ARKANSAS SMACKOVER PROJECT

Standard Lithium's cutting-edge “LiSTR” Direct Lithium Extraction technology is the right tool to unlock this globally significant resource.

SMACKOVER PROJECT SOUTH ARKANSAS

The Smackover formation extends roughly 1,000 miles from south Texas to western Florida and consists of organic fossil deposits and concentrated salt-water brine trapped in the porous limestone aquifers. These highly productive aquifers have hosted huge volumes of mineral-rich brines and hydrocarbons deposited millions of years ago during the Jurassic period, when scientists say most of the southern United States was submerged under what is now the Gulf of Mexico.

For more than 60 years, this mineral rich brine has been pumped from deep below the surface in south Arkansas for the recovery of bromine and other minerals. Currently, the brine pulled from the aquifer is delivered through a network of pipelines to processing plants for extraction. After processing, the tail brine is returned through a network of pipelines to be re-injected back into the formation.

This same brine that produces nearly half the world’s bromine is rich with lithium, but because the geography, climate and brine chemistry are not suited for the conventional process of lithium extraction from brine, large evaporation ponds, used by mining companies in South America it has yet not been commercially developed.

Standard Lithium Ltd.

Enter Standard Lithium

Standard Lithium’s technology focused approach to sustainable project development differentiates it from traditional lithium mining companies.

Standard Lithium is a global leader in Direct Lithium Extraction (DLE) technology. The company’s cutting edge “LiSTR” DLE process has been developed specifically to unlock the globally significant Smackover resource. Standard Lithium has developed a proprietary process called that uses a solid ceramic adsorbent material with a crystal lattice that is capable of selectively pulling lithium ions from the Smackover brine. The ceramic adsorbent materials are mounted in stirred-tank reactors that contain the tail brine. In the second step, the adsorbent releases the lithium for recovery.

The Li-extraction process takes advantage of the brine temperature approximately 160° F (70°C). This means that no additional energy is required, and the reaction kinetics for the adsorption are suitable. The process is fast, reducing the time required for Li extraction to hours versus months (with the evaporation ponds), realizes improved recoveries to hours and is capable of producing a consistent high-purity LiCl solution for further processing in the battery industry.

Standard Lithium Ltd.
Standard Lithium Ltd.

SMACKOVER PROJECT HIGHLIGHTS:

The Company’s flagship 180,000 acre, 4.335 Million Tonne Lithium Carbonate Equivalent (“LCE”) project, (LANXESS 3.14 Million Tonne Indicated, SOUTH-WEST ARKANSAS 1.195 Million Tonne Inferred) is located in a region is home to North America’s largest brine production and processing facilities.

When oil was discovered in south Arkansas in 1921, oil field brines were considered a worthless by-product of oil producers who had problems disposing of the brine. Then, chemists from the Arkansas Geological Commission (now the Arkansas Geological Survey) discovered that the Smackover Formation brines had high bromine content—seventy times greater than that of ocean water. Bromine production followed oil production in Union County in 1957 and has continued ever since. Bromine production in Union and Columbia counties contributes significantly to the local and state economy and employs over 1,000 people. Great Lakes Chemical Corporation built the world’s largest bromine plant in south Arkansas in 1961. Great Lakes Chemical Corporation merged with Crompton Corporation in 2005 to create Chemtura Corporation. Chemtura Corporation was acquired by global specialty chemical company Lanxess AG in 2017. Lanxess operates three brine processing plants in south Arkansas.

Industrial Scale Demonstration Plant located at LANXESS South Plant


LANXESS PROJECT



Preliminary Economic Assessment

A Preliminary Economic Assessment prepared by Advisian, a consulting arm of Worley Parsons, released June 18, 2019 considers the production of battery-quality lithium carbonate through a phased build-out to a total 20,900 tonnes per annum (tpa) from the contemplated joint venture with Lanxess AG at their three-operating bromine-processing plants. 

Link here to LANXESS JV announcement

Link here to download NI 43-101 Preliminary Economic Assessment Technical Report

Key Points:

  • Annual production: 20,900 tonnes lithium carbonate (1)
  • Plant operation: 25 years (2)
  • Total capital expenditures estimate of US$437 Million (3)
  • Non-optimised reagent cost per tonne lithium carbonate of US$3,107
  • All-in operating costs, including all direct and indirect costs, reagent, sustaining capital, insurance and mine-closure costs of US$4,319 per tonne of lithium carbonate (4)
  • Average selling price $13,550 USD per tonne battery quality lithium carbonate (5)
  • Pre-tax US$1.3 Billion NPV at 8% discount rate and IRR of 42%
  • Post-tax US$ 989 Million NPV an 8% discount rate and IRR of 36%
  • Resource upgraded to 3,140,000 tonnes Lithium Carbonate Equivalent (LCE) at the Indicated Category

Notes:
All model outputs are expressed on a 100% project ownership basis**
[1] Total production, using existing brine supply rates at the completion of Phase 3
[2] Plant operation commences upon completion of Phase 1
[3] Includes 25% contingency of both direct and indirect capital costs
[4] Includes all operating expenditures, including sustaining capital and allowance for mine closure
[5] Selling prices ranging between US$10,840-16,260/tonne were modeled as part of sensitivity analysis

See news release Nov 12, 2018 - Subject to proof of concept & positive feasibility study

SOUTH-WEST ARKANSAS PROJECT 

Standard Lithium has an option agreement with NYSE listed TETRA Technologies Inc. to acquire the rights to conduct exploration, production and lithium extraction activities on brine leases located approximately 25 miles (40KM west) of the LANXESS project (link to news release here). This is in an area where the Smackover Formation is known to be highly productive.  This brine resource is in an area where there is localized oil and gas production, and brine is produced as a waste by-product of hydrocarbon extraction.  The data used to estimate and model the resource was gathered from active and abandoned oil and gas production wells on or adjacent to the property.

Standard Lithium has agreements with regional independent oil and gas producers with open, unused Smackover Formation wells in and immediately adjacent to the new lease area to gather new, high-quality lithium brine samples from the key brine production zones.

Preliminary Economic Assessment

The development plan for the PEA considers the production of battery-quality lithium hydroxide averaging 30,000 tonnes per annum (tpa) over a 20-year operating timeframe.  The project contemplates, in broad terms, the extraction of brine from the southern portion of the project where the brine has a higher lithium grade (approximately 400 mg/L) and better reservoir characteristics, and reinjection of the tailbrine into the northern part of the project where the lithium grade is significantly lower (approximately 160 mg/L; additional details are provided below).  The lithium extraction process is based on the Company’s proprietary LiSTR technology, and the final conversion to a lithium hydroxide product will use an electrochemical process tailored to lithium hydroxide production.  The project is located in an area with significant existing infrastructure such as water, power, gas, road, rail and workforce; plus existing operating oil and gas assets, including wells, collection systems, easements and gas processing facilities.  It should be noted that the Company has secured an option to acquire a key parcel of land in the contemplated Project area.  This land may be suitable for siting a future brine processing and conversion facility as it is well served by existing infrastructure, utilities and pipeline easements.  Development of the project, subject to continuing project definition, due diligence and receipt of future feasibility studies, contemplates production commencing in 2025 from the land package assembled by the Company to date (subject to unitization as described below).

The PEA and updated lithium resource estimate are based on a unitized area of future potential production resulting in 36,172 gross mineral acres (14,638 gross mineral hectares).  The PEA considers the production of battery-quality lithium hydroxide averaging 30,000 tonnes per annum (tpa) over a 20-year operating timeframe.  The PEA also updates the existing inferred mineral resource. 

The PEA is preliminary in nature and includes inferred resources that are considered too speculative to have the economic considerations applied to them that would enable them to be categorized as mineral reserves and there is no certainty the estimates presented in the PEA will be realized.

Link here to download NI 43-101 Preliminary Economic Assessment Technical Report

Key Points:

Table 1: PEA Highlights
  Units Values
Average Annual Production (as LiOH•H2O) tpa[1] 30,000[2]
Plant Operation years 20
Total Capital Cost (CAPEX) US$ 869,868,000[3]
Operating Cost (OPEX) per year US$/yr 77,972,000[4]
OPEX per tonne US$/t 2,599
Initial Selling Price US$/t 14,500[5]
Average Annual Revenue US$ 570,076,000[6]
Discount Rate % 8.0

Net Present Value (NPV) Pre-Tax US$ 2,830,190,000
Net Present Value (NPV) Post-Tax US$ 1,965,427,000
Internal Rate of Return (IRR) Pre-Tax % 40.5
Internal Rate of Return (IRR) Post-Tax % 32.1
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] Total production for years 1 to 15 is 30,666 tpa LHM and 28,000 tpa LHM for years 16 to 20
[3] AACE Class 5 estimate includes 25% contingency on direct capital costs
[4] Includes all operating expenditures, ongoing land costs, established Royalties, sustaining capital and allowance for mine closure. All costs are escalated at 2% per annum
[5] Selling price of battery quality lithium hydroxide monohydrate based on an initial price of $14,500/t in 2021, adjusted for inflation at 2% per annum. Sensitivity analysis modelled the starting price between US$12,500-US$16,500/t.
[6] Average annual revenue over projected 20-year mine-life.

LANXESS operations in south Arkansas cover 150,000+ acres or permitted operation that includes roughly 10,000 brine leases. LANXESS extracts brine from their wells located throughout the area, and the brine is transported through a network of 250 miles of pipelines to three plants where the brine is processed for bromine recovery with the tail brine then re-injected to the aquifer. The three bromine extraction plants currently employ approximately 500 people, have been in production for nearly five decades, and produce roughly 5.3 billion gallons of brine annually.

ARKANSAS ADVANTAGE