Credit: REUTERS/AGUSTIN MARCARIANJuly 11 (Reuters) - Short seller J Capital Research on Monday alleged that Lake Resources NL's LKE.AX plan to produce lithium in Argentina is based on a process from Lilac Solutions Inc that likely does not work, the latest attack against a wave of new technologies aiming to produce the electric vehicle battery metal.
J Capital Research's report outlines several alleged missteps by Lake's management and claims technology developed by Lilac is too costly to run and uses too much freshwater.
Privately-held Lilac is among the most-prominent developers of so-called direct lithium extraction (DLE) technologies aiming to extract the battery metal from brine using a range of equipment, though none have worked at commercial scale. ..
"Lake has hitched its cart to Lilac's yet-to-be-proven technology," J Capital Research said in the 17-page report. "Investors still have no evidence that the Lilac DLE technology works at scale, and if so, at what cost."
Shares of Lake, which are traded in Australia, fell 6.3% on Monday. Representatives for Lake and Lilac could not immediately be reached for comment. J Capital declined to disclose the size of its short position.
Lilac signed a deal with Lake last September to develop an Argentina lithium project, part of a plan to evolve from a technology company to a lithium producer. .
In April, Ford Motor Co F.N signed a preliminary lithium supply deal with Lake. .
Lilac's technology uses ceramic beads to attract lithium in batch cycles, akin to a laundry machine, after which a water-and-acid mixture is used to wash off the metal.
J Capital alleges in the report that the high cost of the beads would make Lake's project uneconomical and that the process would leave behind "toxic waste."
The report also alleges that Lake has issued stock options to analysts who published favorable reports.
FOCUS-New lithium technology can help the world go green -- if it works
Ford inks Argentina lithium supply deal with Lake Resources
Australia's Lake Resources teams up with clean tech firm Lilac to develop Argentina lithium project
Standard Lithium shares hit by short seller's technology allegations
Australian lithium developer Vulcan rejects short-seller report
FOCUS-Automakers funding new tech aimed at making greener lithium for EVs
Lake Resources says UK export agency interested in funding Argentina lithium project
BMW invests in lithium technology startup Lilac Solutions
Australian lithium miner Firefinch rises after J Capital goes long
(Reporting by Ernest Scheyder Editing by Marguerita Choy)
((ernest.scheyder@thomsonreuters.com; Twitter: @ErnestScheyder; +1-713-210-8512; Reuters Messaging: ernest.scheyder.thomsonreuters.com@reuters.net))
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
