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Started By
Message
re: Diving deeper on Standard Lithium?
Posted on 12/14/23 at 12:20 pm to FLObserver
Posted on 12/14/23 at 12:20 pm to FLObserver
If I buy more now it’ll guarantee a drop to 1.50 by tomorrow
2
Posted on 12/14/23 at 12:20 pm to deltaland
quote:
If I buy more now it’ll guarantee a drop to 1.50 by tomorrow
LMK
Posted on 12/14/23 at 4:02 pm to Shepherd88
quote:
It’s actually innovation and moving forward towards a more efficient form of energy. It may not be lithium in the future and I do hope we are able to move beyond it eventually but we’ve pretty much reached capacity in regards to what fossil fuels can do for us. Not to mention the national security purposes of finding another form of energy to rely upon.
Lithium is not energy.
Posted on 12/14/23 at 4:11 pm to gautamj
So December 5 hearing orders were posted today and I don't see either the demo plant continuation or royalty postponement posted.
I do see an interesting objection to SLI's royalty proposal from a nonprofit called "South Arkansas Minerals Association." They say that SLI's minimum royalty proposal for Lanxess 1A is 1.33% while they propose a 12.5% (1/8) rate. Should be interesting since SLI is trying to treat lithium like bromine while mineral owners are trying to treat lithium like oil/gas.
I do see an interesting objection to SLI's royalty proposal from a nonprofit called "South Arkansas Minerals Association." They say that SLI's minimum royalty proposal for Lanxess 1A is 1.33% while they propose a 12.5% (1/8) rate. Should be interesting since SLI is trying to treat lithium like bromine while mineral owners are trying to treat lithium like oil/gas.
Posted on 12/14/23 at 6:14 pm to GrizzlyAlloy
quote:
Lithium is not energy
L.O.L. Neither is uranium then.. right?
Posted on 12/15/23 at 8:06 am to Shepherd88
Back over $2 in premarket.
Not sure if it will hold, but I'll take some wins where we can get them right now.
Not sure if it will hold, but I'll take some wins where we can get them right now.
Posted on 12/15/23 at 12:40 pm to Fe_Mike
Mike, any response from IR to your email?
Posted on 12/15/23 at 3:19 pm to gautamj
Negative. They haven’t been great with general IR inquiries recently. Will send a message direct to Allysa next week and see if I get anything.
Posted on 12/16/23 at 2:18 pm to Fe_Mike
US miners miss out on tax credit granted to processors
The 10% production tax credit question of the day-Is SLI considered a miner or processor?
"Alcoa Corp. and Century Aluminum Co. are both poised to receive the full benefit of the so-called 45X tax credit, as aluminum production is a refining process that converts alumina — taken from bauxite — into the lightweight metal."
Does taking lithium from brine and processing it into lithium carbonate/hydroxide qualify here?
Eta 60 days for public comment before finalized.
The 10% production tax credit question of the day-Is SLI considered a miner or processor?
"Alcoa Corp. and Century Aluminum Co. are both poised to receive the full benefit of the so-called 45X tax credit, as aluminum production is a refining process that converts alumina — taken from bauxite — into the lightweight metal."
Does taking lithium from brine and processing it into lithium carbonate/hydroxide qualify here?
Eta 60 days for public comment before finalized.
This post was edited on 12/16/23 at 2:20 pm
Posted on 12/16/23 at 9:33 pm to ev247
AOGC Dec 5 hearing
Getting ready to listen
- Per SLI President Andy Robinson, Phase 1A Opex is $7,390 before considering royalty, [confidential] brine fee to be paid to Lanxess for project duration, and debt costs.
Considering mineral owners want 10x the royalty SLI has proposed, I don't see how anyone could partner on this project before the royalty is decided.
- Oof, tough exchange for the company around 1:09:00. [Robinson wants to distinguish SLI from oil and gas] Lawyer gets Robinson to admit that there's no geological risk on Phase 1A since Lanxess has agreed to supply the brine. Robinson says that there's still some future lithium concentration risks so the lawyer throws his own PR about the company being ready to "move rapidly towards commercialization." Robinson agrees that the company isn't held back by lithium concentration risks. Lawyer successful in showing how limited risks are for 1A.
-Okay, I'm two questions into the cross examination and I feel like I can guess that this will go the mineral owners' way. Robinson used a California excise tax on lithium production as a comp for SLI's royalty proposal, said it's the only thing in US that currently can compare to SLI's situation. The rates were similar. Lawyer points out that there's a MINIMUM 2% royalty ON TOP of the excise tax while SLI is proposing a 1.3% total royalty. Asks Robinson if he bothered to try to find any of those leases and Robinson dodged, saying they only searched public info.
This is really worth listening to. It's interesting to see a leader of the company in this interrogation context.
- 1:24:43 Good question. Basically, have you actually tested at scale?
Answer is no. We've tested at 50 gal/min and commercial plant will be 3,000 gal/min.
- Hmm. "Have you input the proposed 12.5% royalty structure and how does that affect your economics?"
"That results in a project that does not work." -prolonged silence-
- Main economic metric SLI using to determine if project works or not is debt service coverage ratio
- Robinson said something along the lines of a higher royalty might work for a company with large balance sheet who doesn't have to worry about debt costs. As a mineral owner who knows nothing about law, I'd be thinking "Okay we just hold this project hostage until SLI is forced to sell out to someone with that balance sheet to pay us higher royalties."
What would Standard do? No way they come up with the $1.3B needed to skip ahead to SWA without proving scalability first. Idk, I see the mineral owners with much more leverage here, depending on how the law works.
Less than halfway through, to be continued
Getting ready to listen
- Per SLI President Andy Robinson, Phase 1A Opex is $7,390 before considering royalty, [confidential] brine fee to be paid to Lanxess for project duration, and debt costs.
Considering mineral owners want 10x the royalty SLI has proposed, I don't see how anyone could partner on this project before the royalty is decided.
- Oof, tough exchange for the company around 1:09:00. [Robinson wants to distinguish SLI from oil and gas] Lawyer gets Robinson to admit that there's no geological risk on Phase 1A since Lanxess has agreed to supply the brine. Robinson says that there's still some future lithium concentration risks so the lawyer throws his own PR about the company being ready to "move rapidly towards commercialization." Robinson agrees that the company isn't held back by lithium concentration risks. Lawyer successful in showing how limited risks are for 1A.
-Okay, I'm two questions into the cross examination and I feel like I can guess that this will go the mineral owners' way. Robinson used a California excise tax on lithium production as a comp for SLI's royalty proposal, said it's the only thing in US that currently can compare to SLI's situation. The rates were similar. Lawyer points out that there's a MINIMUM 2% royalty ON TOP of the excise tax while SLI is proposing a 1.3% total royalty. Asks Robinson if he bothered to try to find any of those leases and Robinson dodged, saying they only searched public info.
This is really worth listening to. It's interesting to see a leader of the company in this interrogation context.
- 1:24:43 Good question. Basically, have you actually tested at scale?
Answer is no. We've tested at 50 gal/min and commercial plant will be 3,000 gal/min.
- Hmm. "Have you input the proposed 12.5% royalty structure and how does that affect your economics?"
"That results in a project that does not work." -prolonged silence-
- Main economic metric SLI using to determine if project works or not is debt service coverage ratio
- Robinson said something along the lines of a higher royalty might work for a company with large balance sheet who doesn't have to worry about debt costs. As a mineral owner who knows nothing about law, I'd be thinking "Okay we just hold this project hostage until SLI is forced to sell out to someone with that balance sheet to pay us higher royalties."
What would Standard do? No way they come up with the $1.3B needed to skip ahead to SWA without proving scalability first. Idk, I see the mineral owners with much more leverage here, depending on how the law works.
Less than halfway through, to be continued
This post was edited on 12/17/23 at 8:54 pm
Posted on 12/17/23 at 5:41 am to ev247
quote:
Lawyer points out that there's a MINIMUM 2% royalty ON TOP of the excise tax while SLI is proposing like a 1.6% total royalty. Asks Robinson if he bothered to try to find any of those leases and Robinson dodged, saying they only searched public info
have you actually tested at scale? Answer is no. We've tested at 50 gal/min and commercial plant will be 3,000 gal/min. - Hmm.
"Have you input the proposed 12.5% royalty structure and how does that affect your economics?" "That results in a project that does not work." -prolonged silence
Yikes
Posted on 12/17/23 at 9:27 am to Breesus
Yea, did this lawyer just expose that this project is not economical? Nothing like a big "your investment is fricked" for Christmas!
Posted on 12/17/23 at 11:37 am to GREENHEAD22
It is an interesting listen.
My guess that the royalty percentage will fall somewhere between 2-5% at the end imo.
Most bromine and salts royalties are in the 1-1.5% range. SLIs argument is that they are just a processor of brine. Brine is the raw material and the the value of the royalty should be based on the value of the brine and not the value of lithium in the brine, per se. Just because we know that lithium can be successfully extracted from brine, does not inherently mean that mineral owners should be entitled to a higher percentage of the value of commodity. I.e. why should lithium royalty be at 12.5% vs the 1.5% of the other brine extracts just because lithium commands a higher sale value? Giving a higher percentage of the royalty value essentially means that mineral owners are partaking in profits of SLI(or other dle outfits) without assuming any risks(their brine is used and processed regardless of lithium being extracted).
From the mineral owners perspective, they are trying to argue for a fair and equitable royalty rate without significantly affecting the profit of the company(i.e. sli). To show this they demonstrated that based on SLIs on DFS that they should command a sizeable profit and IRR through a variety royalty rates including up to 20% bsed on current value of lithium of 30k/tonne. Profitability falls apart of 12.5% and lithium prices of 17k. (Eta: their argument is look at all the profits they are projected, they can afford a higher royalty rate, and their IRR still outpaces comparative industry norms(oil and gas, and minerals).
As already stated, sli states that a 12.5% royalty is not profitable. Presumably this involves information/operating expenses that is not part of the Oct DFS. Presumption is that the additional operating expense of lanxess may have something to do with it, since they "backed out" and now sli is going to just pay lanxess for the brine. These figures aren't provided. So basically issue got tabled to January to see whether or not if this information can be divulged(i.e. not privileged information) and if so, if that affects the royalty rate, because the commission isn't going to set a royalty rate that bankrupts the company.
I personally think that the talks favor sli mostly, but they aren't going to get a 1.5% royalty rate unless they can demonstrate that a higher rate truly affects their profitably. On the otherhand as an investor, I'm really disappointed in some of the transparency. Hearing makes it seem that the dfs etc. are major puff pieces in and of themselves and don't accurately reflect what the actual operating costs are projected to be.
My guess that the royalty percentage will fall somewhere between 2-5% at the end imo.
Most bromine and salts royalties are in the 1-1.5% range. SLIs argument is that they are just a processor of brine. Brine is the raw material and the the value of the royalty should be based on the value of the brine and not the value of lithium in the brine, per se. Just because we know that lithium can be successfully extracted from brine, does not inherently mean that mineral owners should be entitled to a higher percentage of the value of commodity. I.e. why should lithium royalty be at 12.5% vs the 1.5% of the other brine extracts just because lithium commands a higher sale value? Giving a higher percentage of the royalty value essentially means that mineral owners are partaking in profits of SLI(or other dle outfits) without assuming any risks(their brine is used and processed regardless of lithium being extracted).
From the mineral owners perspective, they are trying to argue for a fair and equitable royalty rate without significantly affecting the profit of the company(i.e. sli). To show this they demonstrated that based on SLIs on DFS that they should command a sizeable profit and IRR through a variety royalty rates including up to 20% bsed on current value of lithium of 30k/tonne. Profitability falls apart of 12.5% and lithium prices of 17k. (Eta: their argument is look at all the profits they are projected, they can afford a higher royalty rate, and their IRR still outpaces comparative industry norms(oil and gas, and minerals).
As already stated, sli states that a 12.5% royalty is not profitable. Presumably this involves information/operating expenses that is not part of the Oct DFS. Presumption is that the additional operating expense of lanxess may have something to do with it, since they "backed out" and now sli is going to just pay lanxess for the brine. These figures aren't provided. So basically issue got tabled to January to see whether or not if this information can be divulged(i.e. not privileged information) and if so, if that affects the royalty rate, because the commission isn't going to set a royalty rate that bankrupts the company.
I personally think that the talks favor sli mostly, but they aren't going to get a 1.5% royalty rate unless they can demonstrate that a higher rate truly affects their profitably. On the otherhand as an investor, I'm really disappointed in some of the transparency. Hearing makes it seem that the dfs etc. are major puff pieces in and of themselves and don't accurately reflect what the actual operating costs are projected to be.
This post was edited on 12/17/23 at 11:43 am
Posted on 12/17/23 at 4:23 pm to Puffoluffagus
I see a couple of dog chasing tail situations here
1. Opposition says DFS should include debt terms/costs
My thoughts
- But debt terms/costs can’t be figured until you know amount being financed
- But can’t know amount needed to finance until you know amount of grant received
- But can’t apply for grant without DFS
Also
1. What is the value of brine so we can use forced pooling values of 1/8 and call that the royalty rate?
2. No clue, there’s no brine market.
3. Wait, there is a brine market. SLI is buying brine from Lanxess as we speak.
4. Great! For how much? Sorry, that’s confidential
1. Opposition says DFS should include debt terms/costs
My thoughts
- But debt terms/costs can’t be figured until you know amount being financed
- But can’t know amount needed to finance until you know amount of grant received
- But can’t apply for grant without DFS
Also
1. What is the value of brine so we can use forced pooling values of 1/8 and call that the royalty rate?
2. No clue, there’s no brine market.
3. Wait, there is a brine market. SLI is buying brine from Lanxess as we speak.
4. Great! For how much? Sorry, that’s confidential
This post was edited on 12/17/23 at 9:01 pm
Posted on 12/17/23 at 5:34 pm to ev247
quote:
1. What is the value of brine so we can use forced pooling values of 1/8 and call that the royalty rate?
2. No clue, there’s no brine market.
3. Wait, there is a brine market. SLI is buying brine from Lanxess as we speak.
Right i didnt want to go too much more into my already longwinded post. I can't imagine that the commission will follow through on the 1/8th rule as things stand now.
While in this specific case, sli is buying the brine from lanxess. That may not be the case for future wells and/or sites. There may instances in the future, where it will or may make financial sense to only drill for brine to get lithium and not other resources. Hence the need for an independent royalty valuation. I just think they'll ultimately assign a value higher than the traditional 1-1.5% given the known value of lithium compared to other resources.
If that's the case and/or committee feels this way in non meeting discussion, sli may not need to disclose what they plan to pay lanxess for the brine and the committee may use other determinants to assign a royalty value. But will see, all speculation at this point.
Posted on 12/17/23 at 8:11 pm to Puffoluffagus
Yeah there's no way the commission will go with 1/8 of the lithium sales like mineral owners are asking. Like the one guy said at the hearing, that would be like giving oil/gas mineral owners a royalty on the eventual gasoline instead of the raw product.
Even if everyone agrees to let the director or whoever see the confidential agreement between Lanxess and SLI I'm not sure how clear a picture they will get since Robinson is claiming that the payments to Lanxess are for more than brine (infrastructure maintenance, guarantee of brine supply for project duration, etc.). In other words, I doubt the payments are itemized, $x for brine. At that point SLI can say that 95% is toward infrastructure and 5% toward brine, so there's our royalty basis.
At the end of the day I think your 2-5% estimate is perfectly reasonable. And that we won't have any earth-shattering PRs until this is resolved, hopefully in January. Will be on the lookout for that hearing date
Even if everyone agrees to let the director or whoever see the confidential agreement between Lanxess and SLI I'm not sure how clear a picture they will get since Robinson is claiming that the payments to Lanxess are for more than brine (infrastructure maintenance, guarantee of brine supply for project duration, etc.). In other words, I doubt the payments are itemized, $x for brine. At that point SLI can say that 95% is toward infrastructure and 5% toward brine, so there's our royalty basis.
At the end of the day I think your 2-5% estimate is perfectly reasonable. And that we won't have any earth-shattering PRs until this is resolved, hopefully in January. Will be on the lookout for that hearing date
Posted on 12/17/23 at 8:37 pm to ev247
Puff/ev
Thanks, I breezed over the first post and misunderstood the line regarding the royalty rate.
So we probably won't get the rate SLI has expected but also won't get an exorbitant rate that makes it uneconomical.
Thanks, I breezed over the first post and misunderstood the line regarding the royalty rate.
So we probably won't get the rate SLI has expected but also won't get an exorbitant rate that makes it uneconomical.
Posted on 12/17/23 at 9:18 pm to GREENHEAD22
Yep that's the impression I have.
Wanted to add this from the hearing
Toward the end, opposing lawyer asked why pushing royalty decision to January- just need time to think or wanting info or what. I appreciated the answer from a commissioner
"I would like to see both parties make an effort to canvas the abstract plants at the courthouses and the landmen that are working in South Arkansas and bring before the commission a copy of a lease, paid-up, for the develop of lithium, that includes the highest and best terms available within the region."
Wanted to add this from the hearing
Toward the end, opposing lawyer asked why pushing royalty decision to January- just need time to think or wanting info or what. I appreciated the answer from a commissioner
"I would like to see both parties make an effort to canvas the abstract plants at the courthouses and the landmen that are working in South Arkansas and bring before the commission a copy of a lease, paid-up, for the develop of lithium, that includes the highest and best terms available within the region."
Posted on 12/18/23 at 9:20 am to ev247
quote:
Like the one guy said at the hearing, that would be like giving oil/gas mineral owners a royalty on the eventual gasoline instead of the raw product.
In the case of Lanxess, are they paying royalties on the raw brine or for the bromine that they extract?
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