A dispute between partners casts doubt on a million-dollar investment in lithium

This is a conflict in the Kachi project led by the Australian company Lake Resources and the North American startup Lilac Solutions

By Andres Sanguinetti

09/20/2022 – 09:01 a.m.

A millionaire lithium project in Catamarca, in which the founder of Microsoft participates Bill Gatesis at risk of failing due to an internal dispute between the two partners of the venture.

The fight involves the Australian mining group Lake Resorts NL and the North American startup Lilac Solutions Inc., that last April they had closed an agreement to promote the production of lithium brine in the project called Kachi that covers an area of ​​74,000 hectares in Catamarca.

The problems are linked to the terms of participation in the association that Lilac claims to access 25% of the capital of Kachi Lithium Pty Ltd, the company in charge of the business once it complies with certain obligations established by Lake Resources.

According to the technology company, the term expires on November 30, while the Australian holding company considers that it will last until September 30.

Reasons for the dispute

This is not just a dispute over timing, as in that period Lilac must have fulfilled a series of corresponding project funding obligations while providing its technology to advance the initiative.

The company entered this business at the hands of Bill Gates, who led an investment round for US$20 million through two of his funds, “Breakthrough Energy Ventures” and “The Engine” of MIT, to finance the startup. American company that implements new technologies to make water use more efficient in mining extraction processes.

There are more and more foreign companies interested in investing in projects to extract lithium in Argentina

There are more and more foreign companies interested in investing in projects to extract lithium in Argentina

Following the incorporation of this technology, the Kachi project should be operational during the latter part of this year and a production target of 25,500 tons per year (tpa) of lithium carbonate (LCE), with commissioning and production in in 2024, after a final investment of US$540 million.

For this to happen, the fulfillment of a series of milestones by Lilac is considered essential. One of them is to complete at least 1,000 hours of operations from its pilot unit and the production of a feed totaling at least 2,500 kg of lithium carbonate equivalents from on-site operations.

According to a Lake Resources report, the difference in the deadline with its partner forced it to exercise its rights so that the dispute is resolved by agreement between the two companies or through arbitration.

In addition, he recalled that he has the option to exercise certain repurchase rights of the shares under the agreement if Lilac does not achieve the milestone on the required date, a fundamental fact for the Australian group to comply with its plan to produce lithium in Argentina.

Batteries for Ford

As it happens, with Lilac technology, the company in charge of Kachi can efficiently deliver the large volumes of high-quality lithium chemicals needed by manufacturers of batteries needed for electric cars.

In fact, Lake Resources has signed an agreement with Ford Motor to supply the North American car manufacturer that is committed to direct lithium extraction (DLE), a relatively new technology that filters the metal from brine and uses much less surface area than mines. open air and evaporation ponds.

A dispute between partners casts doubt on a million-dollar investment in lithium

A dispute between partners casts doubt on a million-dollar investment in lithium

Ford intends to buy 25,000 tonnes/year of the white metal from Lake and Lilac Solutions’ Kachi project.

Meanwhile, the Australian company completed the construction of a plant that will be used by the North American startup to face the demonstrations of the technology that it will use in Kachi. Lilac should then begin on-site processing of the brines.

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