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Broader Market Shifts Send Lithium Demand Over the Top

NetworkNewsWire Editorial Coverage: Tesla CEO Elon Musk in December made true his promise to build in South Australia the world’s biggest lithium ion battery. “The world’s largest lithium ion battery will be an important part of our energy mix, and it sends the clearest message that South Australia will be a leader renewable energy with battery storage,” Australian Premier Jay Weatherill said in statement (http://nnw.fm/m2Lzh).” Musk’s vow came after a challenge for Tesla to address power blackouts and energy shortages in South Australia. In tandem with Weatherill’s enthusiasm over the success of the project, the achievement reveals a broader, global push to increase the use of lithium as a power source. Several companies are poised to scale up their production efforts and capitalize on the resulting global demand for lithium and cobalt, which is essential to lithium-ion battery operation. They include Standard Lithium Ltd. (OTCQX: STLHF) (TSX.V: SLL) (FRA: S5L) (STLHF Profile), Sociedad Quimica y Minera de Chile S.A. (NYSE: SQM), NRG Metals, Inc. (TSXV: NGZ), FMC Corp. (NYSE: FMC) and eCobalt Solutions Inc. (TSE: ECS).

China Boosts Potential for Lithium Companies

China has the largest automotive industry in the world and it is estimated that cars running on combustion engines account for around 30 percent of the country’s air pollution. The government’s decision to phase out vehicles operating on fossil fuels has been welcomed by environmentalists.

The Chinese government aims to produce 7 million EVs and hybrid vehicles by 2025, and Goldman Sachs has estimated that China will account for 60 percent of all global EV sales by 2030.

China’s plans may appear ambitious, but it already has two of the top five lithium-ion battery manufacturers in the world, BYD and CATL. Some critics have pointed out that lithium-ion batteries are heavy and expensive, accounting for 33 percent of the cost of EV manufacture. However, Bloomberg reports that the price of these batteries is decreasing and predicts that EVs will be as affordable as vehicles powered by combustion engines by 2022 (http://nnw.fm/8iRER). As a result, demand for lithium and cobalt is skyrocketing, paving the way for companies in the industry to expand operations and increase production of the two minerals.

Standard Lithium, Gears Up to Service Global Demand 

Based in Vancouver, Canada, Standard Lithium Ltd. (OTCQX: STLHF) (TSX.V: SLL) (FRA: S5L) is focusing its efforts on developing existing large-scale lithium brine resources in the United States that can be brought quickly into production. To this end, the company is exploring and developing its California Lithium Project, which includes the Bristol Dry Lake and Cadiz Dry Lake lithium brine properties in the Mojave area of San Bernardino County in California. Standard Lithium has agreements in place with both of the regions permitted brine processor’s, National Chloride Corporation of America and TETRA Technologies.

Under the recently announced agreement with TETRA Technologies, Inc., Standard Lithium has increased the project scope to roughly 48,000 acres of mixed private, patented and placer claim land in the Bristol Dry Lake and Cadiz Dry Lake basins that allow for exclusive lithium brine exploration and processing. This agreement marked an extension of Bristol Dry Lake’s potential, and positioned Standard Lithium to fully leverage its working relationship with TETRA.

“Since day one we have recognized the bigger opportunity with respect to expanding the resource base and strengthening project economics at Bristol Dry Lake by securing the rights for lithium development over the entire basin.  By inking an agreement with TETRA, the only other permitted operator in the area, we have now effectively achieved that.  This is a significant and strategic move for Standard, but has only been made possible by the excellent relationships we have developed with the permitted brine operators in the region.  Gaining access to the adjacent Cadiz Dry Lake operating project is an additional benefit to our relationship with TETRA,” Standard Lithium CEO Robert Mintak noted in a press release announcing the deal (http://nnw.fm/4yD4U).

Part of the allure of the Bristol Dry Lake project in particular is that it is currently permitted for brine extraction and processing activities; has significant production infrastructure in place; and is serviced by major highways, power and a dedicated rail siding and loading spur.  Located 20 km (just under 12.5 miles) southeast of Bristol Dry Lake is the Cadiz Dry Lake Property, of which three initial grab samples of brine wells showed lithium concentrations in pumped brine ranging between 112-139 mg/L.

These concentrations from relatively shallow wells suggests that there is a potentially significant lithium brine deposit present in the Cadiz Dry Lake basin.  Our technical team is currently performing due-diligence on all available data for the Cadiz Dry Lake basin and will be laying out a plan for new data collection over the coming months.  Additional investigation of TETRA’s properties in both Bristol Dry Lake and Cadiz Dry Lake will be performed concurrently with our existing resource definition program, and as such, we should be able to significantly expand our resource base as we move towards producing maiden lithium resource estimates for the Mojave projects,” Standard Lithium president and COO Dr. Andy Robinson.

In a development updated issued in December 2017, Standard Lithium reported that six new separate evaporation ponds were installed on the Bristol Dry Lake Property, allowing the company to further assess the potential role of short-duration passive solar evaporation in processing the lithium brines encountered at the project.

Following previous work showing the possibility to concentrate brines from initial lithium concentrations of 146 mg/L to concentrations of 686 mg/L in roughly seven weeks, Standard Lithium is conducting additional evaporation tests to assess season variations and produce large volumes of pre-concentrated brine that will be shipped to the company’s North American testing facilities for use in ongoing selective lithium extraction processing work. A bulk raw-brine sample from the Cadiz Dry Lake project will also be transported to the evaporation ponds to assess the pre-concentration of lithium brine from the project.

With official approval of the lithium brine sampling program at Bristol Dry Lake, Standard Lithium said it expects the development will be finished by the end of January.

The company’s other significant project is its Smackover Lithium Brine Project. As announced earlier this week, Standard Lithium furthered its existing partnership with TETRA with an option agreement to acquire the rights to conduct exploration, production and lithium extraction activities in a highly productive area of Southern Arkansas’ Smackover Formation.

According to the Arkansas Oil and Gas Commission, Arkansas produces on average more than 9 billion gallons of brine per year, mostly from the Smackover Formation. Standard Lithium’s brine leases, which covers an area of up to 33,000 acres of brine leases. have extensive resource potential, with well-studied and documented geology and hydrogeology. According to the company, this makes the Smackover deposit one of the most promising in the lithium industry, which has the benefit of existing regional large-scale brine extraction, processing and brine re-injection facilities. Historical data from Standard Lithium’s lease area indicates lithium content of 370-424 mg/L in these brines.

“The Company chose the Smackover Formation as a key development target, precisely because it combines a very large resource potential, with well-studied and documented geology and hydrogeology, along with a permitting regime that has a long history of approving operations that remove, process and re-inject massive volumes of brine.  Combined with a wealth of existing infrastructure in the project area (power, rail, gas, water, trained workforce, cheap reagents etc.), this makes Standard Lithium’s new opportunity in Southern Arkansas the perfect location to locate a modern lithium brine processing operation.  Due to the wealth of already-available data from our new project area, we can start the process of compiling a maiden resource estimate for this large lease package extremely quickly, with a minimum of additional intrusive investigation,” president and Chief Operating Officer Dr. Andy Robinson stated in the press release announcing the option agreement (http://nnw.fm/q1Pw8).

As Standard Lithium expands its project portfolio, management continues to invest in the company itself with the inclusion of industry professionals to its team.

In November 2017, Standard Lithium named Craig J. Brown, P. Eng. and a qualified Chemical Engineer, to its Scientific Advisory Council, as well as announced that that John E. Young, P. Eng. would join the company as senior corporate development officer.

Brown is widely respected as a hydrometallurgical expert and played a central role in the development of ion exchange technology. He has more than 45 years of experience in developing processes for the separation of a wide range of chemicals from aqueous solutions. The company intends to utilize Brown’s expertise in selective ion-exchange and hydrometallurgical technologies to improve its lithium extraction processes. Standard Lithium also announced that it had begun test work on a new lithium-selective Ion Exchange resin that has been in development for some years by one of the largest suppliers of these resins in the world. This shows the company’s commitment to expand its testing program to include cutting-edge technology in its drive to develop optimal process solutions for its lithium brine projects.

Young’s mandate will be to head up the company’s acquisition and development activities, while expanding and managing strategic partnerships and alliances, focusing on the southern U.S. region. He has more than 35 years of experience in reservoir engineering, economic evaluation, project development and property acquisition. As a registered professional engineer, Young holds a degree in petroleum engineering, as well as membership of the Society of Petroleum Engineers and the Society of Petroleum Evaluation Engineers. Previously, he held the position of director of business development for Legacy Reserves, LP.

Potential Comparable Companies

Sociedad Quimica y Minera de Chile S.A. (NYSE: SQM): Headquartered in Santiago, Chile, SQM produces and markets industrial chemicals, specialty plant nutrients, potassium, iodine and derivatives, as well as lithium and derivatives. SQM is the world’s largest lithium producer, supplying lithium carbonates, hydroxides and chlorides for a wide range of applications. Its lithium carbonate is used as electrochemical material in batteries, and lithium hydroxide for battery cathodes.

NRG Metals (TSXV: NGZ): NRG Metals is an exploration company with a focus on lithium brine projects in Argentina. The company is drilling its Salar Escondito Lithium Project, a 29,000-hectare area that has shown results of 227ppm lithium. It is also evaluating the Hombre Muerto North Lithium Project, a 3,287-hectare site in Salta province. An Environmental Impact Study has been filed and the company has applied for permits to drill.

FMC Corp. (NYSE: FMC): Based in Philadelphia, Pennsylvania, FMC Corporation is a company that provides solutions and products for applications in the global consumer, agricultural and industrial markets. Through its subsidiary, FMC Lithium, the company markets lithium for use in batteries, pharmaceuticals, polymers, glass, ceramics, greases and lubricants.

eCobalt Solutions (TSE: ECS): eCobalt is a Canadian company which focuses its cobalt producing operations on its mineral rights in Cobalt Camp, Ontario. The company has merged with CobalTech and Cobalt One, giving it control over 10,000 hectares of unconsolidated land for prospecting. The company is currently developing historic mines in this area, including the Keeley-Frontier, Silver Banner and Bellellen mines.

With the global demand for lithium and cobalt predicted to grow exponentially over the next two decades, companies such as Standard Lithium Ltd. (OTCQX: STLHF) (TSX.V: SLL) (FRA: S5L), Sociedad Quimica y Minera de Chile S.A. (NYSE: SQM), NRG Metals, Inc. (TSXV: NGZ), FMC Corp. (NYSE: FMC) and eCobalt Solutions, Inc. (TSE: ECS) are uniquely positioned to expand exploration and production capabilities to establish themselves as leaders on the international lithium market.

For more information on Standard Lithium, visit Standard Lithium Ltd. (OTCQX: STLHF) (TSX.V: SLL) (FRA: S5L)

For a more in-depth look into Standard Lithium (TSXV: SLL) (FRA: S5L) (OTCQX: STLHF) you can view the full report on Streetsignals.com.

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