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By Team Ace Investors

COMPANY OVERVIEW

Lake Resources NL (“LKE” or the “Company”) is a clean lithium developer utilizing direct extraction technology for production of sustainable, high purity lithium from its flagship Kachi Project in Catamarca Province within the Lithium Triangle in Argentina among three other projects covering 220,000 ha. This direct extraction method delivers a solution for two rising demands – high purity battery materials to avoid performance issues, and more sustainable, responsibly sourced materials with low-carbon footprint and significant ESG benefits.

On 24^th October 2025, the Company strengthened its financial position during the quarter with a well-supported ~$12 million capital raise, significantly enhancing liquidity and flexibility to progress the Kachi Lithium Brine Project—one of the largest assets in the Lithium Triangle. The Company released improved results from the updated Kachi DFS Addendum for Phase One, highlighting a 16% reduction in CAPEX to US$1.16 billion and a 3% improvement in OPEX to US$5,895/t LCE, placing the project among the lowest-cost operations globally. Lake also reported an updated ore reserve supporting a 25,000 tpa operation over a 25-year mine life, with planned development of 11 production wells and 14 injection wells at an average grade of 268 mg/L lithium. Engagement with Argentine authorities continued as the Company moves toward approval of the Exploitation EIA. In parallel, FEED work with YPF Luz confirmed that grid power is a viable solution for Kachi’s energy needs. The Company also focused on organisational optimisation, targeting a ~40% reduction in 2025 cash outflows versus 2024. As of 30 September 2025, Lake held $18 million in liquidity, supported by proceeds from the capital raise, ATM funding, and ongoing cost discipline.

Source – Company’s Report

INVESTMENT RATIONALE

• Transformational Project Improvements: Significantly Enhanced Economics & Operational Efficiencies – The updated Phase One DFS Addendum for Lake’s Kachi Project highlights major improvements in project economics and operational efficiency. The revised study shows CAPEX reduced to US$1.16 billion and OPEX lowered to US$5,895/t LCE, supporting a strong pre-tax NPV₁₀ of US$1.5 billion and a 22.5% pre-tax IRR, based on a plant design grade of 249 mg/L. Resource quality and project de-risking have strengthened, with measured and indicated resources increasing to 8.2 Mt LCE (+12%) and total resources rising to 11.1 Mt LCE (+5%). Optimisation work has also enabled a ~22% reduction in well count and a 15–20% smaller plant footprint versus the original DFS. On the technology front, advancements in Lilac’s Gen 4 ion-exchange (IX) system deliver ~90% recovery rates, significant reductions in module count, and materially lower DLE CAPEX and OPEX. Additional cost and efficiency gains are expected from higher brine concentrations (268 mg/L) and Lilac’s Gen 5 IX improvements. Overall, the DFS Addendum confirms a more robust, lower-cost, and more efficient development pathway for Phase One of the Kachi Project.
• Higher Grades, Better Technology, Lower Costs, and Stronger Economics – The updated DFS Addendum results for Lake Resources’ Kachi project are driven by a combination of higher brine grades, improved extraction technology, reduced project footprint, and stronger overall economics. The project now benefits from a substantially improved lithium concentration profile, rising from the original 205 mg/L to over 250 mg/L, with the DFS Addendum using 249 mg/L as the design basis and recent data showing an even higher average grade of 268 mg/L. This directly enhances extraction efficiency and reduces pumping requirements. The transition to Lilac’s Gen4 ion-exchange (IX) DLE technology further strengthens the project by increasing lithium recovery rates from roughly 80% to around 90%, while also offering greater throughput, longer media life, and fewer required IX modules. These improvements drive a 39% reduction in DLE Capex and a 40% reduction in DLE Opex, substantially lowering the cost structure. In parallel, the project footprint has been streamlined, with a ~22% reduction in wells leading to a 35% decline in well Capex and a 44% reduction in well Opex. The number of DLE modules has been cut by half, and overall site footprint lowered by 15–20%, supported by reduced brine pumping volumes and significantly lower reagent consumption. Together, these enhancements translate into stronger project economics, with lower capital intensity, better operational efficiency, and engineering optimizations that offset inflationary pressures, ultimately delivering improved IRR and NPV for the Kachi development.
• Lithium Market Outlook 2025–2035: High Volatility and Strong Long-Term Demand Growth – In 2025, the lithium market experienced significant price volatility, largely driven by an intense news cycle and uncertainty around future supply. By early November 2025, lithium carbonate and hydroxide prices had surged 22% and 29% respectively since July, while spodumene rose 38%. Forecasts for battery-grade lithium carbonate diverge, with spot prices around $11.3/kg LCE, Goldman Sachs projecting stability near $13.5/kg, and Benchmark Minerals expecting a rise to $19/kg by 2035. Meanwhile, demand for lithium is projected to nearly double between 2025 and 2030—from 1,145 kt to 2,266 kt LCE—and grow by 58% more by 2035, reaching 3,573 kt. This reflects a strong 12% CAGR, driven by rapid EV adoption across Asia and Europe, expanding energy-storage deployments in the Middle East, and reinforcing global policy support.

ACE’s RECOMMENDATION

The Company’s Kachi Project is positioned as a major global lithium asset with strong expansion potential. Phase 1 of the Definitive Feasibility Study (DFS) was completed in December 2023, with an addendum finalized in August 2025, and Exploitation EIA approval anticipated in 2026. The project aims to produce battery-grade lithium carbonate at >99.5% purity and is supported by a large 11.1 Mt LCE resource base, including 8.2 Mt measured and indicated and 2.9 Mt inferred. Updated DFS design parameters include a brine feed concentration of 249 mg/L and an average brine concentration of 268 mg/L.

The development plan targets a 25 ktpa production capacity in Phase 1, with Phase 2 enabling construction of a second plant to double capacity and allow for further staged expansion. With an expected mine life of 25 years, the project is underpinned by responsible development practices, a clear growth strategy, experienced leadership, and strong support from the provincial government of Catamarca.

The Company entered Q3 2025 with a solid financial position, holding A$18 million in cash and no debt, and increasing its liquidity to approximately A$20.5 million after receiving A$2.5 million in ATM proceeds post-quarter. The company achieved stronger-than-expected cost discipline, projecting a ~40% reduction in 2025 cash expenditures compared to 2024 while closely managing spending and maintaining a conservative cash approach. Looking ahead, cost reductions and operational streamlining are expected to deliver additional savings in 2026, with current liquidity anticipated to carry the company through the full year. We recommend the stock as a SPECULATIVE BUY at a closing price of $0.055, with a stop loss in the range of $0.042–$0.045.

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