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05 January 2024

Argentinian lithium mine progresses financing

Metals and Mining
Middle East & Africa, Americas, Asia-Pacific, Europe
Managing Editor
The ECA-covered loan backing Lake Resources’ Kachi lithium project in Argentina is due to close in Q1 2025 and will mark UKEF’s first project in the South American country since the Falklands war.

Australia-based Lake Resources is expected to close a roughly $800 million ECA-backed limited-recourse debt package to finance the construction of its flagship Kachi lithium project in Argentina in Q1 2025. The news comes after the developer announced the results of its definitive feasibility study at the end of 2023. 

The scheme, with an estimated total project cost of between $1.2-1.4 billion, is located in the Catamarca Province, and will mark UKEF's first project in the country since the Falklands war. The size of the scheme has increased as more drilling unearths more reserves: measured resources have increased from 2.19 to 2.93 million tonnes (Mt) of lithium carbonate equivalent (LCE) with estimated inferred resources of 5.18 mt LCE.

JP Morgan and Citi were mandated at the beginning of the summer, with GKB Ventures and SD Capital Advisory as advisers. One source close to the deal says bank appetite for medium- to long- term Argentinian risk was limited – and this was prior to the incumbent prime minister Javier Milei’s election – given the country's political instability in recent years and issues around directing hard currency into the economy.

The next steps of the project include the initiation of a strategic partnering process, led by Goldman Sachs; commencement of negotiations with potential offtake partners to secure binding offtake agreements (in tandem with strategic partnering process); and, the selection of a Front-End Engineering Design (FEED)/Engineering, Procurement and Construction Management (EPCM) contractor. 

There will be continued engagement with ECAs and the supporting commercial banks for the project financing, as well as opportunities to further improve the overall project capex and opex.


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