The Lake Resources N.L. (ASX: LKE) share price is having another tough session on Tuesday.
In morning trade, the struggling lithium developer’s shares are down a further 21% to a new 52-week low of 30 cents.
This means the Lake Resources share price is now down a massive 78% since this time last year, as you can see on the chart below.
Why is the Lake Resources share price crashing?
Investors have been heading to the exits in their droves this week after Lake Resources released a very disappointing update on the Kachi lithium project in Argentina.
That update has reset expectations for the company’s production plans and costs. And as you might have guessed from the share price weakness, this reset hasn’t been a positive one.
Instead of delivering 50,000tpa of lithium carbonate production by 2024, management now expects 25,000tpa three years later in 2027.
Making things even worse, the company is also guiding to significantly higher costs than previously planned. Management estimates that its phase one plan has a capital cost of US$1.1 billion to US$1.5 billion with a run rate operating cost of US$4.70 to US$7.10 per kg.
Whereas its pre-feasibility study results for 25,500tpa had a capex of US$544 million and lower costs per kg.
Twice the cost and three years later than planned is not a good look for management. Not that short sellers will mind. As one of the most shorted shares on the Australian share market, short sellers have won big time on this bet.
Some shareholders will no doubt be wishing they had sold their shares back in March when the company’s chair, Stu Crow, offloaded just under $4 million worth of Lake Resources shares through a series of on-market trades.
