The Lake Resources N.L. (ASX: LKE) share price has hit a new 52-week low of 41 cents today.
The ASX lithium share is down 4.7% today and down 80% over the past 12 months. By comparison, the S&P/ASX All Ordinaries Index (ASX: XAO) is down 0.37% today and down 0.95% over the year.
The latest news dragging on the Lake Resources share price
ASX lithium shares with operations in South America were all hit by news out of Chile last Friday.
The Chilean Government has decided to nationalise its lithium industry. The government plans to set up a state-owned lithium company that will take a controlling stake in local producers. Yikes.
Lake Resources shares have fallen 10% since this news broke. Argosy Minerals Limited (ASX: AGY) shares and Allkem Ltd (ASX: AKE) shares also took a hit given they all have mines in neighbouring Argentina.
ASX investors are now concerned that Argentina might want to replicate Chile’s decision in the future.
Institutional investor takes advantage of fallen price
Although it’s depressing for existing investors to see the Lake Resources share price this low, it’s interesting to note that United States financial services company State Street Corporation is buying.
Clearly, it sees an opportunity to nab Lake Resources shares for a good price, and it wouldn’t be buying if its analysts weren’t convinced of a bright future ahead.
State Street became a substantial holder of Lake Resources shares on 19 April with a 5.01% stake.
It increased its stake to 6.03% on 24 April — three days after the news from Chile — indicating that its analysts may not be fazed by this particular development.
Have Lake Resources shares hit bottom?
Investors are sure hoping so.
The Lake Resources share price has tumbled from an all-time high of $2.65 in April last year to 41 cents today. That’s a gut-wrenching 85% loss.
A number of things have happened during this period to bring the share price down.
There was the seemingly acrimonious resignation of CEO Steve Promnitz, then projections that lithium prices would fall, and a devastating attack by United States short seller J Capital.
All of this drama led to Lake Resources becoming one of the most shorted shares on the ASX. The short interest today is 8.06%, according to the latest ASIC figures.
However, recent news from Lake Resources indicates perhaps the worst is over.
The company appears to have debunked one of J Capital’s assertions by showing that its ion exchange DLE technology works.
On 3 April, Lake Resources announced independent verification of above 99.8% grades and purity for lithium carbonate produced at its flagship Kachi Project in Argentina using its DLE technology.
Two weeks later, the company announced first production of 2,500kg of lithium carbonate equivalents (LCE) “with minimal environmental impact”.
The company said it took 1,000 times less land and 10 times less water to produce its LCE than traditional methods.
This is important because Lake Resources seeks to establish itself as a cleaner producer of lithium than other companies, which it hopes will make it more appealing to ESG-focused customers and investors.
Lake Resources CEO David Dickson said DLE was “a new process that has now been proven …”.
Lake Resources says Kachi is now ‘on track’ for commercial-scale development.
What do the experts think?
As we covered last month, Bell Potter thinks the Lake Resources share price could grow five-fold in the next year.
At the time, the broker had a speculative buy rating on Lake Resources with a share price target of $2.52.
