Standard Lithium Announces Partnership to Accelerate Arkansas Plant Development

Robert Mintak, CEO of Standard Lithium Ltd. (Kyle Massey)

Standard Lithium Ltd., the company developing commercial lithium operations in Arkansas and east Texas, announced Wednesday that it has a new partnership with publicly traded Equinor ASA.

The deal with the Equinor, of Stavanger, Norway, is worth up to $160 million.

Equinor, a multinational energy enterprise specializing in renewables, will own 45% of Standard’s plant in southwest Arkansas. In addition, it will take the same stake in Standard’s east Texas drilling properties.

Standard, based in Vancouver, British Columbia, will get a $30 million cash payment at closing of the deal. Additionally, Equinor will solely provide funds for a $60 million work project in southwest Arkansas and in east Texas. Standard has been producing battery-quality lithium products at a test plant in El Dorado for more than three years. That project is in conjunction with Lanxess AG. Lanxess has extracted bromine from the underground brines of the Smackover geological formation for years.

The Vancouver company plans to grow its extraction operation in El Dorado into a commercial plant that could produce 5,000 tons of lithium products per year. Equinor will be helping to build a much larger $1.3 billion plant on 118 acres that Standard bought in Lafayette County last year. That plant could deliver 35,000 tons of lithium per year, the company said.

In a news release, Standard said that the partnership will accelerate its development of large-scale lithium projects in the Smackover formation.

Validation for Standard

The $60 million in work project money represents a $33 million carry by Equinor for Standard Lithium’s portion and a $27 million carry for Equinor’s portion. Equinor will also invest up to $70 million more subject to final investment decisions by both companies. Standard will own 55% and Equinor 45% of the southwest Arkansas and Texas projects. Standard will retain operational control.

In a statement, Standard President and COO Andy Robertson said the company was delighted with the arrangement. “We believe this partnership with a global energy major validates the quality of our team, our [direct lithium extraction] flowsheet and experience, and our world-class lithium-brine resources in Arkansas and Texas.”

Robinson said Equinor’s involvement “will be fundamental to the continued de-risking and execution of these important projects.”

“We believe we have aligned with the right partner to take SLI and the lithium industry in Arkansas and Texas to the next level,” he added.

The release said Equinor has deep experience in subsurface production, project development, financing, construction and operations. The transaction also “strengthens Standard Lithium’s financial position,” the company said. And it carries development costs without diluting value to existing shareholders, the company said.

‘Major Accomplishment’

Standard CEO Robert Mintak called the partnership a major accomplishment.

“It has long been our belief that success in this sector hinges on strategic partnerships with companies who share our vision and bring complementary strengths,” Mintak said. “Equinor’s culture and values align with ours in using innovation, integrity and responsible development to enable the global energy transition. With this partnership, we have the opportunity to accelerate our progress and carve out a significant role in shaping the future of sustainably produced lithium.”

Morten Halleraker, a senior vice president at Equinor, said the Norwegian company is looking forward to working in the Smackover Formation.

“With Standard Lithium as operator and by building on Equinor’s core competencies such as sub-surface and project execution capabilities, we believe that more sustainably produced lithium has growth potential,” Halleraker said.

The companies completed the deal on Tuesday. It calls for Equinor to fund the first $40 million of costs in the Lafayette County project. The companies will fund all additional capital ventures on a pro-rata basis, officials said.

Citi was Standard’s financial adviser. It took legal counsel from  Skadden, Arps, Slate, Meagher & Flom, as well as Cassels Brock and Blackwell LLP. Standard Lithium trades under the symbol SLI on the TSX Venture Exchange and on the NYSE American exchange. Equinor trades on the New York Stock Exchange under the symbol EQNR.