How Standard Lithium ended up in Arkansas by applying a different development strategy
Standard Lithium Ltd. (TSX.V: SLL) is leading the next generation of lithium producers. They are focused on unlocking the value of existing large-scale US based lithium bearing brine resources that can be brought into production quickly. The company believes new lithium production can be brought on stream rapidly by minimizing project risks at selection stage; resource, political & geographic, regulatory & permitting, and by leveraging advances in lithium extraction technologies and processes.
Hannah Bernard: Hi. I’m Hannah Bernard. You’re watching Market One Minute. Today we are joined by Robert Mintak of Standard Lithium. Robert, we’ve seen some recent reporting about a glut of supply in the Lithium space. What’s your take on this?
Robert Mintak: Yeah, well the space has been red hot for the last couple of years. There’s 200+ companies in the space. A lot of capital has been raised, expectations are quite high, and the demand for lithium is growing. It’s supposed to grow by as much, or projected to grow by as much, as 400 per cent over the next 5–7 years. That’s a lot. New projects have to come online.
Hannah Bernard: Of course, yeah.
Robert Mintak: But there’s been a few reports out that are making assumptions that these projects will come online. There will be a glut of supply because there’s so many companies looking to get in the space and go into production.
Hannah Bernard: Of course.
Robert Mintak: But the assumptions that there’ll be a glut in supply assumes that these projects will get financed. They’ll get permitted. They’ll get built. The industry has a history of not meeting its expectations. Projects have to come online for the success of the EV industry, the lithium battery projects, and supply has to come online. But I don’t feel that there’s any chance that there’ll be an imminent supply/oversupply scenario. It just doesn’t make sense.
Hannah Bernard: Yeah. Very interesting. Standard Lithium is using a different development strategy than other companies in this sector. You call it the “Moneyball” approach. What does that mean?
Robert Mintak: Yeah, we sort of hijacked that. It’s from the Michael Lewis book. It was a few years back, but it’s really a data-driven approach. Our approach isn’t to chase after high-grade on some remote salar in South America or on an outcropping in Quebec or in Australia. Our approach is to chase after projects where we can eliminate the execution risk. And how do you do that? You identify the critical fail points that the companies face.
So, what are those? There’s discovery. That’s one. There are permitting challenges. All across the way: environmental challenges, getting permits to drill, all of the application for permits and the review process there. There’s jurisdictional process challenges. History is littered with companies that had great discoveries, but they failed because they aren’t able to build the project.
So, our focus is on finding projects where we eliminate discovery because we know there’s already grade there. We eliminate execution risk because they’re already in production. There’s a handful of places in the world you can do that, and we fortunately identified them. No one else looked at them, and we signed agreements on them.
Hannah Bernard: So, let’s talk about your flagship property. It is located in a jurisdiction and a region that might not be familiar to a lot of investors. How did Standard Lithium end up in Arkansas?
Robert Mintak: Yeah, as I’ve mentioned, we’re focused on data. So, we’re looking at opportunities where we find projects in jurisdictions that have been overlooked because they didn’t fit the conventional mining model. So, we started the company, we said, “Where can we go where we know that we can apply what we’ve learned and do agreements with an existing producer that doesn’t recognize that they have a lithium resource?” There’s a couple of locations. We signed an agreement earlier last year in California, but the big opportunity for us was in Arkansas. People are familiar with Australia and Argentina, both jurisdictions that begin with A. Arkansas begins with an A and it’s got a lot of lithium.
It’s been recognized in technical reports going back 30–40 yeas as a massive lithium resource in an area that is the largest brine producing area in North America. They just don’t extract lithium from the brine. They extract bromine, but what they do is they extract upwards of 200 to 300 million barrels of brine every year, strip bromine out of it, and then they put the brine back into the ground. That brine is rich in lithium.
One company, Albemarle, is the world’s largest lithium producer. Started in southern Arkansas in the bromine business. In 2011, they put out a news release saying they successfully extracted lithium in a pilot plant in southern Arkansas, and it’s been in their slide deck for a number of years saying that it’s a world-class resource and an opportunity exclusive to Albemarle — until this year. We signed an agreement with one company, Tetra Technologies, to acquire a large land package in southern Arkansas. 30 thousand acres, and just this last May, we signed a deal with Lanxess, a German specialty chemical company, that has the largest land package in southern Arkansas and the largest bromine processing facility. They produce as much as 400 thousand barrels of brine every day, take the bromine out and put it back into the ground. So, we announced a deal with Lanxess where we have access to their tail brine, and we have an opportunity to build our pilot plant inside the permitted fence of one of their production facilities. It puts us years ahead of any other company.
Hannah Bernard: It sounds like Arkansas is a good place to be then.
Robert Mintak: Yeah, Arkansas, the volume of brine, it’s 200 to 300 million barrels of brine every year — rich in lithium. It’s 10 billion gallons a year of brine that gets pumped and re-injected back into the ground. Thousands of employees in the brine-handling industry, they’ve got all of the other materials and infrastructure required because it’s already in production. They’ve got power, access to water, cheap chemical reagents. It’s close to the Gulf Coast. It’s in the US. So, it’s a great jurisdiction. It’s a globally significant opportunity.
Hannah Bernard: So, let’s talk about the future. What does 2018 and beyond look like for Standard Lithium?
Robert Mintak: Yeah, we got a lot of exciting news coming up because we just announced this deal with Lanxess. We’ll have access to years of their production data, so we’ll be putting together a technical report on their 150,000-acre land package. We’ll be putting out a technical report on our 30,000-acre land package in southern Arkansas. That package came with 200 miles of 2D seismic, because the area’s seen so much exploration and development work. It came with 200 miles of 2D seismic. Hundreds of wells have been drilled on it already, so we’re putting together a very data-driven, strong technical report on ours, and we’re moving forward on our pilot plant.
So, it took 10 months to do this deal with Lanxess. But all along that period, because they’re already in production, we’ve had access to brine, to the lithium-rich brine from them for the last 10 months, so we’ve been doing bench-scale, mini pilot plant work at our own facilities in Canada, towards putting together engineering drawings for our pilot plant. We’ll be building the pilot plant over the next quarter, moving it to southern Arkansas, Q4, and it’ll be up and running Q1, 2019.
Hannah Bernard: Wow.
Robert Mintak: So, a lot significant milestones coming.
Hannah Bernard: Yeah, some news flow coming from Standard Lithium in the near future. Thanks for being with us, Robert.
Robert Mintak: Thank you.