energy insights

Standard Lithium’s PEA results promising news for Smackover lithium production

On October 12, 2021, Standard Lithium Ltd. announced positive results on its preliminary economic assessment (PEA) for the company’s Southwest Arkansas lithium project in Lafayette County. According to Standard, the 30,000 tonnes per year battery-grade lithium hydroxide plant has a pre-tax net present value of $2.83 billion at 8% discount rate and an internal rate of return of 40.5% (post-tax $1.97 billion NPV at 8% DR and 40.5% IRR).

With CAPEX of the project estimated at $870 million with a 25% built-in contingency, the project certainly has a positive outlook. Additionally, the estimated OPEX of $2,599 per tonne lithium hydroxide is very favorable in comparison to the current North American price of $15,500 per tonne.

In addition to the financials provided in the report, Standard’s PEA also provides an upward revision of their total in-situ resource to nearly 2 million tonnes lithium carbonate equivalent if they were to unitize their acreage.

Given Galvanic Energy’s existing lease position within that area, we are a direct beneficiary as a non-operator. Standard’s PEA also supports a strong valuation of our acreage position, which is immediately south and west of Standard’s highly concentrated southern tier, which boasts some of the highest lithium values recorded in North American brines. In fact, the two wells tested by Standard in 2018, with concentrations of 350 ppm and 450 ppm, are surrounded by our mineral leases.

These results are promising for Standard, but also for the Smackover Formation as a whole. An American lithium supply is increasingly important as automakers like GM, Stellantis, Toyota and Ford are announcing significant investment in electric vehicles and battery facilities in the U.S.