Up another 5%, the Lake Resources (ASX:LKE) share price is booming. Here’s why.

a close up of a happy handshake between two people, one of whom is grinning widely in the background, as though a beneficial deal has been struck between the two people.

The Lake Resources NL (ASX: LKE) share price is eyeing new record highs after the company announced potential funding support from Canada’s export credit agency.

The company’s share price shot 5% higher to 63 cents in early trading before settling at 60 cents at the time of writing.

Lake Resources is an emerging lithium player that operates the Kachi Project, located in Argentina’s Catamarca province. Using direct extraction technology, Lake Resources plans to produce a sustainable, high purity lithium carbonate product from Kachi.

Lake Resources share price higher as project funding gathers momentum

Lake Resources is rapidly honing in on the completion of exploration and project development activities.

A major hurdle for Lake Resources, and any emerging producer for that matter, is to work out how it’s going to finance the project’s future construction and development.

Last week, Lake Resources announced a funding partnership with its technology partner Lilac Solutions.

Under the terms of the agreement, Lilac will contribute technology, engineering teams and an on-site demonstration plant, in addition to approximately $50 million of future development costs.

The Lake Resources share price surged 18.45% to 61 cents on the day of the announcement.

Financial support for the Kachi Project continues to attract investors. This time, the company received a formal letter of interest from Canada’s Export Credit Agency (EDC) to potentially work alongside UK Export Finance (UKEF).

According to the company’s announcement, EDC would potentially provide direct lending OECD commercial interest references rates of up to US$100 million. The current interest rate for OECD loans sits at 1.77% fixed, significantly less than traditional debt financing and won’t dilute shareholders’ equity.

The announcement explains that ECA’s backing provides significantly lower cost capital and reflects additional confidence around shared financing for its prospective lithium project.

What did management say?

Lake Resources’ managing director Steve Promnitz was pleased with potential further backing for the company’s clean lithium project.

Having Canada’s direct sovereign lending alongside the UK’s sovereign support considerably de-risks the project for the investors and the international banks who continue to express strong interest to be part of Kachi’s development.

Admittedly Lake has significant work to convert these EOI’s into committed funding arrangements. However, these EOI’s are a road map and if Lake does what it says it’s going to do in the [Definitive Feasibility Study] DFS and [Environmental and Social Impact Assessment] ESIA, the project will be funded.

What’s next for Lake Resources?

The Lake Resources share price has a number of catalysts on the horizon.

The company said that Kachi’s feasibility study and Environmental and Social Impact Assessments are “well advanced” and targeting completion in Q2 2022.

The company expects to make a final investment decision on construction finance by mid-2022.

The post Up another 5%, the Lake Resources (ASX:LKE) share price is booming. Here’s why. appeared first on The Motley Fool Australia.

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Motley Fool contributor Kerry Sun has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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