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Standard Lithium, Lanxess Proceed Toward Big Plant in El Dorado

4 min read

Despite class-action lawsuits accusing it of hyping its technology and a scathing report doubting its production capabilities by Hindenburg Research, Standard Lithium Ltd. kept up a roll of big partnership developments Thursday, announcing a deal with Lanxess Corp. to pursue a permanent commercial lithium extraction plant in El Dorado.

Standard, based in Vancouver, British Columbia, has been producing small batches of lithium products for the battery market at two test facilities on a Lanxess site in El Dorado for two years, and this year has announced partnerships with Koch Minerals & Trading LLC and other Koch Industries entities.

The El Dorado plants are attached to the Lanxess infrastructure long used by the company to mine bromine from south Arkansas’ underground brine. The “tail brine” from the Lanxess process goes to Standard’s test plants, which leach lithium from the same water before returning it underground.

The deal announced Thursday, dated Feb. 23, identifies Standard and Lanxess as strategic partners and streamlines planning for a commercial lithium plant envisioned as the size of a city water treatment plant.

The project is to be built at “an operational Lanxess facility in El Dorado,” the companies said in a news release, with Standard controlling all development through completion of a front-end engineering design study, or FEED study, a common path for companies looking to use project financing.

“Standard Lithium will hold, at a minimum, a 51% majority equity stake in the Project and may retain as much as 100% of the Project,” the news release said, adding that the company will also keep 100% ownership of its South West Arkansas Project, over 30,000 acres of separate brine leases in southwest Arkansas.

“This agreement builds upon the successful working relationship that has been established between the companies,” said a statement by Robert Mintak, Standard’s CEO. “Standard Lithium takes ownership of the Project and its development timelines with a clear path towards delivering the first new commercial lithium production in the USA in over 50 years. We have already begun the process of engaging and integrating the strategic team members to make this project a success. With the recent investment from our largest shareholder, Koch Strategic Platforms, we are fully funded to complete all planned Project milestones leading to a Definitive Feasibility Study, which is expected to be completed in Q4 2022.”

In the arrangement, Standard will form an initially wholly-owned company that will hold 100% of the project during pre-FEED and FEED engineering studies. The FEED engineering will inform a definitive feasibility study expected in the fourth quarter of this year. Lanxess will provide the brine for the project, provide a site lease and rights of way, and continue providing infrastructure. Standard will provide a market fee-based license to the Project Company of its intellectual property.

Lanxess is obliged to support the project’s development, and once a definitive feasibility study is complete will have an option to acquire not less than 30% and not more than 49% of the project company. If Lanxess takes minority ownership, the parties will share the costs of financing construction and Lanxess will have the right to acquire some or all of the lithium carbonate off-take from the commercial plant at market rates, less a handling fee.

If Standard Lithium keeps ownership, it can elicit bids from other interested parties for up to 49% ownership of the project company. Lanxess would still have the right to acquire some or all of the lithium product for market price minus up to 20%.

Stifel Nicolaus Canada Inc. of Toronto acted as financial adviser to Standard Lithium during the agreement’s negotiation.

In recent months, law firms specializing in investor class actions have been advertising for clients to sue Standard for improperly pumping up stock prices by overselling the commercial potential of its proprietary process for extracting lithium from the brine. Standard is jointly listed on the TSX Venture Exchange and the NYSE American under the trading symbol “SLI”; and on the Frankfurt Stock Exchange under the symbol “S5L.”

A global  investor rights law litigator, the Rosen Law Firm of New York, is one firm gathering plaintiff investors for class actions. Its lawsuit, already filed, accuses Standard Lithium of making false or misleading statements, overstating its direct lithium extraction technology’s efficiencies and obscuring its final product lithium recovery percentage at its El Dorado demonstration plant.

Another drag on confidence was a Feb. 3 report by Hindenburg Research, which stirred short-sellers and deeply questioned Standard’s processes, leadership and honesty. The headline, “Standard Lithium: All the Hallmarks of a Made-in-Vancouver Stock Promotion Scheme Fueled by EV Lithium Hype,” was followed by a 10,000-word argument, unverified by Arkansas Business, for why the project will not work.

Weeks of attempts by Arkansas Business to reach Mintak and other Standard executives for comment have been unsuccessful.

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