Lake Resources shares soar to record high on drawdown deal

The Lake resources [ASX:LKE] The share price rose 15% today following a non-binding memorandum of understanding with Hanwa for up to 25,000 tpy of lithium carbonate.

Shares of LKE rose 15% in afternoon trading, at one point trading as high as $1.98 per share, an all-time high.

After a lull at the start of the year, when LKE shares were trading at around 95 cents, Lake Resources has surged more than 100% in the past month alone.

LKE has gained more than 590% in the past 12 months as the ASX lithium sector continues to build on its momentum.

The question is, how long can this momentum last?


Lake’s Memorandum of Understanding with Hanwa

Lake Resources has signed a memorandum of understanding (MoU) with major Japanese trading company Hanwa to provide for an offtake of up to 25,000 tonnes per year of lithium carbonate (LCE) over 10 years.

The proposed LCE load will be priced using average quarterly reference market prices.

LKE said the MoU also leaves open the option for Hanwa to provide…

Financial support mechanisms such as significant capital investment, possible prepayment on levy and trade finance facilities to secure a long-term agreement and build a lasting partnership with Lake.

LKE commented that partnering with an A- rated partner such as Hanwa could ‘de-risk the project for funders and investors.’

Source: Lake resources

Lake Resources Stock Price Outlook

As part of the MoU, LKE and Hanwa have agreed to negotiate in good faith to achieve a legally binding agreement.

Lake Resources also said Hanwa was willing to…

Coordinating a strategic partnership between not only Hanwa and Lake, but also companies down the battery supply chain to jointly develop a unique and efficient supply chain.’

Lake Chairman, Mr. Stuart Crow, commented:

This memorandum of understanding and the finalization of a binding off-take agreement with Hanwa will allow Lake to remain an independent supplier in global lithium supply chains and provide security of supply to the market and potential customers. .

Growing customer and consumer scrutiny around the environmental credentials of lithium production and security of supply concerns has given us the confidence to enter into this partnership with Hanwa.

Lake’s ongoing negotiations with Hanwa are promising — but investors will likely look to see if the terms contemplated under this memorandum of understanding become binding in any legally binding agreement.

As the surge in the LKE share price shows, lithium remains a hot investment topic.

But as always, we have to ask ourselves how much of the growth is already priced in.

How long can this lithium boom last?

We reflect on these questions in our latest research report on “Three overlooked ASX lithium stocks that could soon soar on the fast-growing electric vehicle revolution‘.

Well worth a read!


Kiryll Prakapenka,
For silver morning