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Lake Resources NL (ASX:LKE) – Buy Opportunity on Sudden Stock Dip Post CEO Departure


Lake Resources’ share price fell 28% to A$0.97/sh overnight upon news that it would be establishing North American head offices to assist in the operations of its Argentine Li brine projects and better serve its off-take customers and partners. Mr. Stu Crow was appointed temporary Executive Chairman to oversee the appointment of a new CEO, board members, and establishment of US offices. The executive search was progressing well while engaging candidates with production, operations, and market experience. We soon came to realize that previous MD, Steve Promnitz, resigned unexpectedly on Friday. A third-party has reported that he also sold his entire 10.2M share position. Steve had done an excellent job in setting the strategic groundwork with an ESG focus for Lake. While we were told that Mr. Promnitz was likely destined for a new role within LKE, the transition to a North American CEO had been in the works for about six months, and his sudden departure comes as a shock to the Board. We view this share price correction as a great investment opportunity to buy Lake Resources at a lower entry point. While CEO departures are common as firms evolve into the construction and production stage, rumors may emerge on Mr. Promnitz sudden departure. Some may wonder if there are DLE or other technical or financial de-risking issues. We suspect this is not much more than a human resources issue, perhaps with a difference in opinion on the head office location strategy. A transition process has been underway for last six months. While moving into North American markets, the Board decided to transition its corporate office into NA. With Argentine projects, Hatch in Toronto, Lilac in CA and an off-take with Ford, eliminating time-zone issues would help streamline the business. Lake Resources has the largest land package in the Lithium Triangle with four brine projects in Argentina, including flagship Kachi. While LKE has financially de-risked Kachi through debt and offtakes, we note that the upcoming DFS and pilot plant should help on the technical front.

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