Standard Lithium Corp (SLI) Q4 2024 Earnings Call Transcript Highlights: Strong Financial ...

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  • Net Income Before Taxes: CAD212.8 million for Q4 and CAD182.5 million for the full year ended June 30, 2024.

  • Net Income Per Basic Share: CAD0.97 for Q4 and CAD0.83 for the full year.

  • Net Consideration from Equinor Partnership: USD133 million.

  • Immediate Cash Payment from Equinor: USD30 million.

  • Working Capital Balance: Approximately CAD40 million.

  • Grant from US Department of Energy: CAD225 million for the Southwest Arkansas project.

  • Brine Production Rights: Secured for Southwest Arkansas project.

  • Land Purchase: 118-acre parcel for the central processing facility in Southwest Arkansas.

  • Resource Estimate for Southwest Arkansas: 1.8 million tons lithium carbonate equivalent with an average lithium concentration of 437 milligrams per liter.

  • Exploration Results in East Texas: Lithium concentrations up to 806 milligrams per liter, average concentration of 644 milligrams per liter.

  • Commercial Scale DLE Column: Installed and commissioned at El Dorado, Arkansas, with lithium recoveries exceeding 95%.

Release Date: October 01, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Standard Lithium Corp (SLI) secured a significant strategic partnership with global energy major Equinor, validating the quality of their assets and processes.

  • The company received a CAD225 million conditional grant from the US Department of Energy, one of the largest ever for a US critical minerals project.

  • Successful commissioning of the first commercial-scale daily column in North America, with performance exceeding expectations.

  • Reported net income before taxes of CAD212.8 million for Q4 and CAD182.5 million for the full year, a rare achievement for a pre-revenue developing company.

  • Strong support from cornerstone investors, including Koch Industries, enhancing financial stability and project credibility.

Negative Points

  • The retreat in lithium pricing from all-time highs in 2022 has pressured the sector, impacting overall market sentiment.

  • Potential risks associated with the finalization of the DOE grant terms and conditions, which could be affected by a change in US administration.

  • The company is still in the process of securing customer offtake agreements and project-level debt, which are crucial for future project financing.

  • Ongoing need to derisk and advance projects, which requires significant time and resources.

  • Dependence on strategic partnerships and government grants for funding, which may introduce uncertainties and dependencies outside the company's control.

Q & A Highlights

Standard Lithium Corp (SLI) Q4 2024 Earnings Call Highlights

Q: Regarding the larger scale project plan for Southwest Arkansas, can you provide some color on the proposed plan to produce lithium carbonate rather than a hydroxide that was outlined in the PFS? A: Hey, Max, it's Andrew Robinson here. That was principally based on feedback from the off-take community. The general guidance was very much towards a preference for a carbonate product in the timeline that were contemplating for commercial production. So in that late '27, '28 period for initial production, the feedback was very much for a carbonate product. And so that really informed the switch in the flowsheet.

Q: For the DOE award, assuming the final negotiations are successful, could a potential administration change in the US put the receipt of the award at risk? A: This is David Park. Yes, theoretically well, first, the award of the money for the DOE grant has been allocated by the U.S. government. So if the terms and conditions are not finalized prior to a change in administration, there is a theoretical possibility that it could be at risk. However, we've been told by the DOE as recently as today that they are driving to completion of these grants by the end of December.

Q: I'm interested in the collaboration with the Equinor team. How does that work in practical terms? A: It's Andrew Robinson. We formed a true joint venture. The projects are run on an integrated project management team basis, with a project team made up of Standard Lithium and Equinor personnel working together. Equinor brings strengths in subsurface drilling, reservoir engineering, well completions, and project management disciplines. The teams communicate on an hourly basis as the projects progress.

Q: Regarding the additional well sampling and drilling, what are you looking to identify from the incremental data? A: For Southwest Arkansas, we are doing confirmatory drilling to ensure the input for the final commercial production model is accurate. In East Texas, we are seeking greater geographic definition and expanding our leasing footprint. We will be stepping out with our drilling in new areas, looking for rock properties, permeability testing, and brine samples for geochemical analysis. We aim to put out a maiden resource statement by mid-2025 and start preliminary economic assessments.

Q: You mentioned successfully commissioning the column on the demonstration project with Koch technology. Is the license process for that technology complete? A: The license process is currently coming to closure. We have been working together on the technology in a significant and collaborative way, and we hope to conclude the licensing process very quickly.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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