RCKS Talk

12-Dec-2018

Standard Lithium Ltd

First Lithium Carbonate Another Step Forward

Impact: Positive

On the heels of Standard Lithium’s recent announcement of a maiden resource of 3.1Mt LCE in the brine fields of southern Arkansas, the company has faster than expected successfully commissioned a Crystallisation Pilot Plant for transforming brines into high purity (>99.1%) lithium carbonate. This news aligns with our thesis that the company is quickly surpassing the normally lengthy milestones required to get in to production and remains a low-risk lithium developer in North America.

Highlights: 
    • High purity lithium has been produced. The
      Lithium Carbonate Crystallisation Pilot Plant in BC has been fully commissioned ahead of our expected schedule. The current prototype has already been successful in transforming impure feed solution composed of lithium, sodium, alkali and non-metallic contaminants, in to highly pure lithium carbonate at a purity greater than 99.1%. Upon refining operating parameters and addition of process cycles, the prototype is expected be ready shortly for full scale design.
    • Two halves make a whole. The company is simultaneously developing both halves of its pilot plant with a Lithium Extraction Pilot Plant being designed and built in Burlington, Ontario. We expect the two parts to be combined and constructed construction in Arkansas in late Q1/19, with commissioning starting in late Q2/19.
    • Well into the pilot plant development phase - accelerating pace to production.
      Brines at the company’s flagship project in Arkansas are currently in production for bromine extraction by likely JV partner LANXESS. Once proof of concept is achieved in 2020E, with permits in-hand, significant infrastructure in-place and full-scale production and funding likely coming from its partner, Standard Lithium is on a shortened path to production.
Valuation:
The market is missing the fundamental value of Standard Lithium’s potential. Standard Lithium has access to 150,000 acres of brine fields and with existing permitted infrastructure, a well underway prototype Pilot Pant and permits in hand, we believe the market is currently undervaluing the potential of this update. The company currently trades at US$15/t LCE in contrast to brine exploration and development peers at US$39/t LCE. Upcoming Catalysts include 1) Further results from ongoing test-work (Q1/19), 2) Completion of definitive agreement with LANXESS (H1/19), 3) Pilot plant commissioning (mid-2019) and 4) PEA expected in H1 2019.

14-Nov-2018

Standard Lithium Ltd.

A Sizeable Maiden resource at Smackover

Impact: Very Positive

Standard Lithium’s recent announcement of a maiden resource brings in to light the significant valuation discount relative to brine developer/explorer peers. With access to over 150,000 acres of brine fields with existing permitted infrastructure, the company is quickly surpassing the normally lengthy milestones required to get in to production. 

Highlights: 
    • A sizeable maiden resource. With sufficient data from its recent agreement with LANXESS, the company has been able to output an inferred resource of 3.1Mt LCE within brines which are currently in production for bromine extraction by LANXESS and re-injected into the aquifer awaiting Standard Lithium’s extraction. This resource estimate was based on estimated lithium concentrations in the wellheads that ranged from 53-292 mg/L, where a conservative average in-situ concentration of 165 mg/L was used for resource calculation. Once the company’s lithium extraction plant is interconnected with LANXESS’ bromine plant, lithium is to be extracted as a by-product to bromine from the Smackover brines.
    • Success at pilot plant now a key catalyst.
      While an in-situ grade of 165mg/L is on the lower end of lithium brine grades, with in-place infrastructure, the hurdle rate is far lower. The next key catalyst, is expected to be the results of the company’s mini-pilot plant testing, which is expected in early 2019. The results of which are expected to inform a H1 2019 PEA, which will provide initial economics for the project.
    • Another step on the short path to production. Once proof of concept is achieved by 2020E, we expect with permits in-hand, significant infrastructure in-place and JV funding from LANXESS that Standard Lithium is likely to be quick to market.
Valuation:
Standard Lithium now trades at a discount to brine developers and explorers. With a fully permitted facility and now a sizeable resource, Standard Lithium is well-positioned to rapidly advance towards production. We believe the market is currently undervaluing the potential of this update as company currently trades at US$21/t LCE in contrast to brine exploration and development peers at US$54/t LCE. Upcoming Catalysts include 1) Positive results from prototype test-work (Q1/19) and 2) Completing the offtake agreement (Q4/18).

13-Nov-2018

Standard Lithium Ltd.

One Step Closer with LANXESS JV

Impact: Very Positive

New partnership, with valuable data, will be focused on quick lithium production timetable. A term sheet has been signed between Standard Lithium and LANXESS Corp., a subsidiary of LANXESS AG (XTRA:LXS), to form a joint venture (JV) in the commercial production of battery grade lithium as by-product to bromine production from the brine extracted at the Smackover Formation in South Arkansas. The partnership adds momentum to Standard Lithium’s already quick timeline to production and may give LANXESS, a top bromine producer, the opportunity to extract value from a by-product of its lithium carrying brines. 

Highlights: 
    • Going right to the source. Previously, Standard Lithium had acquire off-take rights to TETRA Technologies, off-take from LANXESS’ large scale brine extraction operation. With this agreement Standard Lithium now has full access to the network of pipelines from the wells to the processing plants and all the years of data that comes with it, currently owned by major bromine producer, LANXESS. Therefore, a JV would provide the data to fast track defining a lithium resource (Figure 1).
    • One step closer. A JV would provide extraction rights to Standard Lithium to produce lithium as by-product from LANXESS’ existing bromine operations. Where LANXESS would allow the use of existing infrastructure and Standard Lithium would contribute its
      proprietary extraction processes in addition to existing rights and leases held in the Smackover Formation, acquired from TETRA.
    • JV provides big brother for funding and tech support. Besides shortening the benefit of existing infrastructure and data, the strategic partnership is likely to bring in a partner with significant experience and deep pockets for development funding. Once proof of concept has been achieved, a JV announcement is expected by 2020.
Valuation:
Re-rating expected when Smackover resource released in Q4. Standard Lithium’s unique ability to quickly generate a resource and rapidly advance towards production make it one of the best junior mining companies in the lithium space. Upcoming Catalysts include 1) Positive results from prototype test-work (Q1/19) and 2) Completing the offtake agreement (Q4/18).

25-Oct-2018

Standard Lithium Ltd.

Breaking down the Brine; Rapid Rerate on the Horizon

Impact: Positive

Commissioning of the prototype pilot plant has started and is an important step before a commercial production decision (2020). We believe the commissioning of the prototype pilot plant is an important step towards securing an offtake agreement. This in turn would help fund the construction of a full-scale operation. We continue to believe that Standard Lithium is one of the best ways gain exposure to the space as it already has access to a producing brine field (permits in-a-hand, no exploration work required).

Highlights:
    • Another step towards commercial production. The completion of the prototype pilot plant is important, as it will determine the final process design for the pilot plant. A pilot scale plant is needed to generate enough material for battery manufacturers to test the product leading to an offtake agreement, which is the precursor to full-scale production. Operations of the prototype is expected to run for 2-3 months at which point, the company is expected initiate the construction of a pilot plant.
    • A high-quality and quick to market product is likely. Previous lab test work on the Arkansas brines yields high purity (>99.5%) of crystallized lithium product. The brines at Smackover are currently the world’s largest source of bromine, which contain elevated levels of lithium in the range of 150-500 mg/L. Standard Lithium plans to tap into the existing brine stream to harvest the lithium, and build its production facilities within already permitted areas, making this a quick to market project.
    • Finalizing off-take agreements are key, expected in Q4. We believe that once the company completes its offtake agreement with the underlying lease holder, Lanxess (ETR:LSX), we would expect it to publish a sizeable lithium resource, likely re-rating the stock and catching the attention of larger producers.
Valuation:
Re-rating expected when Smackover resource released in Q4. Standard Lithium’s unique ability to quickly generate a resource (once the off-take agreement is complete) and rapidly advance towards production make it one of the best junior mining companies in the lithium space. Upcoming Catalysts include 1) Positive results from prototype test-work (Q1/19) and 2) Completing the offtake agreement (Q4/18)

12-Sep-2018

Standard Lithium Ltd.

Standard Lithium Ticks Another Box for Lithium Extraction

Impact: Positive

Standard Lithium has provided an update on its progress in developing and constructing a large-scale Pilot Plant for deployment at its 30,000 acre project on the Smackover Formation in Southwestern Arkansas.

  • The company’s mini Pilot Plant has operated continuously for long duration's and has demonstrated that lithium can be selectively extracted from brine and converted into a concentrated and substantially purified lithium chloride solution with overall lithium extraction efficiencies achieving >90%
  • This announcement ticks another box for the company and allows for the design of the larger-scale lithium extraction Pilot Plant to be sufficiently completed, which now enables the company to start the process of procuring long lead-time equipment
  • Testwork to crystallise battery-grade lithium carbonate from the company’s lithium chloride has been successful in making high purity lithium carbonate material (>99.5% purity), which also paves the way for the company in demonstrating that the company’s proprietary crystallisation technology can be used in place of existing OEM crystallisation technologies
Standard Lithium is unique with respect to other junior lithium companies, in that, rather than developing a new resource, their plan is to tap into existing brine production, significantly reducing development costs and permitting requirements as they progress towards developing a pilot plant. Over the next few months, we believe there are going to be a number of catalysts in the near-term that should demonstrate the value of this unique company.

28-Aug-2018

Standard Lithium Ltd.

Initial Testing Delivers Good Li Grades; New Resources Coming

Impact: Positive

Standard Lithium released initial sampling results from its 30,000 acre project on the Smackover Formation in Southwestern Arkansas. We view the results positively, as they represent good Li grades, particular when you consider the in-place infrastructure.

  • Four brine samples from the project area returned grades between 347-461 mg/L, putting this project middle of the pack when looking only at Li grades globally, but front of the line for brine development projects in North America
  • Samples were taken, be re-entering existing oil wells on the project, significantly reducing exploration costs and providing the company significant exploration and development cost advantages
  • These results are expected to lead to a near-term maiden resource for this project in the very near-term. As well, the company is working on a maiden resource from its neighboring flagship operation, where it has an agreement to access lithium rich brine from a 150,000 acre active brine extraction operation
Standard Lithium is unique with respect to other junior lithium companies, in that, rather than developing a new resource, their plan is to tap into existing brine production, significantly reducing development costs and permitting requirements as they progress towards developing a pilot plant. Over the next few months, we believe there are going to be a number of catalysts in the near-term that should demonstrate the value of this unique company.

06-Jun-2018

Standard Lithium Ltd.

Saltworks Commissioned for Design & Build of Pilot Plant

Impact: Mildly Positive

Standard Lithium has announced the commissioning of Saltworks Technologies Inc. to design and build a portion of its pilot plant.
  • Saltworks will be designing a selective crystallisation plant to make battery-grade lithium carbonate in a continuous process to be fed by high-purity lithium solution produced by a full-scale Selective Extraction Pilot Plant
  • Crystallisation plant to be automated and use machine-learning to optimise crystallisation conditions
  • Data from a successful pilot plant is expected to be used in the design of a full-scale commercial plant for future production from lithium brines
Standard Lithium is unique with respect to other junior lithium companies, in that, rather than developing a new resource, their plan is to tap into existing brine production, significantly reducing development costs and permitting requirements as they progress towards developing a pilot plant.

01-Jan-2018

Standard Lithium Ltd. (TSXV:SLL)

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