Export Development Canada has sent Lakes a letter of intent, saying it is open to working with UK Export Finance to support 70% of the total finance.
UKEF expressed an interest to meet 70% of the total stage one costs in August, and potentially supporting an expansion to double production to 51,0000 tonnes per annum of battery-grade lithium carbonate equivalent.
Since then, Lake has agreed to a 25% farm of Kachi with its technology partner, Lilac Solutions, which will provide technical support and up to US$50 million. Lilac subsequently raised $150 million.
EDC arrives with an offer of up to $100 million, subject to sourcing requirements, which Lake managing director Steve Promnitz said would be at the "attractive" OECD fixed commercial interest reference rate, which would be significantly lower cost of capital than traditional debt financing.
Currently the CIRR is just below 1.8% over 8.5 years.
Promnitz has said that Lake may be able to fund its equity share from available cash, and in-the-money options, but that potential ECA support makes international banks keen to be involved in the project.
He said the backing of EDC and UKEF would not increase the overall ECA capital pool, but would diversify it, providing flexibility and greater access to low-cost direct lending, while reflecting confidence in Kachi's green credentials and Lilac's ion exchange processing technology that does away with large evaporation ponds, and shortens the processing time from months to days.
The offers from EDC and UKEF are not binding, and come with a number of requirements, including due diligence and the successful conclusion of a definitive feasibility study.
Promnitz said the letters of interest were "a road map and if Lake does what it says it's going to do in the DFS and ESIA, the project will be funded".
The DFS and environmental and social impact assessment are due for completion in the June 2022 quarter.
The goal is to achieve first production in 2024.
The 25,5000tpa Kachi stage one is expected to need $544 million, with payback expected within about two years.
Lake has around A$26 million in available cash.
Lake shares were up 5% in early trade to 63c. The stock is trading just below its recent all-time high of 68c. Its shares were below 5c for much of 2020.
