Lake Resources (ASX: LKE) was up 13.44% at the open following revelations that the lithium explorer has signed a non-binding agreement (MoU) with Ford Motor Company.
Following a near identical deal with Hanwa announced last month, Ford and Lake are collaborating to fully develop a Clean Lithium Supply Chain to meet the global environmental demands for electric vehicles (EVs).
Both parties have agreed on a deal for delivery of around 25,000 tonnes of lithium pa from its Kachi lithium brine project in Argentina.
Lake Resources intends to use an innovative direct extraction technology using a well-used ion exchange water treatment method in Argentina.
Management notes the agreement with Ford supports Lake’s strategy to be a key independent supplier into global lithium supply chains.
This latest agreement also supports Lake’s TARGET 100 Program, which aims to produce annually 100,000 tonnes of high purity lithium chemical by 2030.
Management also notes this second non-binding MoU further de-risks the project for financiers and investors.
Together with the UK and Canada Export Credit Agencies’ there's indicative provision of debt finance for around 70% of the Kachi project’s capital requirements.
“Both Lake and Ford see this as an opportunity for a potential long-term agreement with the ability to scale up environmentally responsible production and participate in Lake’s other projects to ensure high-quality lithium products are available to Ford,” Steve Promnitz Lake’s Managing Director said.
Beyond being a key independent supplier into global lithium supply chains, Lake’s Chair, Stu Crow also reminded the market that investors, debt providers, and off-takers and their customers are now demanding new lithium projects adhere to strict ESG standards.
“Increasing customer and consumer scrutiny around lithium production's environmental and ethical credentials drives our focus on sustainable extraction,” Crow said.
“Lake Resources is committed to integrating sustainable development practices throughout our operations, minimising our environmental footprint, and contributing to a clean energy future.”
While Lake’s shares are 70% higher since the start of the year, they’re up over 500% over the past 12 months on the back of a strong surge in lithium prices.
Consensus on Lake Resources is Strong Buy.
Based on Morningstar’s value of $1.87, the stock appear to be fairly valued.
Get the latest news and media direct to your inbox