Stock up 9%
Project review options include stake sale, company merger
Lake claims Kachi project is materially undervalued
Updates throughout, adds share moves in paragraph 3
May 7 (Reuters) - Shares of Australia's Lake Resources LKE.AX surged more than 9% on Wednesday after the company launched a strategic review of its flagship Kachi lithium project in Argentina.
The review, prompted by what the lithium developer perceives as a significant undervaluation of the asset, comes despite surging long-term demand for battery metals following a recent slump in lithium carbonate prices.
Prices of lithium carbonate last month reached their lowest levels since around August 2021 amid prolonged weakness in demand growth from the electric vehicle sector.
Lake's stock was on track for its biggest one-day jump since April 24, while the benchmark index .AXJO was up 0.1% at 0050 GMT.
Potential options being considered include a stake sale in the project and a potential sale or merger of the company.
The Kachi Lithium Brine project is the largest independent project across South America's "lithium triangle", with total resources exceeding 10.6 million metric tons of lithium carbonate equivalent.
The decision to explore strategic alternatives is also bolstered by recent instances of companies with Argentine lithium projects receiving proposals significantly exceeding their current market capitalizations, Lake Resources said.
The review comes more than five months after it agreed to sell three of its non-core lithium brine assets in Argentina for $9 million.
(Reporting by Nichiket Sunil in Bengaluru; Editing by Mohammed Safi Shamsi and Alan Barona)
((Nichiket.Sunil@thomsonreuters.com))
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