Smackover Lithium’s DFS reports “robust economics” for Arkansas project

[Redator]

Smackover Lithium, a joint venture between Standard Lithium (TSXV: SLI) (NYSE.A: SLI) and Norway’s state-owned petroleum company Equinor (NYSE: EQNR), has announced positive results of a definitive feasibility study (DFS) for its South West Arkansas project.  

Smackover Lithium is developing a greenfield lithium extraction and chemicals production facility in the southwestern region of Arkansas. In January, the JV received a $225 million grant from the US Department of Energy to support the construction of Phase 1 of the South West Arkansas project. 

The DFS projected initial production capacity of 22,500 tonnes per annum (tpa) of battery-quality lithium carbonate (Li₂CO₃) for the project, marking the first commercial lithium production in the Smackover Formation, an underground geological formation stretching from Florida to Texas filled with lithium-rich brine.  

Analysts estimate the Smackover could contain more than 4 million metric tons of lithium, enough to power millions of electric vehicles and other electronic devices. 

DFS results  

Detailed Resource and Reserve modelling supports a production plan with average lithium concentration of 481 mg/L, underpinning a minimum 20-year operating life with ample opportunity for significant further expansion, the company said.  

The DFS envisions unlevered pre-tax NPV of $1.7 billion and IRR of 20.2%, assuming a discount rate of 8% and a lithium carbonate price of $22,400/t, an average of Fastmarket’s 20-year forward pricing curve for battery-quality lithium carbonate.  

All-in Class III capex estimate of $1.45 billion includes a 12.3% Monte Carlo risked contingency. This is informed by an 18-month detailed front-end engineering design process which has yielded capital definition well beyond typical DFS studies. Conservative adoption of pilot and demonstration plant learnings used in FEED results in improved capital intensity expected on future expansion phases. 

The DFS forecasts average cash operating costs of $4,516/t over the operating life and average all-in costs of $5,924/t. 

Since completion of the prefeasibility study (PFS), the JV has re-entered wells and drilled a new in-fill well to support upgrading the Resource and modeling Proven and Probable Reserves.  

The Total Measured and Indicated Resource is 1,177,000 tonnes lithium carbonate equivalent (LCE) at an average concentration of 442 mg/L for 0.50km³ of brine volume and Proven Reserves are 447,000 tonnes LCE at an average concentration of 481 mg/L for 0.20km³ of brine volume.  

First commercial direct lithium extraction in the US 

Smackover Lithium is licensing Koch Technology Solutions’ lithium selective sorption process for the initial phase of the project, which includes performance guarantees.  

Opportunity exists for further operational and cost improvement on future expansion phases with regional exclusivity for the technology in the Smackover under a joint development agreement, the company said. 

“The robust economics from our SWA Project DFS confirm what we’ve known for a long time – that this is a world class asset and opportunity,” Standard Lithium president and COO  Dr. Andy Robinson said in a news release.  

“Through years of extensive testing and development we have substantially de-risked the process technology and increased our confidence in project execution,” Robinson said. “We are well-positioned to move the Project towards a Final Investment Decision and are excited by the prospect of being a domestic champion for securing critical minerals production in the United States.” 

First production is targeted for 2028, the company said.