Why is Lake Resources (LKE) stock price under pressure?

Despite falling in recent days, shares of the lithium explorer have doubled in value over the past 12 months.

Lake Resources (ASX:LKE) is among the ASX’s worst performing stocks, continuing its slide over the past few days that has seen the lithium explorer lose nearly 40% of its value over the past 2 sessions.

As of this writing, the stock was down another 11.6% to 86 cents.

Why did LKE stock price drop?

The recent decline in Lake Resources shares comes after the company on Monday made the shocking announcement about the exit of its pivotal managing director Steve Promnitz.

In a statement to the ASX, the company said Mr Promnitz, who had run the company since 2016, left effective immediately, but did not include any statement from him regarding his departure.

Lake Resources said Stu Crow will serve as executive chairman for an interim 6-month period and oversee the transition to serve the company’s critical North American and Asian supply chains. He will be responsible for hiring a new CEO and board members, as well as setting up the company’s offices in the United States.

“We are now establishing a North American presence to serve our pick-up customers, continue to work with our US-based technology partner, and engage capital markets,” the company said in the release.

“As part of this transition…general manager Steve Promnitz will leave after establishing Lake’s dominant position in Argentina.”

Part of the jitters over the company’s stock price stems from the fact that Mr. Promnitz owned more than 10.2 million shares of Lake. His sudden departure followed by a large block trade in the stock on Tuesday spooked investors.

Transformation

But much of it is due to the belief that the transformation of Lake Resources was led by Mr. Promnitz. He was CEO and Managing Director for nearly 6 years and will be hard to replace.

Its exit comes less than 2 months after the junior lithium explorer signed a major new kidnapping agreement with global auto giant Ford Motor Company (NYSE:F) in April.

Under the non-binding memorandum of understanding signed between the 2 companies, Ford will purchase approximately 25,000 tonnes per year of lithium from the flagship Lake Project, Kachi, Argentina, which sits in the middle of the so-called “lithium triangle”. from South America. center.

Lake had also signed a similar agreement with Japan’s Hanwa Co Ltd in March to supply up to 25,000 tonnes per year of lithium carbonate from the Kachi project.

The 2 deals underscored the company’s growing status as a supplier to the global electric vehicle (EV) supply chain, helping to de-risk its Kachi project and 3 other ongoing projects. development in Argentina for financiers and investors.

The decision also comes at a bad time for the battery minerals sector as a whole, which has been the target of negative sentiment amid rapidly rising interest rates and slowing economic growth that could hamper the growth prospects of the electric vehicle industry.

Indeed, shares of rival ASX-listed explorers Core Lithium (ASX:CXO) and Pilbara Minerals (ASX:PLS) have also suffered in recent weeks and were down 8% and 2% respectively on Wednesday.

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