Lake Resources N.L. (ASX: LKE), which is developing five projects at the heart of the Lithium Triangle, in Argentina, has raised A$20.6M from institutional investors at a 12% premium to the ten-day volume weighted average price. As trading closed on Monday 25 January, the Australian company’s share price had risen by 21.43% to 25.5 cents per share, and year-on-year growth of 442.55% was recorded.
The raise has enabled Lake Resources to fully fund its flagship Kachi Lithium Brine Project in Argentina through to the construction phase in 2022. The company develops high-purity lithium for Tier 1 electric vehicle makers and battery manufacturers using clean, direct extraction technology.
Nevertheless, while today’s share price rise will be welcome news for the board and investors, Lake Resources remains undervalued compared with its fellow lithium developers. As trading closed on Monday, the company’s market cap was A$172.29M and the 52-week share price range was A$0.022 to A$0.268. Steve Promnitz, MD & Director of Lake Resources, notes that several of Lake Resources’ industry peers have a much greater market cap despite having experienced similarly dramatic share price upswings in recent weeks.
One example is Standard Lithium (TSX: SLL), which Mr Promnitz says is the only other company to be as advanced as Lake Resources’ when it comes to direct extraction. It also has a similar product quality and is at the same stage of development towards production. Standard Lithium has a 52-week range on the TSX of C$0.39 a share to C$4.60 a share, and the company is up 377.91% in the last year with a market cap of C$532.45M, as of 22 January 2021.
Another is Canada’s Neo Lithium Corp. (TSX: NLC), which has a 52-week range of C$0.38 to C$3.88. As of last Friday 22 January, Neo Lithium Corp. has seen a year-on-year rise of 389.23% and has a C$407.26M market cap. The firm, like Lake Resources, is based in Argentina but uses traditional evaporation pond methods and does not employ the same cutting-edge, clean technology as its Australian peer.
Last year, Simon Francis, founder of Orior Capital, said that Lake Resources “looks cheap”. This both in absolute terms, as well as relative to other lithium developers – especially as Lake Resources has operational advantages arising from its clean technology and the lithium industry’s strong prospects for growth.