Standard Lithium Q4 2024 Earnings Results & Report

Standard Lithium EPS Results

• Actual EPS: -$0.04
• Consensus EPS: -$0.04
• Beat/Miss: Met Expectations
• One Year Ago EPS: N/A
• EPS Beat Rate: 4 of last 8 quarters

Standard Lithium Revenue Results

• Actual Revenue: N/A
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Standard Lithium (NYSEAMERICAN:SLI) is a development-stage lithium company focused on producing battery-grade lithium from lithium-bearing brines in the Smackover Formation of the south-central United States. The company is developing direct lithium extraction (DLE) technology, which is designed to selectively remove lithium from brine and potentially support a more efficient production process than conventional evaporation-based methods.

Standard Lithium’s principal activities are centered on its projects in southwestern Arkansas, including the South West Arkansas Project and assets associated with its relationship with LANXESS. The company has operated demonstration-scale DLE facilities in the region to test lithium extraction and conversion processes. It has also pursued opportunities in east Texas and other parts of the Smackover geological formation, which extends across several U.S. states.

Founded in 2016, Standard Lithium is not currently a conventional lithium producer; its business is focused on resource development, technology validation, project permitting and advancing potential commercial operations. The company is headquartered in Vancouver, British Columbia, and its shares trade on the NYSE American under the symbol SLI. Standard Lithium has been led by President and Chief Executive Officer David Park, who oversees the company’s project development and commercialization efforts.

Standard Lithium Q4 2024 Earnings Call Transcript

Key Takeaways

• Equinor partnership closed: Sold a 45% interest in the Southwest Arkansas and East Texas projects for $160 million gross (with a $30 million cash payment), de-risking both developments and securing Equinor’s commitment to fully fund up to $1 billion.
• $225 million DOE grant awarded: One of the largest U.S. critical minerals grants ever, this conditional award for the Southwest Arkansas project supports up to 45,000 tpa lithium carbonate production and is expected to create over 400 direct and indirect jobs.
• Commissioned the first commercial-scale direct lithium extraction (DLE) column in North America, achieving >95% lithium recovery and >99% impurity rejection, further de-risking their proprietary flow sheet.
• Completed a pre-feasibility study, secured brine production rights and acquired 118 acres for the central processing facility, scaling the Southwest Arkansas project to two phases of 22,500 tpa lithium carbonate each.
• Reported Q4 net income before taxes of $212.8 million (Q4 FY 2023 loss) and full-year net income of $182.5 million, driven by gains from the Equinor joint-venture transaction, ending with CAD 40 million working capital.

Presentation

[Operator]

Ladies and gentlemen, thank you for standing by. Welcome to Standard Lithium's Fiscal Fourth Quarter and Full Year Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. It is now my pleasure to turn today's call over to Salah Gamoudi, Chief Financial Officer. Sir, please go ahead.

[Salah Gamoudi, CFO at Standard Lithium]

Thank you, and welcome everyone. Joining me on the call today are David Park, CEO and Director, Andy Robinson, President, Director, and COO, and Mike Barman, Chief Development Officer. As a reminder, some of the statements made during our call, including any forward expectations, company performance, and timing of projects, may constitute forward-looking statements. Please note the cautionary language about forward-looking statements contained in our press release, which also applies to this call. I'm pleased to introduce our newly appointed director and CEO, David Park. David joins us after nearly three decades at Koch Industries, one of our key strategic partners. He began advising Standard in 2023 and has played a key role in helping to systematically de-risk our business, including with the consummation of our partnership with Equinor. David, it's great to have you on board. I'll now turn the call over to you.

[David Park, CEO at Standard Lithium]

Thanks, Salah, for the introduction. Since joining Standard in September, it's been a pleasure to meet many of our investors, analysts, and key local stakeholders. The company has carefully navigated a complex economic environment over the last fiscal year. We're ending twenty twenty-four stronger than ever, having partnered with global energy major Equinor and with the support of cornerstone investors, including Koch Industries. While the retreat in lithium pricing from all-time highs in twenty twenty-two and broader cooling of sentiment in the electric vehicle and energy transition space has pressured the sector, we're focused on what's within our control. For us, that means continuing to de-risk our business and move our world-class lithium brine projects forward. The most significant de-risking event for Standard and our shareholders occurred in Q4, with the close of a project-level investment and partnership with Equinor.

[David Park, CEO at Standard Lithium]

Equinor is a global energy major that has made a strong commitment to growing its renewables and low-carbon solutions business. We're thrilled to have them on board. Our teams have already been working closely together over the last few months. We believe our partnership with Equinor validated the quality of our assets in Arkansas and Texas, our direct lithium extraction process, and the expertise of our team. Standard clearly communicated over the past fiscal year the importance and benefit of having strong strategic partnerships, and we delivered on this vision. The world-class potential of our Southwest Arkansas project was further validated last week with a $225 million conditional grant from the U.S. Department of Energy. This award is one of the largest ever received by Arkansas and, or a U.S. critical minerals project.

[David Park, CEO at Standard Lithium]

It will help ensure American energy and supply chain security by breaking our reliance on China. This project is expected to add up to 300 construction jobs and 100 direct permanent jobs, as well as many more indirect jobs and millions of additional dollars in community benefits to the area. Equinor and the U.S. Department of Energy carefully evaluated our assets, teams, and plans over the last year, as Koch did a few years before. All three determined that Standard Lithium and the Smackover is where they want to invest. Concurrent to securing a strategic partner, we worked to advance and de-risk our projects, specifically at Southwest Arkansas. We completed a pre-feasibility study, secured our brine production rights, and purchased a 118-acre parcel of land that we expect to house the project's central processing facility.

[David Park, CEO at Standard Lithium]

We continue to refine the scope as part of the FEED and DFS work. Standard now envisions a larger project developed in two phases, producing 22,500 tons per annum each of lithium carbonate. At our demonstration plant in El Dorado, Arkansas, we successfully installed and commissioned the first commercial-scale DLE column in North America, supplied by Koch Technology Solutions. Its performance has exceeded our expectations and design parameters to date, and it was an important step in de-risking our DLE flow sheet. The good work advancing and de-risking our projects has been supported by the build-out of our executive team over the last year. This included the addition of Salah Gamoudi, who has brought structure and best practices to our finance accounting functions. He's ensuring the company is well prepared for the next phase of growth as we move forward towards development and production.

[David Park, CEO at Standard Lithium]

Mike Barman joined as our Chief Development Officer, bringing over twenty years of experience in investment banking and relationships with him. He's currently focused on advancing discussions related to offtake and project financing. While market sentiment and lithium price may ebb and flow, Standard is focused on what we can control, and for us, that means continuing to de-risk and advance our world-class lithium brine projects. I'll now hand it over to Andy, who will provide more insight on our projects and DLE process that's helping us unlock our Smackover resources in Arkansas and Texas.

[Andrew Robinson, President and COO at Standard Lithium]

... Thanks, David. As you mentioned, we're focused on advancing and de-risking our largest and highest grade projects within the Smackover Formation. Over the last fiscal year, we executed two drilling programs that yielded the highest ever reported lithium brine grades in North America. The potential in East Texas continues to excite us, and we're strategically expanding our land positioning in the areas that have the highest quality resource and the best quality rock. Our exploration results in East Texas delivered lithium concentrations up to 806 milligrams per liter, and an average concentration of 644 milligrams per liter, as well as meaningful concentrations of potash and bromine. These grades are unparalleled anywhere other than like a handful of projects in Chile and Argentina. Over the coming next few quarters, we plan to re-enter and resample three existing wells within our growing land position.

[Andrew Robinson, President and COO at Standard Lithium]

We're doing this to confirm and expand our understanding of the existing resource, and to assist our efforts in producing a maiden resource report, just for a portion of our land holdings in East Texas. We also expect to be drilling one new we in the region to advance our understanding of the potential resources there. And all this work is being done in close partnership with the Equinor team. At the Southwest Arkansas project, our PFS reported a resource of 1.8 million tons lithium carbonate equivalent, with an average lithium concentration of 437 milligrams per liter across the approximately 30,000-acre total project area. Our understanding of the resource potential of the Southwest Arkansas project has matured over the last year.

[Andrew Robinson, President and COO at Standard Lithium]

We've now fully integrated all the findings from last year's PFS drilling, and we're completing additional resource evaluation work during the next couple of quarters. The improved quality of the reservoir, combined with a higher grade resource, means that we've been able, with the assistance of our design team, to contemplate an increased overall production of up to 45,000 tons per year of lithium carbonate. We anticipate completing this larger project in two phases of 22,500 tons per year each. The recent $225 million grant, awarded by the U.S. Department of Energy to the Standard Lithium and Equinor Joint Venture for the Southwest Arkansas project, is reflective of this larger project scope.

[Andrew Robinson, President and COO at Standard Lithium]

And also, based on feedback from potential customers, we have shifted our focus from hydroxide to carbonate, and the current FEED design work is based on a flow sheet that will produce a battery-quality lithium carbonate product. The Standard Lithium and Equinor project team continues to work through all the necessary design and development work that's required to get the FEED study completed. The recent announcement of the DOE grant adds another level of support to the project. The combined team will be working on several parallel and complementary work streams over the next few quarters, including unitization, the royalty process, offtake and project financing negotiations, vendor and contractor evaluations, as well as additional technical refinement of the project. So we've got a very busy phase for the JV team. We'll be working as diligently as possible to move the project towards the final investment decision.

[Andrew Robinson, President and COO at Standard Lithium]

The key to unlocking all of our globally significant lithium resources in East Texas and Southwest Arkansas is successful execution of a direct lithium extraction process. I've said it before, the only way to know if your flow sheet works is to operate it continuously for long periods of time, with large volumes of brine that's pumped directly from your resource into your flow sheet, and that's why we continue to spend time and money to operate our demonstration plant. We've been running this plant in Arkansas for the last four years, and in April, it became home to the only truly commercial scale DLE column in operation in North America. We successfully commissioned the column in partnership with Koch Technology Solutions. Our partnership with Koch has been fundamental in building a shared understanding of how DLE works with Smackover brines.

[Andrew Robinson, President and COO at Standard Lithium]

To date, we've processed over 21 million gallons of brine through our demo plant, and we've run over 9,500 cycles with the Koch technology. Performance to date for the commercial column has exceeded expectations, with lithium recoveries consistently exceeding 95%, and the rejection of impurities being greater than 99%. This is a technology that's now been proven to work. And with that, I'll turn the call over to Salah, who will speak to our quarterly and fiscal year results.

[Salah Gamoudi, CFO at Standard Lithium]

Thank you, Andy. For our fourth quarter and full year ended June 30, 2024, we reported a rare event for a pre-revenue developing company, in that we had net income before taxes of $212.8 million and $182.5 million, respectively, or $0.97 and $0.83 per basic share. This compares to net losses in both the fourth quarter and full year 2023. Net income for the quarter was primarily driven by gains recognized related to the minority interests we sold in our Southwest Arkansas and East Texas projects to Equinor.

[Salah Gamoudi, CFO at Standard Lithium]

With the formation of the joint venture with Equinor, we retained a 55% interest in both the Southwest Arkansas and East Texas projects, and sold a 45% interest to Equinor in each of the projects, in exchange for gross and net consideration of $160 million and $133 million, respectively. Further, our balance sheet was strengthened by our Equinor partnership, which provided an immediate $30 million cash payment to us at transaction close, and a commitment by Equinor to sole fund both the Southwest Arkansas and East Texas projects, up to $40 million and $20 million, respectively, post-close. We ended the year with a working capital balance of approximately CAD 40 million. As we have mentioned on previous calls, we are committed to advancing and de-risking our projects while minimizing our cost of capital.

[Salah Gamoudi, CFO at Standard Lithium]

For us, this means pursuing funding via one, strategic partnerships. Two, offtake and potential customer financing. Three, low-cost project debt. And four, other forms of financing, such as grants and parent company-level equity financing.... We told you we'd secure a strategic partnership, and we did that. We told you that we'd pursue government grants, and we have been conditionally approved for one of the largest grant awards to be awarded for a domestic critical minerals project from the DOE. We are now pursuing customer offtake agreements and the requisite project level debt to help us take steps forward in finalizing capital formation at Southwest Arkansas, and as well, we are ensuring the company has the required liquidity to keep increasing our leasehold footprint in East Texas. With that, I'll turn the call back over to David for closing remarks.

[David Park, CEO at Standard Lithium]

Thanks a lot. At Standard, we're focused on what's within our control. For us, that means continuing to de-risk and advance our portfolio of projects. In twenty twenty-four, we did what we said we were going to do, and secured a strategic partnership with Equinor while delivering key project milestones and globally significant drilling results from our Smackover assets. Now it's time for us to prioritize, focus, and execute. We look forward to working with Equinor to advance Southwest Arkansas through DFS and FEED, and concurrently progress East Texas, where we see the potential to develop what could be one of the best lithium resources in the world. The key to developing long-term value for our shareholders is delivering on our commitments, and for us, that means advancing our projects in a timely fashion within budget.

[David Park, CEO at Standard Lithium]

As Salah mentioned, we'll continue to prioritize our lowest cost of capital options to finance the next phase of our company's growth, and we're confident that with the support of Equinor and Koch, we'll build a world-class, US-based, sustainable lithium business. Thank you. Operator, back to you.

[Operator]

Thank you. We will now open the line for questions. If you would like to ask a question, please press star followed by the number one on your telephone keypad to raise your hand and join the queue. To withdraw your question, please press star one a second time. If you have dialed in and are listening via loudspeaker on your device, please pick up your handset and ensure that your device is not on mute when asking your question. Our first question comes from Greg Jones with BMO Capital Markets. Please go ahead.

[Max Yaron, Analyst at BMO Capital Markets]

Good afternoon. This is Max Yaron for Greg Jones from BMO. Regarding the larger scale project plan for Southwest Arkansas, could you provide some color on the proposed plan to produce lithium carbonate rather than a hydroxide that was outlined in the PFS?

[Andrew Robinson, President and COO at Standard Lithium]

Hey, Max, it's Andrew Robinson here. Yeah, I mean, that was principally based on feedback from the offtake community. So discussions over the last year, informally, the general guidance was very much towards a preference for a carbonate product in the timeline that we're sort of contemplating for commercial production. So in that late 2027, 2028 period for initial production, the feedback was very much for a carbonate product. And so that really informed the switch in the flow sheet.

[Max Yaron, Analyst at BMO Capital Markets]

Got it. Thank you. That's helpful. And for the DOE award, assuming that final negotiations are successful, could a potential administration change in the US put the receipt of the award at risk at all?

[David Park, CEO at Standard Lithium]

This is David Park. Yes, theoretically. Well, first, the award, the money for the DOE grant has been allocated by the U.S. government. So if the terms and conditions are not finalized prior to a change in administration, there is a theoretical possibility that it could be at risk. However, we've been told by the DOE as recently as today, that they are driving to completion of these grants by the end of December.

[Max Yaron, Analyst at BMO Capital Markets]

Okay, got it. Thank you. That's very helpful. That's all from me for today. I'll turn it back over to the queue. Thanks, guys.

[Operator]

Our next question comes from Noel Parks with Tuohy Brothers. Please go ahead.

[Noel Parks, Analyst at Tuohy Brothers]

Hello, good afternoon.

[David Park, CEO at Standard Lithium]

Good afternoon.

[Noel Parks, Analyst at Tuohy Brothers]

I just have a couple I wanted to run by you. Just interested in the collaboration with the Equinor team. Sort of in practical terms, how does that work? You mentioned that you're gonna be reentering and resampling existing wells and doing a new well, and I'm assuming there's data generated from that. So, just interesting kind of how the mechanics and how they might weigh in on, you know, based on the results you get, how you might proceed.

[Andrew Robinson, President and COO at Standard Lithium]

Hey, Noel, it's Andrew Robinson here. Yeah, I mean, what we've formed, Noel, is effectively a true joint venture. So the projects are run on an integrated project management team basis. For example, for the Southwest Arkansas project, there is a project team which is made up of a series of Standard Lithium and then Equinor personnel as well, working together in an integrated manner. The strengths that Equinor bring are, yeah, very much on the subsurface side. They're bringing a lot of-...

[Andrew Robinson, President and COO at Standard Lithium]

Drilling, reservoir engineering, well completions, pumping, fluids processing type information, Noel, and experience, as well as then some of the, you know, the important aspects relating to health, safety, social environment, and then sort of wider project execution, and large scale project management, discipline, and processes. So truly sort of an integrated approach. The teams are communicating on an hourly basis, as the projects are progressing. And, yeah, there is a very deep and wide collaboration and sort of joint use and production of the data. Does that give you an idea, Noel?

[Noel Parks, Analyst at Tuohy Brothers]

Certainly. That's great, and regarding the additional sampling and drilling you're gonna do, can you just sort of maybe characterize what it is you're looking to identify, you know, from the incremental data?

[Andrew Robinson, President and COO at Standard Lithium]

Yeah, sure. I mean, so, for Southwest Arkansas, we're looking to do some fill in, really confirmatory drilling there to make sure that the inputs for the final commercial production model, i.e., that the true reservoir production model, have been, you know, sufficiently ground truthed, stress tested, and that the appropriate conservatism is built into, you know, our production modeling work, which will incorporate the data from the forthcoming resampling and drilling work. So really, it's confirmatory with a view to then developing the commercial production model. In East Texas, it's a little more, obviously a little more exploratory there. So we're seeking to gain sort of greater geographic definition as we continue to expand our leasing footprint in the region.

[Andrew Robinson, President and COO at Standard Lithium]

We're gonna be stepping out with our drilling to some new areas that we've been leasing. Really, we're looking there for you know rock properties. So we're looking to take core, to do permeability testing, et cetera, as well as obviously take brine samples for geochemical analysis to get a view for grade. Then one of the things that you sort of will see announced not immediately, Noel, but certainly during sort of the first half of 2025, is we'll then start to do some initial process testing on the brines from East Texas, so that you know during the calendar year 2025 you know we're guiding towards putting out a maiden resource statement as soon as we can, likely sort of middle of the year.

[Andrew Robinson, President and COO at Standard Lithium]

And then hopefully, not too, not too long thereafter, we can start to think about a preliminary economic assessment as well. So we can start to, start to put in, in place some of that sort of, hydromet treatment work, and we can start to talk about project economics, that kind of thing.

[Noel Parks, Analyst at Tuohy Brothers]

Great. Great. And then just a last one. You mentioning that, of course, you have successfully commissioned the column and the demonstration project with the Koch technology. And just curious, is the license process of that already in place? I hadn't really thought before to ask about, is that complete and fully priced or anything, or is that something still to be done or to be negotiated?

[Andrew Robinson, President and COO at Standard Lithium]

That is a process which is currently coming to closure, Noel. So it's been a license process, which we're hoping to complete in the very near future. Obviously, we've been working together on the technology in a very significant and collaborative way, so that's something we hope to conclude very quickly.

[Noel Parks, Analyst at Tuohy Brothers]

Great. That's all for me. Thanks a lot.

[Operator]

We have no further questions at this time. This will conclude today's conference call. Thank you all for your participation. You may now disconnect.

Participants

Executives

• Andrew Robinson, President and COO
• David Park, CEO
• Salah Gamoudi, CFO

Analysts

• Noel Parks, Analyst at Tuohy Brothers
• Max Yaron, Analyst at BMO Capital Markets