6 questions lodged at 2025 Lake Resources (LKE) virtual EGM

Q1. Why didn't we offer our 31,560 retail shareholders a chance to participate in this latest capital raising via a share purchase plan on the same terms as "sophisticated" big end of town investors which were hand-picked for the discounted institutional placement being approved in resolution 1? As a relatively new shareholder, could you briefly summarise our history in terms of looking after retail investors through SPPs and will you offer a make good SPP before the next AGM?

Answer: When he finally got to it, the chair butchered the question and offered up the usual blather about low demand with previous SPPs. He said they needed to move quickly when the lithium price briefly bounced, before slumping again. Hence, the placement is now under-water. Watch video of exchange via Twitter.

Q2. We already have a slightly ridiculous 2.158 billion shares on issue before approving tranche 2 of the latest placement. Will you undertake to put up a share consolidation at the upcoming AGM so that our shares don't trade at such embarrassingly low levels? We shouldn't have more shares on issue than the Commonwealth Bank and CSL.

Answer: The chair was reading the questions and edited down this one badly then blamed the weak lithium price for the large amount of shares on issue but said there were no plans to do a consolidation. Watch video of exchange via Twitter.

Q3. I'm generally not a fan of paying brokers with equity. Why did we have to do this and did we run a competitive tender to determine who would handle the latest raise as the ticket clipping seemed a little excessive, especially when you throw in these options on top. Next time, will you just pay the brokers with cash and not further complicate the arrangement by requiring a shareholder resolution to approve part of the payment?

Answer: Not asked at meeting but later received this written response: "As Mr Crow explained at the EGM, we did not run a competitive tender process as we determined we needed to act quickly to take advantage of the market upturn we saw following plant closures in China. We also decided not to use additional cash for broker payments as we wanted to conserve as much cash as possible to prolong our financial runway."

Q4. The latest accounts claim that we have net assets of $144.4 million but the market cap today is only $71 million. Could chair Stuart Crow comment on why we are issuing so many new shares and options to himself and others at prices which are at material discount to what we claim each share should be worth based on the net assets? Shouldn't we be taking a write-down if we think the share price used in the placement is fair value?

Answer: Not asked at meeting but later received this written response: "In several recent announcements, Lake has stated a position regarding the Company being significantly undervalued in comparison to market data and transactions of other lithium companies. Net assets on the Company's Statement of Financial Position is reported following prescribed accounting standards. As disclosed in our Annual Report, no impairment was considered appropriate as at 30 June 2025. The Company considers indications for impairment at least annually and more often when significant changes in market, industry and company factors occur. Impairment assessment includes many quantitative and qualitative factors to be considered in the aggregate. While market cap is a factor considered, it is not an isolated basis for impairment."

Q5. Non executive directors who receive management style options are not regarded as independent by proxy advisers and institutional investors. Could Robert Trzebski comment on why he feels the need to be paid in part by way of options, thereby losing his independence. Wouldn't it be better to just be paid with cash and then be classified as an independent director, not someone participation in the same incentive schemes as the CEO. It's not as if we don't have any spare cash based on the $US1m cash salary being paid to the CEO. Does Robert agree having a 3 man board with no independent directors lacks credibility?

Answer: Not asked at meeting but later received this written response: "Having options in a company's public equity does not automatically disqualify a director of a public company from being considered independent. The independence of a director is primarily assessed based on their relationships, both personal and professional, with the company and its management, as outlined in the ASX Listing Rules and corporate governance standards. The company decided to seek shareholder approval for issuance of options to the directors as a way to more closely align the directors' interests with the interests of the shareholders. Finally, while we understand that having a 3-person board is not optimal, the Company decided to reduce the size of its board in an effort to save cost and to decide later, when lithium market conditions improve, to enlarge the size of the board."

Q6. Given that David Dickson already has a solid equity position in the company and is being paid an excessive base salary of $US1 million a year, why does he also need to load up with these additional director options? Given that we burnt through $25.7m in cash last year, wouldn't it make more sense to reduce David's cash salary and pay him more with stock?

Answer: Not asked at meeting but later received this written response: "Mr Dickson's salary and incentive structure are subject to a contractual agreement between the Company and Mr Dickson, which can only be changed by mutual agreement. That agreement provides for salary, short-term incentives and long-term incentives; which have an agreed mix of salary and stock (the issuance of which is subject to shareholder approval). Despite this, as publicly disclosed on 1 July 2024, the Company implemented multiple cost savings initiatives, including by agreeing with Mr Dickson, the voluntary deferral of a significant portion of his salary, which has had the effect of lessening the cash burden of the Company. The Company does not currently plan on further altering Mr Dickson's compensation structure. Finally, as stated in response to a previous question, the director options were issued with the intention of further aligning director interests with the interests of the shareholders."

Copyright © 2025 The Mayne Report. All rights reserved

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