Standard Lithium

Standard Lithium has received a $100 million investment from the largest private company in the United States.

A $100 million investment announced this week could accelerate possible lithium production in Columbia and Lafayette counties.

Standard Lithium Ltd. of Vancouver, Canada said that Koch Investments Group, will make a $100 million investment in Standard Lithium through a direct private placement to support the company’s strategic development goals.

“This news is very encouraging for the lithium production initiative in South Arkansas,” said Dr. David Rankin, chairman of the Golden Triangle Economic Development Council.

“This $100 million investment by Koch Strategic Platforms is a very significant boost to Standard Lithium’s plans to expand lithium production in the United States. We are blessed to have this important strategic chemical element in our region," Rankin said.

In addition to the new capital, the company, along with several Koch Industries subsidiaries, are exploring opportunities to work collaboratively in several key areas.

These potentially include working with Koch Engineered Solutions (“KES”) which provides key process equipment, engineering, procurement, and construction services; as well as Koch Minerals & Trading (“KM&T”) which is involved in the trading of many of the materials that will be required by the company in the future, as well as the lithium products it intends to produce.

The net proceeds of the $100 million direct investment will be used by the company to pursue the following objectives:

-- Continue to rapidly advance the first commercial project proposed for the Lanxess facility in El Dorado.

-- Accelerate and expand the company’s development of the South West Arkansas Lithium Project in Columbia and Lafayette counties.

-- Continue to develop and commercialize modern lithium extraction and processing technologies and work collaboratively with KES businesses.

-- Allow for strategic project expansion.

“We’re entering an important phase for Standard Lithium and we’re thrilled to be starting it with a globally recognized industrial leader like Koch Strategic Platforms as a partner” said Robert Mintak, CEO of Standard Lithium. “KSP has an impressive track record of investing in disruptive technologies and their backing is an important endorsement of the company’s core technology, development plans and of our intent to make the Gulf Region a leading supplier of lithium resources.”

“KSP is focusing on investing in companies with strong tailwinds that are disrupting the market as we know it. We are excited to invest in Standard Lithium as they pave a path forward towards lithium production here in the U.S. This is an exciting time for energy transformation and we believe KSP’s investment in Standard Lithium can help accelerate the production of lithium resources right here at home.” said David Park, president of Koch Strategic Platforms.

Standard Lithium expects the direct investment by KSP to provide for mutually beneficial alignment with several Koch Industries businesses. For example, several businesses within the KES and KM&T platforms could assist in the following ways:

-- Providing key industrial technologies and process solutions for commercialization from Koch Separation Solutions.

-- Engineering and development oversight from Koch Project Solutions.

-- Engineering, procurement and other construction services from the Optimized Process Designs (OPD) group.

-- Raw material supply agreements and assistance with future lithium product off-take agreements from the KM&T group.

Under the terms of the direct investment, KSP will subscribe for 13,480,083 common shares of Standard Lithium at a price of $9.43 Canadian dollars ($7.42 U.S. dollars) per share for gross proceeds to Standard Lithium of $127 million Canadian dollars ($100 million U.S. dollars).

All common shares issued to KSP will be subject to statutory restrictions on resale prescribed by applicable Canadian and United States securities laws. Completion of the direct investment remains subject to the approval of the TSX Venture Exchange, as well as satisfaction of customary closing conditions.

Koch Investments Group is a unit of Wichita, KS-based Koch Industries, which is the largest privately-held corporation in the United States with more than $115 billion in annual revenues.

Among Koch’s holdings are wood products giant Georgia-Pacific, glass and fiberglass maker Guardian Industries, and electric and fiber-optic maker Molex.

MaxEn Capital Advisors, Ltd. acted as sole financial advisor to Standard Lithium on the transaction, led by Senior Managing Director Howard Margulis, and will be entitled to receive a cash fee and share purchase warrants of Standard Lithium in consideration for services provided.

In October, Standard Lithium issued a statement that it regards as positive an economic assessment for future lithium production in Columbia and Lafayette counties.

This could mean a capital investment of about $870 million in brine field and lithium processing facilities, with potential full-time employment of 75 people. The South Arkansas-produced lithium would serve an expanding market for rechargeable batteries, especially in electric vehicles.

Standard Lithium also said it has acquired an option on land suitable for a future brine processing and conversion facility that is “well served by existing infrastructure.” It didn’t name a specific location.

Vancouver-based Standard Lithium released a preliminary economic assessment (PEA) for its “South-West Arkansas Lithium Project,” previously called the Tetra Project.

Key points included the following:

-- Pre-tax net present value (NPV) of $2.83 billion at an 8% discount rate, and an initial rate of return (IRR) of 40.5 percent. After-tax NPV of $1.97 billion at 8% discount rate and IRR of 32.1 percent

-- A 20-year mine-line producing a yearly average of 30,000 tons of battery-quality lithium hydroxide monohydrate.

-- Operating costs of $2,599 per ton of battery-quality lithium hydroxide. This contrasts with a selling price of $14,500 per ton.

-- A capital investment of $870 million, including a 25% contingency of direct capital costs.

The company has updated the area’s lithium brine resource to consider the potential unitized area of production, leading to an increased total resource of 1,195,000 tons of lithium carbonate equivalent.

Standard Lithium has an option with Tetra Technologies for 27,262 acres in existing brine leases held by Tetra. Most of the land is leased by Tetra from property owners in the area of Lake Columbia westward to Arkansas 29 in Lafayette County, south of U.S. 82.

“The development plan for the PEA considers the production of battery-quality lithium hydroxide averaging 30,000 tons 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).

“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,” the October statement said.

Standard Lithium divides the potential lease from Tetra into “South” and “North” resources areas. If Standard Lithium moves forward with a brine field development plan, it would use a network of 23 brine supply wells that would produce an average of 7,238 gallons a minute. This would come from South Resource brine field, which apparently possesses a higher grade of lithium.

Standard Lithium’s LiSTR process uses a fine-grained, solid, inorganic adsorbent to selectively adsorb lithium ions from the brine. This produces a concentrated lithium chloride solution and is the process Standard Lithium is testing at its Union County demonstration plant.

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