US lithium project to receive $225 million DOE award

LEWISVILLE, Ark. - Standard Lithium Ltd. (TSXV:SLI) (NYSE:A:SLI), in collaboration with energy company Equinor, announced that their joint venture, SWA Lithium LLC, is in line to negotiate for up to $225 million in funding from the U.S. Department of Energy (DOE). This award, which is contingent on final negotiations, is part of the U.S. government's efforts to bolster domestic battery supply chain and critical mineral production under the Infrastructure Investment and Jobs Act.

The DOE grant aims to support the construction of the Central Processing Facility (CPF) for the South West Arkansas project's Phase 1. This facility is expected to produce 22,500 tonnes of battery-quality lithium carbonate annually using Direct Lithium Extraction (DLE) technology. The project is a significant step in the U.S. initiative to establish a secure domestic supply chain for lithium, a critical mineral for energy storage and electric vehicles.

The South West Arkansas project, located in Lafayette and Columbia Counties, is undergoing expansion plans to double its total output to 45,000 tonnes of lithium carbonate per year. The project will create up to 300 construction and 100 direct jobs and aims to benefit local communities through infrastructure, health initiatives, educational partnerships, and workforce development programs.

Standard Lithium's CEO, David Park, expressed that the DOE's financial commitment validates the project's quality and the company's de-risked approach to development. Allison Thurmond, Equinor's Vice President of US Lithium, emphasized the project's importance for America's energy transition and the commercial readiness of their endeavors.

The DOE's selection of SWA Lithium LLC for the potential grant highlights the strategic importance of domestic lithium production. This funding is expected to accelerate the project's development and position it as a key player in the U.S. battery materials industry.

Standard Lithium, a near-commercial lithium development company, is focused on sustainable lithium-brine properties in the U.S., with projects in Arkansas, Texas, and California. Equinor, headquartered in Norway, is an international energy company with a diverse portfolio, including oil, gas, renewables, and low-carbon solutions.

The information in this article is based on a press release statement from Standard Lithium.

InvestingPro Insights

As Standard Lithium Ltd. positions itself to play a pivotal role in the U.S. battery supply chain, financial metrics from InvestingPro provide a snapshot of the company's current fiscal health. The company's Price/Earnings (P/E) Ratio, as of the last twelve months leading up to Q3 2024, stands at -5.56, indicating that investors are willing to incur a loss in anticipation of future growth. The PEG Ratio, which measures the stock's value while also accounting for earnings growth, is notably low at 0.04, suggesting that the company's earnings could be growing at a rapid pace relative to its share price.

Moreover, Standard Lithium's Price/Book (P/B) Ratio is 1.98 in the same period, which could imply that the market values the company at nearly twice its book value, often a sign of investor confidence in the company's future prospects. InvestingPro Tips highlight that the P/B ratio is a critical indicator of valuation, especially for capital-intensive industries like mineral extraction.

Despite the potential DOE funding and expansion plans, the company's financials reflect challenges, with a Gross Profit of -8.5 million USD and an Operating Income, Adjusted at -42.52 million USD for the last twelve months as of Q3 2024. The EBITDA Growth rate during this period is -86.56%, underscoring the significant reduction in earnings before interest, taxes, depreciation, and amortization. These figures underscore the importance of the DOE grant and the need for efficient capital allocation to ensure the project's success and profitability.

InvestingPro Tips suggest closely monitoring the company's next earnings date on September 20, 2024, as it will provide investors with crucial information regarding the company's financial trajectory and the impact of the DOE funding. For those seeking more comprehensive analysis, InvestingPro offers additional tips on evaluating companies in the lithium market and other emerging sectors.

With the InvestingPro platform, users can access even more in-depth tips to guide their investment decisions—currently, there are 15 additional InvestingPro Tips available for Standard Lithium Ltd. and related companies in the energy transition space. These tips are designed to help investors navigate the complexities of investing in the rapidly evolving energy sector.

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