Since December, big news and doubts have trailed Standard Lithium Ltd., the Vancouver company mining south Arkansas’ underground saltwater with hopes of building a new domestic lithium production industry.
But Standard has had little comment beyond prepared statements in news releases about strategic partnerships with the German chemical multinational Lanxess Corp., which provides infrastructure in El Dorado, and the Koch family of companies, which have invested $100 million in the project.
Lanxess let the Canadians hook onto the El Dorado pipelines it uses to extract bromine from the Smackover Formation. The dream is to build a commercial lithium products plant in El Dorado — think of something the size of a municipal water treatment plant — that would fuel the growing lithium-ion battery market.
In 2021 and in January, Standard Lithium announced the $100 million investment by Koch Strategic Platforms and a deal with Koch Minerals & Trading LLC, which said it was clearing the way for more synergies with other Koch divisions. Koch is based in Wichita, Kansas.
Amid all that good news, reporters who once had Standard CEO Robert Mintak on speed-dial found him unreachable, and repeated voice and email messages drew no response for weeks, even as naysayers promoted an opposite narrative accusing the startup of hyping its technology and fudging production figures.
Standard was the subject of a scathing 10,000-word report from Hindenburg Research, unverified by Arkansas Business, questioning its production numbers and suggesting the whole enterprise might be a stock scam. The company is also the subject of several lawsuits by investor-rights law firms.
A series of phone calls to Vancouver and emails to the company’s investor relations department eventually drew a call from Bob Cavosi of RooneyPartners LLC of New York, a public relations representative who invited Arkansas Business to tour the two test plants in El Dorado. A tentative date in April was set.
“That would let you connect with Robert,” Cavosi wrote in a follow-up email, promising “a great opportunity for an update from the company — Lanxess, Koch, where the project stands today.”
Short-Selling Concerns
Asked for comment on the lawsuits and Hindenburg report while the tour with Mintak is being arranged, Cavosi noted that class actions are bread and butter for investor rights law firms, often targeting companies with no record of wrongdoing.
“Regarding the Hindenburg report,” Cavosi said in his email, “at this juncture there’s nothing further that the company can say about it, considering the aim/objective of the short selling community at large.” Short-sellers often employ negative reports about companies to depress their stocks and profit more when their deals mature. Cavosi didn’t address more specific questions about production numbers and the Hindenburg report’s assessment of Mintak and several previous failed mining ventures.
Several recent developments counter Hindenburg’s view of Standard’s project as a stock scheme. On Feb. 24, the company announced a deal with Lanxess to pursue a permanent commercial lithium extraction plant in El Dorado.
Standard has been producing small batches of lithium products in two modular pilot plants in El Dorado that were shipped from Canada to Arkansas and put together during the past two years. The El Dorado plants are attached to the Lanxess infrastructure long used by the company to mine bromine. The “tail brine” from the Lanxess bromine-stripping process goes to Standard’s test plants, which leach lithium from the same water before returning it underground.
In December and January, Standard Lithium announced partnerships with Koch Strategic Platforms, Koch Minerals & Trading and other Koch Industries entities. Unrelated companies also see potential in direct lithium extraction in south Arkansas, including Galvanic Energy LLC of Oklahoma City, which secured access to 100,000 acres of brine lands from some 3,000 Arkansas landowners in 2021. Brent Wilson, Galvanic’s CEO, told the Arkansas Democrat-Gazette his model was similar to Standard Lithium’s. “We’re fans of theirs,” he said.
Wilson said he’s working toward a $750 million facility that would take at least two years to plan and build.
Commercial Plant Plans
Standard and Lanxess say their Feb. 24 deal streamlines planning for a commercial lithium production plant at “an operational Lanxess facility in El Dorado.” Standard will control all development through completion of a front-end engineering design study, or FEED study, a common path for companies looking to use project financing. The next step would be a definitive feasibility study, with conclusions due before the end of the year.
“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 release said, adding that the company will also keep 100% ownership of the South West Arkansas Project, more than 30,000 acres of separate brine leases in southwest Arkansas.
Lanxess said in a statement that by signing the agreement, it was safeguarding opportunities “in the attractive lithium market without taking downside or commodity price risks.”
Mintak, Standard’s CEO, said in statements at the time that the deal rests upon a proven working relationship with Lanxess. “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.”
Standard will form an initially wholly-owned company that will hold 100% of the project during pre-FEED and FEED engineering studies, Mintak said. The FEED engineering will inform the definitive feasibility study. 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 after the 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 was financial adviser to Standard Lithium during the deal’s negotiations.
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 Canada’s TSX Venture Exchange and the NYSE American under the trading symbol “SLI.”
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 the Feb. 3 report by Hindenburg, 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 detailing why the project should not work.
Standard Lithium stock, which had never traded above $5 a share until last July, was trading last week at about $5.60 in U.S. dollars. It peaked above $12 in October on news of the Koch Strategic Platforms investment.
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