Lake Resources fields strong interest for debt financing amid electric vehicle boom

Lake Resources N.L. (ASX:LKE) (OTCMKTS:LLKKF) (FRA:LK1) is moving closer to securing debt financing to develop its flagship Kachi Lithium Project from which it aims to produce cleaner and greener lithium to service growing global demand.

The clean lithium developer said more than half a dozen major international banks had expressed interest in providing a cash injection for the lithium play as the electric vehicle industry comes to the fore.

Of course, a bank’s participation is subject to Export Credit Agency approval, so SD Capital and GKB Ventures have been appointed to facilitate any sign-off on funding runways.

In the meantime, Lake’s Kachi project remains funded through to a final investment decision on construction finance, which is anticipated to occur mid next year.

A focus on sustainability

Speaking to the progress towards debt financing, Lake managing director Steve Promnitz said: “Export credit agencies and the project finance banks are committed to the new energy transition and to projects with an environmental, social, and corporate governance benefit that includes sustainable development goals.

“As a company focused on the sustainable, direct extraction of lithium to produce a high-quality, battery-grade product, Lake is ideally positioned to contribute to the achievement of these goals.

“We look forward to advancing these talks further, together with potential international off-takers, as we progress the Kachi definitive feasibility study towards a successful outcome.”

Funding facility expanded

Recently, Perth-based investment bank Acuity Capital expressed further confidence in Lake’s operations by expanding its funding runway.

In July 2018, Acuity established a controlled placement agreement with the ASX-lister. Since then, however, the investment bank has expanded the placement’s size to A$30 million, providing Lake with access to a larger capital pool.

To date, Lake has drawn down nearly A$4.76 million under the placement facility, with about A$25 million still available as standby financing until January 2023.

The road to debt financing

In order to advance lower-cost funding discussions, SD Capital and GKB Ventures have chosen to focus on Export Credit Agencies (ECAs).

ECA-led financing would lead to lower-cost, longer-term debt, generally accounting for roughly 70% of the funding required and involving a 10-year repayment scheme.

Commenting on potential financing for Kachi in a joint statement, SD Capital’s David Buckle and GKB Venture’s Gabriel Buck said: “We are greatly encouraged by the progress being made and the early positive response from the project finance banks.”

Ultimately, Lake said estimates involving the potential size and duration of a debt funding package would be provided in the coming months after it received expressions of interest.

Meanwhile, the lithium developer is confident it has enough capital to progress work through to a final investment decision at Kachi.

At the end of 2021’s March quarter, Lake had A$24 million in the bank to sustain its operations.

Story by ProactiveInvestors