Lithium developer Lake Resources on Wednesday announced a special board committee to evaluate a range of strategic alternatives for its flagship Kachi project in Argentina.

The Australia-listed company said the committee, comprising all members of its board, would explore options including a potential sale of all or part of its interest in the Kachi lithium brine project, a sale or merger of the company, a restructuring, or potential joint ventures and partnerships.

The move comes amid depressed lithium prices that have weighed heavily on sector valuations. Lake pointed to recent transactions involving lithium developers in Argentina, which it said were priced significantly above public market valuations, as evidence of a growing disconnect between asset value and share price.

“While lithium prices are currently depressed and weighing on company valuations across the sector, the long-term fundamentals for lithium remain robust with 17% per annum demand growth through 2030,” said chairperson Stu Crow. 

“As the largest independent lithium development project in Argentina, Kachi will play an important role in supplying battery-grade lithium carbonate to the automotive and energy storage sectors.”

Crow pointed to recent examples where strategic buyers had ascribed values to Argentine lithium projects that exceeded public market valuations. "We believe this dynamic is true for Kachi and Lake’s current share price. The special committee will be focused on addressing this discrepancy and closing the potential value gap through the strategic review we are announcing today.”

Lake has retained Goldman Sachs as financial adviser for the strategic review, and said multiple parties remained engaged in the process. The company cautioned, however, that there was no certainty the review would result in a transaction.

Kachi ranks as one of the largest independent lithium development projects in Argentina’s Lithium Triangle. It has a total resource of more than 10.6-million tonnes of lithium carbonate equivalent and is targeting Phase 1 production of 25 000 t/y of battery-grade lithium carbonate. 

A definitive feasibility study completed in December 2023 showed 99.9% impurity rejection and 80% lithium recovery using ion exchange technology. 

Environmental permitting is well advanced, with approvals expected by mid-2025.

Lake said the project was near “shovel ready” and highlighted its potential to expand beyond initial production levels.