re: Diving deeper on Standard Lithium?

Positive article on seeking alpha written Jan 21 2022



It’s on seeking alpha. Author Austin Craig owns sli, lac, other lithium miners recommendation strong buy

Goes into detail about npv and competitive advantages. This board already knows all this but it’s just a reminder of why we loved this stonk

One thing to point out is this author is considerably more positive on the management at sli than this board has been, not saying who’s right or wrong just pointing this out.

Cant figure out how to link it

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The question you need to ask is "Does the current price make sense given NPV along with excessive lithium demand and a constrained supply?". Factor in expanding lithium prices (which alter the NPV northward). A potential wild card with the California lithium property. Then realize Standard Lithium lacks massive problems that we covered above (natives, funding, politics, labor force, water rights, etc.). With all of these factors considered, the company is undervalued and more so if you ponder future NPV. Some might argue that the present day NPV puts them at a bit of a higher valuation than some other lithium companies: This rings true. Then again, you are not buying an extremely risky company loaded with problems. You are buying a well-funded company that lacks big ticket problems with adequate funding. The real question then comes down to do you have the patience to buy and wait? If so, then Standard might be a "standard part" of your investment portfolio.

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Standard Lithium Project Highlights

Standard has two projects: The first is the Lanxess project where Standard Lithium owns 30% of the project (expandable to 40%). Details on the Lanxess project are:

Annual production: 20,900 tons lithium carbonate

Plant operation: 25 years
Total capital expenditures estimate of US$437 Million
Non-optimized reagent cost per ton lithium carbonate of US$3,107
All-in operating costs, including all direct and indirect costs, reagent, sustaining capital, insurance and mine-closure costs of US$4,319 per ton of lithium carbonate
Average selling price $13,550 USD per ton battery quality lithium carbonate
Pre-tax US$1.3 Billion NPV at 8% discount rate and IRR of 42%
Post-tax US$989 Million NPV an 8% discount rate and IRR of 36%
Resource upgraded to 3,140,000 tons Lithium Carbonate Equivalent (LCE) at the Indicated Category.
Second Project

The second lithium project is for a property very close to the proposed joint venture to the east (called the TETRA project) at 1.195 ton LCE Inferred resource, and a future expansion target of 30k ton/year of LCE initially. Keyword is "initially".

2nd Project Key Points:

Pre-tax US$2.83 Billion NPV at 8% discount rate and IRR of 40.5%;
After-tax US$1.97 Billion NPV at 8% discount rate and IRR of 32.1%;
20-year mine-life producing an average of 30,000 tonnes per year of battery-quality lithium hydroxide monohydrate (LHM);
Operating costs of US$2,599 per tonne of battery quality lithium hydroxide;
AACE Class 5 Total CAPEX estimate of US$870 Million including conservative 25% contingency of direct capital costs; and,
SW Arkansas Lithium Project PEA lithium brine resource is updated to consider the potential unitized area of production, leading to an increased total (global) in-situ resource of 1,195,000 tonnes Lithium Carbonate Equivalent (LCE) at the Inferred Category.
Net Present Value
When studying a company, the NPV (Net Present Value) can be used to get a snapshot of how valued the company is for this time frame. Granted, this does not factor in future projects or expansions. It is a snapshot of the "now." Standard Lithium shows us:

Project #1 a NPV of $297 million at 30% ownership ($396 NPV at 40%)

Project #2 West Arkansas = $1.97 billion USD NPV

Total NPV = $2.267 billion @ 30% ownership of project #1

Total NPV = $2.366 billion @ 40% ownership of project #1

If we take the market cap of SLI ($1.398 B) and divide that into the Total NPV, we get 61.6% (at 30% ownership of project #1) and 59% (if ownership were 40% of project #1).

NPV Notes: Standard Lithium is not content to just run 50,900 tonnes of lithium. They want to expand to over 70,000 tonnes. (Source: Mad Money) This potential expansion (along with rising lithium prices) would lower future NPV projections. Lastly, a third project in California exists but it's currently on hold in my opinion as the company is focused on Arkansas.

I wonder if Austin Craig has gotten a hat? Someone needs to invite that baw into our thread.

I would love to see the JV signed, sealed and delivered.

It appears that commercialization can't take place until then.

Do y’all think this has gone down enough that it won’t crash with everything else

Damn I shoulda sold

Might go sub $5 this week at this rate. LAC down below $24 as well. All this while lithium prices are at all time high.

I was just looking last week and they actually have lithium futures markets now. Perhaps a better play on lithium is to just go long on those lithium futures rather than try to play lithium stocks in this BS stock market...

I will put a buy order in at 4.75.. Brutal.

Someone unloaded about 120k shares at the open and the overall market is taking a big hit too. This was just followed by a 400k dump.

This is definitely market related. Has nothing to do with SLI. Standard is just a high beta stock and when the market is going down, it's going down slightly faster. Is the same on the way up, generally.