Smackover Lithium’s DFS reports ‘robust economics’ for Arkansas project

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

The DFS projected an initial production capacity of 22,500 tonnes per annum (tpa) of battery-quality lithium carbonate (Li₂CO₃). This would make SWA 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 that the Smackover Formation could host more than 4 million tonnes of lithium, enough to power millions of electric vehicles and other electronic devices.

DFS results

The DFS detailed 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 study envisions a pre-tax net present value of $1.7 billion and an internal rate of return of 20.2%, assuming a discount rate of 8% and a lithium carbonate price of $22,400/t, the average of Fastmarket’s 20-year forward pricing curve for battery-quality lithium carbonate.

The all-in capex estimate of $1.45 billion was based on an 18-month detailed front-end engineering design (FEED) process, which yielded capital definition well beyond typical DFS studies, the company said, adding that conservative adoption of pilot plant learnings used in the FEED could lead to improved capital intensity in future expansion phases.

As a result, 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 0.5 km³ of brine volume. The proven reserves are 447,000 tonnes LCE at an average concentration of 481 mg/L for 0.2 km³ of brine volume.

First commercial DLE site in 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, Standard Lithium 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’s president and COO 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 added. “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.”

The company is targeting first production in 2028.