Standard Lithium Announces Positive Preliminary Feasibility Study
Results for Its South West Arkansas Project
Standard Lithium Ltd. (“Standard Lithium” or the
“Company”) (TSXV:SLI) (NYSE American:SLI) (FRA:S5L), announced
today the positive results of a Preliminary Feasibility Study
(“PFS”) for the Company’s 100%-owned South West Arkansas (“SWA”)
Project (the “Project”).
All figures are in US dollars unless otherwise stated.
PFS Highlights:
- Lithium brine project in
southwestern Arkansas. PFS indicates base case production
of 30,000 tonnes per annum (“tpa”) battery-quality lithium
hydroxide monohydrate (“LHM”); upside case of 35,000 tpa
- 20-year plus operating
life. Upgraded mineral resource averaging 437 mg/L
underpins a minimum 20-year operating life
- Robust project
economics. Base case after-tax NPV $3.1 billion and IRR of
32.8% and upside case after-tax NPV $3.7 billion and IRR of 35.4%,
assuming production of 30,000 tpa and 35,000 tpa, respectively, and
both assuming discount rate of 8% and a long-term price of
$30,000/t for battery-quality LHM
- Competitive operating
costs. Average annual operating costs of $4,073/t of LHM
over the operating life
- CAPEX of $1.3
billion. Total capex estimate of $1.3 billion includes
conservative 20% contingency
- Increased lithium grades
support larger resource. Upper Smackover Indicated and
Middle Smackover Inferred Resource of 1.4 Mt and 0.4 Mt lithium
carbonate equivalent (“LCE”), respectively, with an average lithium
concentration of 437 mg/L and maximum reported lithium grade of 597
mg/L
“The robust economics from the South West
Arkansas Project PFS showcase its incredible potential,” said Dr.
Andy Robinson, President and COO of Standard Lithium. “Our
exploration program in the first half of this year yielded
significantly improved lithium concentrations and grew the total
resource to 1.8 million tonnes of lithium carbonate equivalent. The
upgraded resource underpins an operating life of at least 20 years
at competitive costs.”
“Our team has also been hard at work at our
Demonstration Plant at the Lanxess South Facility in El Dorado,
processing approximately 14 million gallons of Smackover brine to
date and successfully extracting lithium. We now have a well-tested
direct lithium extraction (‘DLE’) process, and we successfully
converted our DLE product into battery-quality lithium hydroxide.
This start-to-finish proven process, combined with an improved
resource at SWA, positions the Project to be a meaningful
contributor to U.S. lithium supply within this decade.”
"Standard Lithium's pioneering work in the
Smackover Formation and strong results of the SWA PFS solidifies
the region’s status as North America's premiere lithium brine
resource," commented Standard Lithium CEO Robert Mintak. "Our
mission is to boost domestic lithium production through a phased
development approach. Starting with the Lanxess 1A project, we aim
to deliver the first new lithium production facility in the U.S.,
with results from a Feasibility Study to be reported shortly. These
encouraging outcomes from SWA, along with our initiatives in East
Texas, underscore the need for simultaneous advancements within our
project portfolio, as we are dedicated to leading the region into
becoming a key player in America's lithium supply chain."
About the South West Arkansas
Project
The South West Arkansas Project is located
approximately 15 miles (24 kilometers) west of the City of Magnolia
in Columbia County, south western Arkansas. It encompasses
approximately 27,262 net lease acres in Columbia and Lafayette
counties and forms the updated 2023 Upper Smackover Indicated and
Middle Smackover Inferred resource of 1.4 Mt and 0.4 Mt LCE,
respectively, at an average lithium concentration of 437 mg/L.1 The
Project is easily accessible via a paved highway and extensive
regional infrastructure including: water, power, gas and rail. The
region’s rich history of operating oil and gas assets supports the
local workforce pool.
The Company is targeting construction to begin
in 2025 and production to commence in 2027, subject to continuing
project definition, due diligence, available financing and receipt
of future feasibility studies.
___________________________________1 As the PFS
contemplates a future production scenario, it is necessary to model
the potentially available resource by aggregating these leases into
a single unitized production area; this has the effect of ‘filling
in the gaps’ between the lease parcels to generate a single
unitized area of 36,172 gross mineral acres (14,638 gross mineral
hectares) and forms the updated 2023 resource.
Table 1: PFS Highlights
|
|
Base Case |
Upside Case |
Average Annual Production of LHM |
tpa[1] |
30,000[2] |
35,000[2] |
Plant Operating Life |
years |
20 |
20 |
Total Capital Expenditures |
$ millions |
1,274[3,4] |
1,360[3,4] |
Average Annual Operating
Cost |
$/t |
4,073 |
3,964 |
Average Annual All-in Operating
Cost |
$/t |
5,229[5,6] |
5,060[5,6] |
Selling Price |
$/t |
30,000[7] |
30,000[7] |
Discount Rate |
% |
8.0 |
8.0 |
Net
Present Value (NPV) Pre-Tax |
$ |
4,473 |
5,367 |
Net Present Value (NPV)
After-Tax |
$ |
3,090[8] |
3,736[8] |
Internal Rate of Return (IRR)
Pre-Tax |
% |
41.3 |
44.4 |
Internal Rate of Return (IRR)
After-Tax |
% |
32.8 |
35.4 |
|
|
|
|
Notes:All model outputs are
expressed on a 100% project ownership basis with no adjustments for
project financing assumptions.[1] Metric tonnes (1,000 kg) per
annum.[2] Resource modelling work indicates the SWA Property
appears to be capable of producing more than 30,000 tonnes per year
of lithium hydroxide monohydrate for 20 years or more, and that
production rates greater than 35,000 tonnes per year are
possible.[3] Capital Expenditures include 20% contingency on total
installed costs.[4] No inflation or escalation has been carried for
the economic modelling.[5] Includes all operating expenditures,
ongoing land costs, royalties, and sustaining capital.[6] Brine
lease fees in-lieu-of-royalties (to be approved Arkansas Oil and
Gas Commission) have not been defined and are not currently
included in the economic modelling.[7] Selling price of
battery-quality lithium hydroxide monohydrate based on a flatline
price of $30,000/t over total project lifetime.[8] Assumes a U.S.
Federal tax rate of 21% and State of Arkansas Tax rate of 5.1%, as
well as variable property taxes.
Project Overview
The development plan considered for the SWA
Project PFS demonstrates production of battery-quality lithium
hydroxide monohydrate averaging 30,000 tonnes per annum (“tpa”)
over a 20-year operating life. The Project will pump brine from the
Smackover Formation aquifer via production wells, extract lithium
from the brine, convert it to a saleable product, and then reinject
the effluent brine via injection wells to maintain pressure in the
reservoir.
The PFS assumes a network of 21 brine supply
wells will be completed in the Smackover Formation, producing
approximately 1,700 m3/hr or 7,500 US gallons per minute.
Twenty-two injection wells will support pressure maintenance in the
Smackover aquifer to maintain long-term production.
Brine from the supply wells will be routed to a
lithium extraction and lithium hydroxide production facility by a
network of underground fiberglass pipelines. The brine entering the
production facility will be pre-treated and then processed via Koch
Technology Solutions’ Lithium Selective Sorption (“LSS”) DLE
process described further below. After purification and
concentration, final conversion to a lithium hydroxide product
would use a modified chlor-alkali electrolysis process.
After lithium extraction, the lithium depleted
brine will be returned to the resource area by a pipeline system to
the network of brine injection wells.
LSS Direct Lithium
Extraction
Standard Lithium has been developing two forms
of direct lithium extraction at the Demonstration Plant (the “Demo
Plant”) in Arkansas: the Company’s proprietary LiSTR process and a
co-developed Lithium Selective Sorption (“LSS”) process which is a
Koch Technology Solutions (“KTS”) proprietary technology. Under the
Joint Development Agreement with KTS, Standard Lithium has
Smackover regional exclusivity for the LSS process (see news
release dated 9th May 2023).
Both the LiSTR and LSS DLE processes have
successfully selectively extracted lithium from Smackover brine.
The Company used the LSS process as the basis for the DLE in the
SWA Project PFS based on certain technical and commercial
considerations.
The LSS process has been in operation at the
Demo Plant since October 2022. Over 6,000 operating cycles having
been concluded at the time of the PFS, achieving consistent lithium
extraction efficiencies of greater than 95% and contaminant
rejection efficiencies over 99%.
The LSS process produces a high-quality lithium
chloride solution which will be further purified and concentrated
by means of reverse osmosis, chemical softening, ion exchange and
evaporative crystallization. The result is a high-purity lithium
chloride suitable for electrochemical conversion to lithium
hydroxide.
Lithium Hydroxide
Production
The further concentrated and purified lithium
chloride solution will be processed by electrolyzers to form a
high-purity lithium hydroxide solution. The Company evaluated
several technologies at laboratory and pilot scale testing to
support the selection of electrolysis as the core technology for
conversion of lithium chloride to lithium hydroxide.
The testing undertaken during the PFS phase
produced battery-quality lithium hydroxide from Smackover brines
processed through the Demo Plant, confirming the viability of the
process. The output solution from electrolysis will be crystalized
into a solid, battery-quality lithium hydroxide monohydrate (“LHM”)
using standard, proven processes.
Capital Costs
At full build-out, with estimated average
production over 20 years of 30,000 tpa of LHM, the direct capital
costs are estimated at $845 million, with indirect costs of $218
million. A contingency of 20% was applied to total installed costs
($211 million), yielding an estimated all-in capital cost of $1,274
million.
Table 2: Base Case Capital Cost
Summary
|
Capital Cost ($ millions) |
Wellfield |
237 |
Brine Receiving/Pre-Treatment |
167 |
Lithium Hydroxide Unit |
158 |
Purification & Concentration |
153 |
Direct Lithium Extraction Unit |
139 |
Chemical Storage, Handling, & Utilities |
124 |
Pipelines |
68 |
Plant Buildings & Freight |
17 |
Contingency (20%) |
211 |
Total Capital Cost |
$1,274 |
|
|
Notes:[1] Direct costs were
estimated using either vendor-supplied quotes, and/or engineer
estimated pricing (based on recent experience) for all major
equipment.[2] Indirect costs include all contractor costs
(including engineering); indirect labor costs and Owner’s Engineer
costs.[3] Wellfield and pipelines estimates were based on Hunt,
Guillot & Associates’ recent project experience in the local
area.
Operating Costs
The operating costs are based on the operation
achieving average annual production of 30,000 tpa of LHM. Cost
estimates include both direct and indirect costs, as well as
allowances for mine closure/well abandonment.
The operating cost over the life of the project
is $4,073/t of LHM. All-in operating costs, including sustaining
capital expenditures and royalties, are $5,229/t. The majority of
the operating costs come from reagents required to extract the
lithium from the brine as well as power consumption for conversion
to LHM.
Table 3: Base Case Operating Cost Summary
|
Average Annual Cost ($/t)[1] |
Electrical Power & Infrastructure[2,3] |
1,291 |
Reagents & Consumables[4] |
1,158 |
Solids Disposal |
546 |
Maintenance[5] |
470 |
Workforce[6] |
371 |
Insurance |
140 |
Miscellaneous Costs & Closure[7] |
99 |
Total Operating Cost |
$4,073 |
Sustaining capital expenditures |
$415 |
Royalties[8] |
$741 |
All-in Operating Cost |
$5,229 |
|
|
Notes:[1] Operating costs are
calculated based on average annual production of 30,000 tonnes of
lithium hydroxide.[2] Approximately 30% of electrical energy
consumed by wellfield and pipelines; 70% by the processing
facility. [3] Assumes that all natural gas is purchased from open
market and none is co-produced at the wellheads.[4] Greater than
90% of reagent costs are comprised of sodium hydroxide and soda ash
consumption. Hydrogen chloride is produced on-site as a by-product
of the electrochemical conversion of lithium chloride solution to
lithium hydroxide solution, resulting in a negligible additional
demand and a significant cost saving associated with electrolysis
for conversion. [5] Includes all maintenance and workover costs and
is based on experience in similar-sized chlor-alkali facilities,
brine processing facilities and Smackover brine production
wellfields.[6] Approximately 91 full time equivalent positions.[7]
Indirect costs (environmental monitoring, community benefits etc.)
are factored from other capital and operational costs, except for
mine closure, which is based on estimated well-abandonment
costs.[8] Based on agreed royalties and expected future lease
costs. Does not include future lease-fees-in-lieu-of-royalties
which are still to be determined and subject to regulatory approval
(lease-fees-in-lieu-of-royalties have been determined for bromine
and certain other minerals in the State of Arkansas, but have not
yet been determined for lithium extraction).
Project Economics
The financial results are derived from inputs
based on the annual production schedule as set forth in the PFS.
Sensitivity analysis on the unlevered economic results over a
20-year operating life are summarized in Table 4 below.
Table 4: Base Case South West Arkansas
Sensitivity Analysis
|
Base Case After-Tax NPV(US$
millions) |
Base Case After-Tax IRR(%) |
LHM Price ($/t) |
|
|
-20% |
$2,121 |
26.3% |
0% |
$3,089 |
32.8% |
+20% |
$4,058 |
38.9% |
Operating Costs |
|
|
+20% |
$2,950 |
31.9% |
0% |
$3,089 |
32.8% |
-20% |
$3,229 |
33.8% |
Capital Costs |
|
|
+20% |
$2,892 |
28.3% |
0% |
$3,089 |
32.8% |
-20% |
$3,287 |
39.1% |
Mineral Resource Assessment
The PFS contemplates production of
battery-quality lithium hydroxide averaging 30,000 tpa over a
20-year operating life. This was informed by an exploration program
that was executed over a five-month period from February 2023 to
July 2023, including the drilling of two new wells and re-entry of
three decommissioned and abandoned wells. The well locations and
associated high and average lithium concentrations of those samples
are reported in Figure 1 below.
Figure 1: SWA Project PFS Drilling Program
Results
The results of the drilling program and resource
assessment are presented in Table 5 below. The distinction between
North and South Areas identified in the PEA has been retained to
allow for comparison, though the relative shape and extent of these
areas has been adjusted based on drilling data.
The categorization of Mineral Resource
associated with the Upper Smackover Formation evaluated in the PFS
has been upgraded to Indicated. The Middle Smackover remains at the
Inferred Mineral Resource category.
This reclassification is based on the large
amount of data collected by the exploration program conducted in
the first half of 2023 (see news release dated 23rd May 2023). This
body of data has demonstrated the volume of porous reservoir and
the lithium content of the associated brine in the Upper and Middle
Smackover Formation.
The total in-situ Inferred and Indicated lithium
brine mineral resource is estimated at 74,000 and 269,000 tonnes of
elemental lithium, respectively; see Table 5 below for more
detail.
The updated 2023 SWA Project resource is 52%
larger than the 2021 PEA resource estimate. The resource increase
is primarily related to the higher concentration of lithium, which
increased in concentration from an overall average of 255 mg/L to
437 mg/L. Higher lithium concentrations offset a reduction in brine
volume associated with tightened and enhanced reservoir
definition.
Table 5: South West Arkansas Project
Indicated and Inferred Resource Estimation
Upper
Smackover Indicated Resource |
|
|
North Upper |
South Upper |
Total |
Gross Volume |
km³ |
4.69 |
2.80 |
7.49 |
Net Volume |
km³ |
3.17 |
1.93 |
5.11 |
Average Porosity |
% |
11.7 |
11.9 |
11.8 |
Average Lithium
Concentration |
mg/L |
408 |
507 |
446 |
Indicated Resource |
thousand tonnes |
152 |
116 |
269 |
Lithium Carbonate
Equivalent |
thousand tonnes |
810 |
620 |
1,430 |
|
|
|
|
|
Middle
Smackover Inferred Resource |
|
|
North Middle |
South Middle |
Total |
Gross Volume |
km³ |
6.04 |
2.98 |
9.02 |
Net Volume |
km³ |
1.60 |
0.46 |
2.06 |
Average Porosity |
% |
9.0 |
8.1 |
8.8 |
Average Lithium
Concentration |
mg/L |
379 |
508 |
405 |
Inferred Resource |
thousand tonnes |
55 |
19 |
74 |
Lithium Carbonate
Equivalent |
thousand tonnes |
291 |
100 |
392 |
|
|
|
|
|
Notes:[1] Mineral resources are
not mineral reserves and do not have demonstrated economic
viability. There is no guarantee that all or any part of the
mineral resource will be converted into a mineral reserve. The
estimate of mineral resources may be materially affected by
geology, environment, permitting, legal, title, taxation,
socio-political, marketing, or other relevant issues.[2] Numbers
may not add up due to rounding to the nearest 1,000 unit.[3] A
minimum lithium concentration cutoff was not applied in this
analysis because the entirety of the SWA Property exceeds the
previously-used 100 mg/L cutoff value.[4] The resource estimate was
developed and classified in accordance with guidelines established
by the Canadian Institute of Mining and Metallurgy. The associated
Technical Report was completed in accordance with the Canadian
Securities Administration’s National Instrument 43-101 and all
associated documents and amendments. As per these guidelines, the
resource was estimated in terms of metallic (or elemental)
lithium.[5] In order to describe the resource in terms of ‘industry
standard’ lithium carbonate equivalent, a conversion factor of
5.323 was used to convert elemental lithium to LCE.[6] A unitized
acreage of 36,172 was used in the resource evaluation to be
representative of the future production scenario.
Next Steps and
Recommendation
The principal recommendation from the PFS is
that the project is ready to progress to a Feasibility Study. The
Feasibility Study is expected to be completed in 2024 with
construction commencing in 2025 and first production in 2027.
Summary of Consultants - Quality
Assurance
Report was prepared by a multi-disciplinary team
of Qualified Persons (“QPs”) that include geologists, reservoir
engineers, civil and chemical engineers with relevant experience in
brine geology, brine resource modelling and estimation,
lithium-brine processing, chlor-alkali processing and project
development/execution. This was combined with an update of the
resource assessment completed by Cobb & Associates. A National
Instrument 43-101 report is required to be filed, in conjunction
with the disclosure of the PFS in this news release, within 45
days.
The companies and independent
contractors involved in completing the PFS include:
Hunt, Guillot & Associates
(“HGA”): HGA’s headquarters is in Ruston, Louisiana near
to the SWA Project. HGA has extensive engineering and construction
expertise in the Gulf Coast region. HGA is a private company
founded in 1997 with more than 650 engineering and project
management professionals.
William M. Cobb & Associates (Cobb
& Associates): Cobb & Associates is based in
Dallas Texas and was formed in 1983 to provide quality reservoir
engineering, formation evaluation, and geological services. Cobb
& Associates is recognized as an industry leader in identifying
and solving complex technical problems with considerable experience
and expertise in the areas of brine resource production and
management, reservoir analyses, waterflood studies, miscible and
immiscible gas injection projects, reserve analyses, property
evaluations, geology and petrophysics, economic studies, and expert
witness testimony.
Alliance Technical Group:
Alliance Technical Group is headquartered in Decatur, Alabama, with
a core competency location in Bryant, Arkansas and was established
in 2000 to provide environmental support to engineering and
construction projects.
Marek Dworzanowski: Mr.
Dworzanowski is an independent consulting metallurgical engineer
based in Trejouls, SW France. Marek has 40 years of metallurgical
engineering experience, covering a wide range of commodities and
unit processes. This includes extensive experience with lithium
brine processing.
Frank Gay: Mr. Gay is Vice
President and Executive Project Director at Hunt, Guillot, and
Associates, LLC. He has a M.S. and B.S. in Chemical Engineering
from the Massachusetts Institute of Technology and more than 35
years of experience in project management, engineering management,
and general management.
News Release Quality
Assurance
The information contained in this news release
relating to the SWA Project PFS has been compiled by the
above-mentioned companies and independent
contractors.
The information in this press release has been
reviewed and approved by Frank Gay and Marek Dworzanowski. Mr. Gay
and Mr. Dworzanowski are “Qualified Persons” as the term is defined
in National Instrument 43-101 and are independent of Standard
Lithium.
About Standard Lithium Ltd.
Standard Lithium is a leading near-commercial
lithium development company with a portfolio of projects in
progress. The Company’s flagship projects, the Lanxess Project and
the South West Arkansas Project, are located in southern Arkansas
near the Louisiana state line. The Company is focused on the
evaluation and testing of commercial lithium extraction and
purification from brine sourced from approximately 180,000 acres of
leases across these two projects.
The Company operates a first-of-a-kind
industrial-scale DLE Demonstration Plant at the Lanxess South
Plant. The scalable, environmentally friendly process eliminates
the use of evaporation ponds, reduces processing time from months
to hours and greatly increases the effective recovery of lithium. A
Feasibility Study and Front-End Engineering Study for its first
commercial scale lithium extraction plant located at the Lanxess
South Plant (Phase 1A of the Lanxess Project) commenced in
September 2022. Standard Lithium is targeting completion of a
Feasibility Study for the South West Arkansas Project by the end of
2024.
Concurrently, the Company is pursuing resource
development of other projects in the Smackover Formation in East
Texas, as well as approximately 45,000 acres of mineral leases
located in the Mojave Desert in San Bernardino County,
California.
Standard Lithium is jointly listed on the TSX
Venture Exchange and the NYSE American under the trading symbol
“SLI”; and on the Frankfurt Stock Exchange under the symbol “S5L”.
Please visit the Company’s website
at https://www.standardlithium.com.
Investor and Media Inquiries
Allysa Howell+1 720 484
1147a.howell@standardlithium.com
Twitter: @standardlithiumLinkedIn:
https://www.linkedin.com/company/standard-lithium/
Neither TSX Venture Exchange nor its Regulation
Services Provider (as that term is defined in policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release. This news release may contain
certain “Forward-Looking Statements” within the meaning of the
United States Private Securities Litigation Reform Act of 1995 and
applicable Canadian securities laws. When used in this news
release, the words “anticipate”, “believe”, “estimate”, “expect”,
“target, “plan”, “forecast”, “may”, “schedule” and other similar
words or expressions identify forward-looking statements or
information. These forward-looking statements or information may
relate to future prices of commodities, accuracy of mineral or
resource exploration activity, reserves or resources, regulatory or
government requirements or approvals, the reliability of third
party information, continued access to mineral properties or
infrastructure, fluctuations in the market for lithium and its
derivatives, changes in exploration costs and government regulation
in Canada and the United States, and other factors or information.
Such statements represent the Company’s current views with respect
to future events and are necessarily based upon a number of
assumptions and estimates that, while considered reasonable by the
Company, are inherently subject to significant business, economic,
competitive, political and social risks, contingencies and
uncertainties. Many factors, both known and unknown, could cause
results, performance or achievements to be materially different
from the results, performance or achievements that are or may be
expressed or implied by such forward-looking statements. The
Company does not intend, and does not assume any obligation, to
update these forward-looking statements or information to reflect
changes in assumptions or changes in circumstances or any other
events affecting such statements and information other than as
required by applicable laws, rules and regulations.
A photo accompanying this announcement is available at
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