a series of standard project finance terms and due diligence, including, among others, suitable structured offtake contracts, the successful completion of Kachi’s Definitive Feasibility Study (DFS), an Environmental and Social Impact Assessment (ESIA) to Equator Principles.
Source: Company Press Release