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Water Tower Hour Recap: Extracting Domestic Lithium in Arkansas

Robert Mintak, Standard Lithium’s (SLI) Chief Executive Officer, joined the Water Tower Hour podcast to discuss the company’s lithium extraction projects. SLI is advancing two lithium extraction projects in Southern Arkansas and is exploring lithium potential in East Texas. The projects could position SLI as a major domestic supplier of battery-quality lithium. The 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 and natural gas since the 1920s and brine since the 1950s. The Phase 1A Project in Union County Arkansas will use a proprietary Direct Lithium Extraction (DLE) process that has been successfully used at a Demonstration Plant operating onsite since 2020. The project is designed to recover an average of 5,400 tons/year of lithium carbonate over a 25-year economic life from tail brine processed from a bromine-recovery facility that has been in operation since 1957. 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. Pending a positive FID, commercial production could begin in 2027. SLI’s acreage is just north of acreage currently being tested by ExxonMobil for commercial battery-quality lithium development. In October 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 brine also indicated high concentrations of potash and bromine. The Phase 1A Project could provide a replicable development template for the South West Arkansas Project and potential East Texas projects. A preliminary feasibility study (PFS) filed in September 2023 for South West Arkansas and a definitive feasibility study (DFS) filed in October 2023 for Phase 1A suggest the projects could expose SLI to a combined pre-tax NPV (8%) of US$5.3-US$6.1 billion based on a lithium selling price of $30,000/ton before royalties and, in the case of Phase 1A, brine fees that will be paid to LANXESS. The ultimate value to SLI shareholders will depend on the outcome of the remaining economic items to be determined, project financing alternatives, and commercial offtake agreements. You can listen to the episode on Apple Podcasts, Google Podcasts, Spotify, as well as our website. Links are accessible in our full report.