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Striving to Become Domestic Lithium Supplier from Arkansas Brine

Standard Lithium (SLI) is advancing lithium extraction projects in Southern Arkansas and East Texas, which could position the company as a major domestic lithium supplier. A definitive feasibility study (DFS) or the company’s Phase 1A Project indicates a pre-tax NPV of US$772 million and a pre-tax IRR of 29.5%. A preliminary feasibility study (PFS) for the company’s South West Arkansas Project indicates a pre-tax NPV of US$4.5 billion and a pre-tax IRR of 41.3%. SLI’s projects will extract lithium from brine produced from the Smackover Formation, which is recognized as having among the highest known lithium concentrations in North America. The Smackover Formation has produced oil & gas since the 1920s and brine since the 1950s. The Phase 1A Project in Union County, Arkansas will recover lithium through a proprietary Direct Lithium Extraction (DLE) process that has been successfully utilized at a Demonstration Plant since 2020. The project will recover lithium from tail brine processed from a bromine-recovery facility that has been producing since 1957. The project aims to produce an average of 5,400 tons/year of battery-quality lithium carbonate (Li2CO3) over a 25-year economic life. Pending a positive final investment decision (FID) in 1H24, commercial lithium production could begin in 2026. The South West Arkansas Project in Columbia and Lafayette Counties is located where the Smackover Formation has some of the highest tested lithium concentrations in North America. Base-case production is targeted at 30,000 tons/year of lithium hydroxide monohydrate (LiOH·H2O). Pending a positive FID, commercial production could commence in 2027. On October 25, 2023, SLI announced positive test results from three Smackover wells in East Texas. Samples indicated an average lithium grade of 644 mg/L, including one sample at 806 mg/L, representing the highest known sample in North America. The brines also indicated high concentrations of potash and bromine. Arkansas and East Texas have long-established regulatory frameworks that support oil & gas activity and more than 50 years of brine extraction. Brine production falls under the purview of existing state and local agencies. SLI had a C$37.2 million cash balance as of September 30, 2023. The cash flow deficit in 1QFY24 was (C$22.5) million. Management has indicated that the company has adequate sources of liquidity.