Featured Company /
Standard Lithium Ltd.
The dynamics of the electric vehicle (EV) industry are aligning nearly perfectly for resource plays that underpin supply of key elements required to manufacture EVs, namely their rechargeable batteries. Prices for lithium, which is used in everything from pharmaceuticals to lubricants to laptops to EVs, more than doubled in about a year on the back of swelling demand.
Estimates are wide-ranging on just how far demand is going to be pushed as EVs start to dominate the highways in the decades to come, but the common consensus is that supply must be substantially increased to avoid a shortfall. For some color on volume, application and value, consider these expert views:
• Analysts at Research and Markets estimate that the global lithium compound market reached a volume of 260,500 tons in 2016 and will balloon to approximately 400,000 tons by 2022.
The potential for a supply/demand imbalance has carmakers scrambling to compete for market share already. Tesla (NASDAQ:TSLA) may be the headline name everyone equates to EVs, but Volkswagen has voiced its goal to be the world EV leader, Ford (NYSE:F) recently more than doubled the money it has earmarked for EVs to $11 billion in order to meet a goal for 40 electrified vehicles by 2022, General Motors (NYSE:GM) says it believes in “an all-electric future” as part of its plans for 20 new all-electric models by 2023 and so on and so on.
These automakers all have one thing in common: they need lithium to make all these new EVs they’re touting. It’s not so simple, though, as lithium producers, who historically have been bullied into long-term supply agreements at discounted commodity rates by the auto industry are finally flipping the script. Reports show that majors like Volkswagen and Tesla have already been meeting with the world’s biggest lithium suppliers and failed to strike a supply deal yet. In short, producers don’t seem ready to get locked in just yet until they can evaluate all the options being brought to the table for who will pay-up for their lithium.
The political climate is favorable for producing in the United States under the administration of business-friendly President Donald Trump. In December, Trump signed an executive order directing regulators to devise a strategy to end the U.S.’s reliance on imports of critical minerals, a dependence Trump and staff say leaves the country vulnerable.
Among the items on the list the President wants to see produced domestically is lithium. The executive order makes it clear that all efforts need to be made to open a path for increased activity at all levels of the supply chain from exploration to reprocessing critical minerals.
In other words, there’s a perfect storm brewing for lithium producers like Standard Lithium Ltd. (TSX-Venture:SLL) (OTCQX:STLHF) (Frankfurt: S5L) that are 100% focused on projects in the U.S.
Standard Lithium is employing a de-risked strategy using a combination of traditional and modern technologies to extract lithium from brine in areas of the country where brine has been processed for other minerals for decades. By targeting these areas and large-scale resources, the Vancouver-based company can capitalize on all the existing infrastructure, mining-friendly jurisdictions and partnerships with existing operators, benefits that result in saving millions of dollars and years on project development.
Standard Lithium’s flagship project is the 35,000-acre Bristol Dry Lake Lithium Project located in the Mojave region of San Bernardino County, California, one of the most arid places in the world and a perfect location of brine evaporation processes. The company’s 12,000-acre Cadiz Dry Lake Project is located only about 20 kilometers to the southeast of the Bristol project.
For its work in this area, the company has forged agreements with National Chloride Corporation of America and TETRA TECHNOLOGIES (NYSE:TTI), two companies that have commercial-scale operations producing industrial minerals such as calcium chloride from brine, there for decades, which gives Standard Lithium immediate access to raw brine for process testing and project development modeling.
The projects have world-class infrastructure, with easy road and rail access, electricity, skilled labor, abundant water and permits for brine extraction and processing.
Exploration coupled with historic data at Bristol Dry Lake indicate the lithium resource is deep and wide, with concentrations in excess of 110 parts per million (ppm) lithium from near surface to beneath 150 meters. Drilling is ongoing to establish the resource by National Instrument guidelines, with complete results from the latest drill program expected in the coming months. In the meantime, six new evaporation test ponds have been installed, lending credence to the concept that Standard Lithium plans to be producing in the near term.
Early exploration at Cadiz Dry Lake has been comprised of grab samples from three shallow production wells, returning values of lithium concentrations between 112-139 milligrams per liter.
Standard Lithium is using a hybrid approach for brine processing. Leveraging the high evaporation in the Mojave, Standard Lithium has already shown that it can boost concentrations from 146 mg/L to 686 mg/L in as short as 7 weeks. From there, the lithium can be further refined through advanced technologies, such as nanofiltration and chemical precipitation, to produce battery-grade materials much more efficiently than brine or hard rock mining.
The relationship with TETRA, one of the world’s biggest calcium chloride producers, gives Standard Lithium access to what is likely the largest available consolidated petrolithium brine asset in the Smackover Formation in southern Arkansas. Early this year, Standard Lithium signed an agreement to acquire from TETRA the rights to conduct exploration, production and lithium extraction activities on approximately 33,000 acres of highly productive brine leases in the Smackover.
While many people don’t realize it yet (they soon will), the massive Smackover Formation, which runs from Texas to Florida, has the potential to move the needle as a global game-changer in lithium production. A major source for oil and gas, rigs drill right through and pump brine resources out of the Smackover to the tune of billions of gallons annually, none of which has the lithium extracted before it is re-injected into the ground.
In Arkansas alone, a stunning 9.4 billion gallons of brine are produced annually, most of it from the Smackover. Historical data from the Standard Lithium lease area shows 370-424 mg/L lithium in brines.
According to recent news from Standard Lithium, it is negotiating terms with an NYSE listed company to build and operate a continuous demonstration scale pilot plant adjacent to existing chemical production facilities located in southern Arkansas.
Penning a definitive agreement to build the continuous operating plant will allow Standard Lithium to demonstrate a modern, selective extraction and purification process to produce battery-grade lithium products from a variety of brine streams, including tail brines from the Smackover Formation and to consolidate its processing efforts into one location. Moreover, the logistics are favorable for the company to look to expand its already formidable lithium footprint in the South.
Although it’s not a common mantra in the resource sector, Standard Lithium has brought the element of “speed” into its model. The company is aiming to produce lithium faster than conventional processes and is signing deals to establish itself as a leading lithium player in America at a lightning pace. While young peers chase grade and flock to Argentina or to Nevada because it is home to Tesla’s Gigafactory and the only lithium producing mine in North America (Albermarle’s Silver Peak Mine), these companies are years, maybe even a decade, away from production if it is ever achieved at all. Standard Lithium has taken an approach that could see lithium coming from the company by the end of the decade; that’s saying something about the quality and value-building mindset of management.
These developments all take capital, for which investors have shown tremendous support of the Standard Lithium plan. In a bought deal private placement announced last week, with Canaccord Genuity acting as the sole bookrunner, the underwriters have agreed to purchase 9.53 million units of Standard Lithium at $2.10 per unit for gross proceeds of $20.0 million. The underwriters also have the option to purchase an additional 1.43 million shares at $2.10, which would increase the total raise to gross proceeds of $23.0 million if all the options were exercised.
Each unit consists of one common share and one-half of one common share purchase warrant, with each full warrant exercisable at $2.60 per share over 24 months following closing of the offering. That means another approximately $7.1 million (gross) is available through the exercise of warrants over the next 24 months, keeping corporate coffers filled to fund exploration and processing plant work for the foreseeable future.
In the broadest sense, the winds of change are blowing through the auto industry, bringing with it a flood of electric vehicles that can be a company maker for properly aligned lithium producers. The demand is there, and the regulatory climate couldn’t be better. Standard Lithium is making all the right moves from strategic partners to acquisitions in “ready-to-go” brine-producing areas to taking a forward-thinking technological approach to producing large amounts of lithium fast. There is good reason that the market has rallied around the company looking to become one of the only lithium producers in North America alongside Albermarle. When they do, listen for their name to be called upon by automakers looking to lock down their production because odds are good that is exactly what could happen.
Corporate Snapshot:
Standard Lithium Ltd.
Stock Symbol:
CA
Stock Exchange:
TSX-Venture
Sector:
Basic Materials
52 Week High:
$2.8500
52 Week Low:
$0.7100
Alt Exchange/Ticker:
OTCQX:STLHF
Current Stock Quote / Chart / News: Click here
Information as of
February 01, 2018
Standard Lithium Corporate Video:
The dynamics of the electric vehicle (EV) industry are aligning nearly perfectly for resource plays that underpin supply of key elements required to manufacture EVs, namely their rechargeable batteries. Prices for lithium, which is used in everything from pharmaceuticals to lubricants to laptops to EVs, more than doubled in about a year on the back of swelling demand.
Estimates are wide-ranging on just how far demand is going to be pushed as EVs start to dominate the highways in the decades to come, but the common consensus is that supply must be substantially increased to avoid a shortfall. For some color on volume, application and value, consider these expert views:
• Analysts at Research and Markets estimate that the global lithium compound market reached a volume of 260,500 tons in 2016 and will balloon to approximately 400,000 tons by 2022.
The potential for a supply/demand imbalance has carmakers scrambling to compete for market share already. Tesla (NASDAQ:TSLA) may be the headline name everyone equates to EVs, but Volkswagen has voiced its goal to be the world EV leader, Ford (NYSE:F) recently more than doubled the money it has earmarked for EVs to $11 billion in order to meet a goal for 40 electrified vehicles by 2022, General Motors (NYSE:GM) says it believes in “an all-electric future” as part of its plans for 20 new all-electric models by 2023 and so on and so on.
These automakers all have one thing in common: they need lithium to make all these new EVs they’re touting. It’s not so simple, though, as lithium producers, who historically have been bullied into long-term supply agreements at discounted commodity rates by the auto industry are finally flipping the script. Reports show that majors like Volkswagen and Tesla have already been meeting with the world’s biggest lithium suppliers and failed to strike a supply deal yet. In short, producers don’t seem ready to get locked in just yet until they can evaluate all the options being brought to the table for who will pay-up for their lithium.
The political climate is favorable for producing in the United States under the administration of business-friendly President Donald Trump. In December, Trump signed an executive order directing regulators to devise a strategy to end the U.S.’s reliance on imports of critical minerals, a dependence Trump and staff say leaves the country vulnerable.
Among the items on the list the President wants to see produced domestically is lithium. The executive order makes it clear that all efforts need to be made to open a path for increased activity at all levels of the supply chain from exploration to reprocessing critical minerals.
In other words, there’s a perfect storm brewing for lithium producers like Standard Lithium Ltd. (TSX-Venture:SLL) (OTCQX:STLHF) (Frankfurt: S5L) that are 100% focused on projects in the U.S.
Standard Lithium is employing a de-risked strategy using a combination of traditional and modern technologies to extract lithium from brine in areas of the country where brine has been processed for other minerals for decades. By targeting these areas and large-scale resources, the Vancouver-based company can capitalize on all the existing infrastructure, mining-friendly jurisdictions and partnerships with existing operators, benefits that result in saving millions of dollars and years on project development.
Standard Lithium’s flagship project is the 35,000-acre Bristol Dry Lake Lithium Project located in the Mojave region of San Bernardino County, California, one of the most arid places in the world and a perfect location of brine evaporation processes. The company’s 12,000-acre Cadiz Dry Lake Project is located only about 20 kilometers to the southeast of the Bristol project.
For its work in this area, the company has forged agreements with National Chloride Corporation of America and TETRA TECHNOLOGIES (NYSE:TTI), two companies that have commercial-scale operations producing industrial minerals such as calcium chloride from brine, there for decades, which gives Standard Lithium immediate access to raw brine for process testing and project development modeling.
The projects have world-class infrastructure, with easy road and rail access, electricity, skilled labor, abundant water and permits for brine extraction and processing.
Exploration coupled with historic data at Bristol Dry Lake indicate the lithium resource is deep and wide, with concentrations in excess of 110 parts per million (ppm) lithium from near surface to beneath 150 meters. Drilling is ongoing to establish the resource by National Instrument guidelines, with complete results from the latest drill program expected in the coming months. In the meantime, six new evaporation test ponds have been installed, lending credence to the concept that Standard Lithium plans to be producing in the near term.
Early exploration at Cadiz Dry Lake has been comprised of grab samples from three shallow production wells, returning values of lithium concentrations between 112-139 milligrams per liter.
Standard Lithium is using a hybrid approach for brine processing. Leveraging the high evaporation in the Mojave, Standard Lithium has already shown that it can boost concentrations from 146 mg/L to 686 mg/L in as short as 7 weeks. From there, the lithium can be further refined through advanced technologies, such as nanofiltration and chemical precipitation, to produce battery-grade materials much more efficiently than brine or hard rock mining.
The relationship with TETRA, one of the world’s biggest calcium chloride producers, gives Standard Lithium access to what is likely the largest available consolidated petrolithium brine asset in the Smackover Formation in southern Arkansas. Early this year, Standard Lithium signed an agreement to acquire from TETRA the rights to conduct exploration, production and lithium extraction activities on approximately 33,000 acres of highly productive brine leases in the Smackover.
While many people don’t realize it yet (they soon will), the massive Smackover Formation, which runs from Texas to Florida, has the potential to move the needle as a global game-changer in lithium production. A major source for oil and gas, rigs drill right through and pump brine resources out of the Smackover to the tune of billions of gallons annually, none of which has the lithium extracted before it is re-injected into the ground.
In Arkansas alone, a stunning 9.4 billion gallons of brine are produced annually, most of it from the Smackover. Historical data from the Standard Lithium lease area shows 370-424 mg/L lithium in brines.
According to recent news from Standard Lithium, it is negotiating terms with an NYSE listed company to build and operate a continuous demonstration scale pilot plant adjacent to existing chemical production facilities located in southern Arkansas.
Penning a definitive agreement to build the continuous operating plant will allow Standard Lithium to demonstrate a modern, selective extraction and purification process to produce battery-grade lithium products from a variety of brine streams, including tail brines from the Smackover Formation and to consolidate its processing efforts into one location. Moreover, the logistics are favorable for the company to look to expand its already formidable lithium footprint in the South.
Although it’s not a common mantra in the resource sector, Standard Lithium has brought the element of “speed” into its model. The company is aiming to produce lithium faster than conventional processes and is signing deals to establish itself as a leading lithium player in America at a lightning pace. While young peers chase grade and flock to Argentina or to Nevada because it is home to Tesla’s Gigafactory and the only lithium producing mine in North America (Albermarle’s Silver Peak Mine), these companies are years, maybe even a decade, away from production if it is ever achieved at all. Standard Lithium has taken an approach that could see lithium coming from the company by the end of the decade; that’s saying something about the quality and value-building mindset of management.
These developments all take capital, for which investors have shown tremendous support of the Standard Lithium plan. In a bought deal private placement announced last week, with Canaccord Genuity acting as the sole bookrunner, the underwriters have agreed to purchase 9.53 million units of Standard Lithium at $2.10 per unit for gross proceeds of $20.0 million. The underwriters also have the option to purchase an additional 1.43 million shares at $2.10, which would increase the total raise to gross proceeds of $23.0 million if all the options were exercised.
Each unit consists of one common share and one-half of one common share purchase warrant, with each full warrant exercisable at $2.60 per share over 24 months following closing of the offering. That means another approximately $7.1 million (gross) is available through the exercise of warrants over the next 24 months, keeping corporate coffers filled to fund exploration and processing plant work for the foreseeable future.
In the broadest sense, the winds of change are blowing through the auto industry, bringing with it a flood of electric vehicles that can be a company maker for properly aligned lithium producers. The demand is there, and the regulatory climate couldn’t be better. Standard Lithium is making all the right moves from strategic partners to acquisitions in “ready-to-go” brine-producing areas to taking a forward-thinking technological approach to producing large amounts of lithium fast. There is good reason that the market has rallied around the company looking to become one of the only lithium producers in North America alongside Albermarle. When they do, listen for their name to be called upon by automakers looking to lock down their production because odds are good that is exactly what could happen.
Forward Looking Statements
This report includes forward-looking statements that reflect current expectations about its future results, performance, prospects and opportunities. Standard Lithium Ltd. has tried to identify these forward-looking statements by using words and phrases such as "may," "will," "expects," "anticipates," "believes," "intends," "estimates," "plan," "should," "typical," "preliminary," "we are confident" or similar expressions. These forward-looking statements are based on information currently available and are subject to a number of risks, uncertainties and other factors that could cause Standard Lithium Ltd.'s actual results, performance, prospects or opportunities to differ materially from those expressed in, or implied by, these forward-looking statements. These risks, uncertainties and other factors include, without limitation, the Company's growth expectations and ongoing funding requirements, and specifically, the Company's growth prospects with scalable customers, and those outlined above. Other risks include the Company's limited operating history, the Company's history of operating losses, consumers' acceptance, the Company's use of licensed technologies, risk of increased competition, the potential need for additional financing, the terms and conditions of any financing that is consummated, the limited trading market for the Company's securities, the possible volatility of the Company's stock price, the concentration of ownership, and the potential fluctuation in the Company's operating results.
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