Standard Lithium Ltd (SLI) 2025 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by and welcome to Standard Lithium's first quarter 2025 conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you'd like to ask a question, press star, then the number one on your telephone keypad. We kindly ask that you please limit your questions to one and one follow up. If you have additional questions, please return to the queue. It is now my pleasure to turn today's call over to Salah Gamoudi, Chief Financial Officer. Sir, please go ahead.

Thank you and welcome everyone. I am joined today by David Park, CEO and director Andy Robinson, President, director, and COO, and Mike Barman, Chief Development Officer. Before we begin, I would like to start with a reminder that some of the statements made during our call, including any forward expectations, company performance, and timing of projects, may constitute forward-looking statements. Please note the cautionary language about forward-looking statements contained in our press release, which also applies to this call. Now, I will turn the call over to David.

Thank you, Salah, and thank you everyone for joining today. Prioritize, focus, and execute. That's a phrase we've used a lot over this last year, and it's become a motto for us. Since announcing our landmark strategic partnership with Ecuador last May, we spent a considerable amount of time and effort focused on bringing that phrase to life. And on our last call, we told you how we did it and how we plan to live by that phrase going forward. We spoke of strategic additions made across our org chart, as well as improved focus on project delivery, execution, efficiency and cost discipline.

We share some of the results from our work programs ongoing at the JV level, including the final de-risking step of our DLE technology via our pilot plant testing at Southwest Arkansas, publishing lithium recovery results of over 99%, and completion of our flow sheet and reservoir testing at Southwest Arkansas, as well as the advancement of our leasing efforts in East Texas. Disclosing a gross area of interest of approximately 185,000 acres. We provided updates on the commercial and financial progress of our Southwest Arkansas project with the finalization and closing of our DOE grant, as well as the commencement of a project finance and customer offtake selection process. And finally, we spoke of our overall project portfolio and how we were prioritizing our efforts on our highest grade, largest scale, and most productive assets in East Texas and Southwest Arkansas moving forward. As we believe these assets can produce the highest potential returns on capital for our shareholders. We prioritize, we are focused, and now 2025 is about execution.

Last week, our joint venture submitted an application seeking to set a royalty rate of 2.5% for a recently established rentals unit. The first brine production unit established for phase one of our southwest Arkansas project. That rate will serve as a key input to our DFS which we aim to finalize this summer. Armed with the results of royalty establishment, feed, and subsequent DFS. We look to enter into long-term customer offtake agreements, which will allow us to both reduce a significant portion of the price risk of the project and ensure attractive upside for our shareholders with reputable counterparties. With the DFS and customer off-take agreements in place, we'll then have everything we need to secure project debt and other financing arrangements to finalize capital formation for the project.

We also continue to make progress in defining our project areas in East Texas. As mentioned previously, we've identified a total area of interest of 185,000 gross acres across several counties in East Texas. Within that area of interest, our first project area has come into focus. Soon our joint venture will be kicking off a work program in this first project area which will include the resampling of existing wells with the goal of publishing a maiden inferred resource report for this area in the 3rd quarter of this year. This is the first of several project areas that have been identified in East Texas, and we aim to release subsequent resource reports as we continue to expand our leasehold position and further define the resource.

We have a lot of work ahead of us. With several meaningful milestones to be reached in the coming months. With that, I'll now turn the call over to Salah to discuss our financial results.

Thank you, David. For our first quarter ended March 31st, 2025. We reported a net loss of USD1.6 million as compared to a net loss of USD7.7 million during the quarter ended March 31st, 2024. This decline year over year is attributable to several factors. SG&A has declined by USD1.1 million, which highlights the impact of both their back-office cost sharing with their joint venture partner, as well as strong attention to cost management and discipline. Demo plan expenses have declined by USD0.6 million, reflecting a continued focus on cost discipline and a shift in focus of our test work towards our SWA operations and cost sharing with our joint venture partner. Share-based compensation has decreased by USD1.3 million. Mostly due to differences in the timing of rewards and grants period over period. All of these cost reductions combined have significantly reduced our corporate level cash burn rate and allows us further flexibility to allocate capital where it produces the highest returns or projects.

The reduction in net loss is also attributable to a gain driven by an increase in the carrying value of certain assets, notably our equity investment in Aqualung carbon capture AS. In April of this year, Aqualung closed an equity financing transaction in which the company did not participate, whereby we assessed that the fair value of our investment in Aqualung was higher than our carrying value. As a result of this transaction, we have increased the carrying value of our investment in Aqualung to USD5.4 million and have therefore reported a fair market value gain of USD3 million as a result.

Moving on to our balance sheet, we ended the quarter with a strong cash and working capital position of USD31.6 million and USD31.3 million respectively. Through the first quarter, our East Texas and Southwest Arkansas's project areas development expenditures continue to be sole funded by our joint venture partner and therefore through the first quarter, the company has yet to make a capital contribution to the JD.

As disclosed in our quarterly filing, the company does expect that these sole funding contributions by Ecuador will be exhausted during the 2nd quarter, and we will therefore be required to fund our pro rata share of capital expenditures. However, with over USD31 million of cash on hand. Financial flexibility available through a focus on cost discipline, or at the market offering program, and the continued receipt of DOE cost reimbursements at SWA as a result of our USD225 million grant at that project, we believe that we have sufficient liquidity to meet our near-term commitments and obligations. I'll now turn the call back over to David for closing remarks.

Thanks a lot. Working together with our partners, Ecuador and Coke Technology Solutions, our team has methodically de-dressed key workstreams, hit development milestones, and advanced our projects forward over the last year. This progress combined with the Southwest Arkansas project's recent designation as a priority transparency critical minerals project by the Trump administration has built incredible amount of momentum that we now look to harness as we push towards our next project development milestones.

There's still a lot of work to get done, but we believe standard lithium is well positioned to help secure critical mineral production in the United States, and we believe we can deliver significant value to all of our stakeholders, namely our shareholders, employees, and the communities we work in. Thanks again for joining us today. We'll now open the call for questions. Operator, back to you.

At this time, I'd like to remind everyone in order to ask a question, press star followed by the number one on your telephone keypad. Again, that is one. Our first question will come from the line of Jeff Robertson with Water Tower Research. Please go ahead.

Thank you. Good afternoon, David. Can you provide a little color on what the designation as a critical minerals project from the Trump administration means with respect to negotiations around off-tick agreements and Potential financing arrangements for Southwest Arkansas.

Sure, so thanks, Jeff, for the question. Fast 41 program primarily the primary benefit of being one of the initial 10 priority projects identified by the White House and one of only of a few lithium projects. Is that it gives us increased comfort that the NEPA environmental review process or other federal regulatory issues will not be constraints to our project funding. So, that's the primary benefit. The secondary benefit obviously is being named a priority project by the White House, does get the attention of people globally. A number of players in the offtake community have heard a lot of stories and seen a lot of projects that haven't happened. And now on the when they're seeing the investment that Ecuador made in the project, the commitment that DOE has made us lock down a license with Coke Technology solutions, and then at the same time, the White House coming over top, naming us one of the 10 priority projects it wants to see get done. That gives a lot more confidence to the downstream, potential downstream customers as well as to potential export credit agencies and other financial institutions.

Thank you. Salah, you mentioned funding and the DOE grant and the Ecuador funding. Can you provide a little color on the capital spend runway for the SWA project with respect to the sources that you currently have and then it's kind of similar question on East Texas with carry that you have there, does that carry you through the end of 2025 and into 26 or will you run out of that carry before the year end?

Thanks Jeff. First of all, so on East Texas. The carry certainly has gotten us through today, that carry from Ecuador where they are sole funding cap back on the East Texas project for leasing and exploration activity is going to most likely run out by the end of the 2nd quarter or early in the 3rd quarter. And as a result, standard lithium is going to have to provide their 55% share on southwest Arkansas. The capital stack for the entire project, which we communicated to the market previously, is going to be approximately USD1.4 to USD1.5 billion that is going to be taken down from a variety of different sources, primarily project debt.

We have our USD225 million grant, and we also have an FID payment coming from Ecuador to standard lithium. Should we be successful in reaching the final investment decision of USD40 million? Obviously that that'll leave us with a remaining balance to fund via other means, whether that's equity, structured finance, or otherwise, but we will, disclose more to the market post the accomplishment and the finishing of our feed study in DFS which will further define our CapEx figure and as well as at the conclusion of the off take and project finance processes which are currently ongoing.

We have not forecasted to the market, exactly what the capital spend profile will be between here and FID, but what I will say is that from a near term perspective, the cash that we have on hand on our balance sheet as well as the ATM that we have in place, should be sufficient for near term liquidity needs. Should we need or require alternatives prior to SID. That may be the case, but currently, we are taking care of via those two mechanisms of liquidity.

Thank you.

And once again for any questions simply press star followed by the number one on your telephone keypad. Our next question is a follow up from the line of Jeff Robertson with Water Tower Research. Please go ahead.

Thanks David. With respect to the royalty application that was filed in the upcoming hearing, do you anticipate any significant objections to the proposal that you all put forth and I guess, and also, did you work with the major stakeholders in putting the current plan together?

Yeah, I, thanks. That's a great question. This topic has been very well deliberated by the commission. We have been actively engaged in, stakeholder consultation and community engagement. I do think what we have proposed in 2.5% for the rental's unit, it's in excess of relevant global benchmarks. And then when you add the brine fee, we'll be paying on top of that, it gets to approximately 3%, which we believe is a very fair and generous royalty rate. That said, there will be a handful of people that likely show up with some objections in a couple weeks. And the commission will have to weigh the evidence we present versus the arguments they make, but I feel very confident we're going to get to the right answer here in short order.

Looking down the road, is it you're understanding or hope that this royalty rate would be a benchmark rate that would all that could also apply to a phase two, or would that be a separate discussion with the landowners in the AOGC?

I think it will be a very strong precedent that the commission will look to in establishing future royalties in the area.

Great. Thank you.

And that will conclude our question-and-answer session and our call today. Thank you all for joining. You may now disconnect.