Standard Lithium Stock

Ladies and gentlemen, thank you for standing by. Welcome to Standard Lithium's Second Quarter 2026 Conference Call. [Operator Instructions]

It is now my pleasure to turn today's call over to Daniel Rosen, VP of IR and Strategy for Standard Lithium. Please go ahead.

Thank you and welcome everyone. I'm joined today by David Park, our CEO and director, Andy Robinson, President, COO and Director; Salah Gamoudi, Chief Financial Officer; and Mike Barman, Chief Development Officer.

Before we begin, I would like to start with a reminder that some of made during our call today, including any related to company performance, expectations, 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.

I will now turn the call over to David.

Thanks, Dan. I appreciate everyone joining us today. We had a very productive second quarter and year-to-date as we continue to advance the important milestones and deliverables required in order for us to move our Southwest Arkansas project to a final investment decision later this year. To begin the year, we laid out the four primary deliverables required to be completed before taking FID: executing our key construction contracts, completing a federal environmental review under the National Environmental Policy Act or NEPA, finalizing our customer offtake agreements, and securing project financing.

During the second quarter, we fully completed the first two of these objectives while continuing to advance the remaining two. We signed our two primary construction vendor agreements, separately covering the upstream well field and the downstream central processing facility. And the US Department of Energy concluded its NEPA review process with a finding of no significant impact, and no additional mitigation measures or conditions put in place for us to proceed.

These are very important milestones that were many months in the making. Together, they provide greater execution confidence, schedule visibility, and regulatory clarity as we prepare to move rapidly from development into construction. They also reflect the depth and quality of the work completed by our team, alongside our partner, Equinor, while strengthening our first mover advantage into Smackover.

Our focus is now on finalizing the two key remaining work streams: customer offtake, and project financing. The partnership remains in advanced discussions with several prospective customers and aims to conclude all remaining offtake agreements in the third quarter, which will help to finalize the size and structure of the Southwest Arkansas project debt. Both processes are steadily progressing in parallel.

Our expectations for this year remain unchanged, to approve FID and begin construction at the SWA project, resulting in first commercial production of battery quality lithium carbonate in 2029. We're also continuing to advance our broader set of opportunities in East Texas. We plan to release a preliminary economic assessment for the Franklin project in the third quarter, while continuing to improve our resource definition and expand our leasehold position across the region.

With that, I'll pass it over to Andy to discuss our progress in more detail.

Thanks, David. In May, the Department of Energy issued its Finding of No Significant Impact, or FONSI, based on the comprehensive environmental assessment prepared for the SWA project. This marked the successful conclusion of the federal government's NEPA review, which was required in connection with the $225 million DOE grant that was awarded in January 2025 to support the development of our first 22,500 tonne LCE phase of the project.

FONSI was the culmination of over a year of stakeholder engagement, field work and baseline environmental studies and reflects the detailed design of the project which is intended to minimize surface disturbance while enabling responsible lithium production. The process also benefited from our designation as a priority critical minerals project under the government's FAST-41 transparency program. This means that we're now effectively completing our permitting to enable taking FID and beginning construction.

We also executed our two primary construction contracts for the SWA project during the second quarter. For the upstream well field, Smackover Lithium signed an Engineering, Procurement and Construction Management, or EPCM, agreement with Wood Group. Wood brings substantial experience managing complex, multidisciplinary projects globally across energy, lithium and broader minerals. Wood will provide EPCM services for the well filled surface facilities, pipelines and third-party interfaces as well as support for the subsurface drilling and well work that will be led by our project team, leveraging the benefit of Equinor's deep internal capabilities and know-how.

For the downstream central processing facility portion of the project, we entered into an Engineering Procurement, Construction and Commissioning, or EPCC agreement, with S&B engineers and constructors. S&B has proven large construction expertise with 55 plus years of operation and over 90% of their EPCC projects delivered on time and under budget. They have a strong regional presence and will be supported by Hatch, who brings important experience designing and commissioning DLE lithium projects.

S&B scope covers the full processing chain at the central processing facility, including everything related to receipt of the brine from the well field, direct lithium extraction, and ultimate conversion to battery quality lithium carbonate. Both construction agreements include a limited notice to proceed that we have already been taking advantage of. It allows us to continue to progress key work in the lead up to FID, including detailed engineering, procurement planning, and vendor engagement. We'll continue to de-risk execution and optimize the construction schedule so we can transition to full notices to proceed and begin construction promptly following a positive FID.

We're able to put these contracts in place as a result of the extensive project definition that had already been completed by the team through approximately 18 months of detailed front-end engineering design work that culminated in our definitive feasibility study. We believe our construction partnerships give us a highly experienced and capable execution team with the safety culture, regional footprint, and technical depth required for a project of this scale.

Turning to customer offtake and project financing, these are the two key remaining deliverables before we take FID. As previously discussed, the SWA project is designed for 22,500 tonnes per year of battery quality lithium carbonate, and we're targeting approximately 80% of that production to be on the long-term offtake agreements. Our existing 10-year agreement with Trafigura covers 8,000 tonnes annually and represents over 40% of our target contracted volumes.

Our partnership remains in very advanced discussions with several prospective customers and aims to finalize all remaining offtake agreements in the third quarter. We're focused on reaching agreements on the best possible terms to support our project financing efforts and are highly confident in our ability to reach a positive outcome in these important negotiations. Conclusion of these offtake efforts will help to finalize the size and structure of the SWA project debt, where due diligence and other customary underwriting processes are well underway, and this work stream continues to progress in parallel with the offtake process.

Before I hand it over to Salah, I just want to touch on East Texas. We plan to release a preliminary economic assessment for the Franklin Project in the third quarter of this year. This will build on the sizeable maiden inferred resource released almost a year ago that highlighted the highest reported lithium and brine grades in North America. This PEA will provide a first look at what we believe to be a globally significant project, extremely attractive project economics and a clearer framework for the next stage of development. We believe this is the next important step in gaining recognition and more appropriate valuation for East Texas as a core part of our asset portfolio. We'll continue to work on maiden and infernal resource reports for our other potential projects in the area, all while continuing to expand our leasehold footprint in East Texas.

We are quite pleased with all the progress made during the second quarter. Two of the four principal pre-FID deliverables are complete, and the remaining two are advancing well. The project remains positioned for FID and starter construction later this year. Now, I'll turn it over to Salah to discuss our financial results and project financing.

Thank you, Andy. For the second quarter ended June 30th, 2026, we reported a net loss of $3.1 million as compared to a net loss of $5 million for the quarter ended June 30th, 2025. When comparing the quarter ended June 30th, 2026 to the quarter ended June 30th, 2025, G&A increased by $0.7 million while demonstration plant costs increased by $0.3 million. The higher G&A is primarily driven by growth in employee headcount and activity to support the advancement of our portfolio of projects, including preparation of a final investment decision at SWA, partially offset by cost savings and certain audit, legal and consulting expenses.

The demo plant increase was driven by higher personnel and supply costs associated with ongoing R&D activities to help support training of future operators at SWA, potential future improvements to our process flow sheet, along with other maintenance and site improvement work. do at the demo plant has been a real differentiator for us through all phases of our project development.

Additionally, we incurred a non-cash foreign exchange gain of $2.7 million during the quarter. This FX gain was due to having significantly higher average U.S. dollar cash balances as a result of our $130 million follow-on offering in October of last year, as well as fluctuations in exchange rates between U.S. and Canadian dollars, and the resultant non-cash accounting impact on those cash balances held by one of our Canadian dollar functional currency entities.

Below operating expenses, we recorded a slightly higher investment loss from joint ventures of $1.5 million for the quarter versus $1.3 million in the prior period. This increase reflects expanded operational activity at the Smackover Lithium partnership level in connection with commercial and financing initiatives, as well as increased corporate and administrative support as project development activities progress towards FID at SWA. And we continue expansion of our leasehold footprint, resource and economic definition activities in East Texas. We also recognized approximately $800,000 in additional interest income period over period, driven primarily by higher average cash balances.

Moving on to the balance sheet, we ended the quarter with strong cash and working capital positions of $137.3 million and $137.1 million respectively. We remain focused on maintaining a strong liquidity position in addition to disciplined capital allocation and cost management. Standard Lithium made JV capital contributions of $9.4 million during the second quarter, of which $5.5 million and $3.9 million went towards SWA and East Texas, respectively. This brings total year-to-date JV capital contributions to $27.2 million.

For Southwest Arkansas, the contributions allow us to continue to advance key project milestones and technical and engineering workstreams ahead of FID. For East Texas, the contribution is primarily to continue advancing resource and economic definition, expanding our leasehold footprint, and preparing a preliminary economic assessment for the Franklin project with further reports across our portfolio to follow.

Securing an attractive and comprehensive project finance package is critical for a final investment decision at SWA. The approximate $1.5 billion of base project CapEx per our DFS, in addition to potential cost overrun facilities, reserve accounts, or other incremental capital requirements are expected to be financed by a combination of senior secured project debt, our $225 million grant from the DOE, potential further alternative non-dilutive funding sources, as well as respective funding contributions from Standard Lithium and Equinor.

The joint venture is targeting approximately 1.1 billion total in senior secured limited recourse project debt, supported by three leading major export credit agencies. The Export-Import Bank of the United States, Export Development Canada, and Export Finance Norway, along with a strong syndicate of commercial banks. The equity contribution required by Standard Lithium will be supported by the proceeds from our equity raise last year. Any cost over on facilities, contingencies, minimum working capital balances or reserve accounts over and above base project CapEx requirements remain subject to negotiation with the lenders, with quantums to be determined.

While we await the conclusion of our remaining commercial offtake agreements, which will play a significant role in determining the ultimate size and structure of the SWA project debt, we continue to progress important project financing work in the interim around due diligence, structuring and documentation, credit and other approvals, such that we are in a position to reach financial close and draw down shortly thereafter. In other words, the offtake process has not and will not hold up advancement of the project financing workstream. We are in the advanced stages of diligence on this effort, and we remain on our targeted timelines.

With that, I will now turn it back over to David for closing remarks.

Thanks Salah. We saw real tangible results in the second quarter as we converted multiple years of technical, environmental and engineering work into the completion of pre-construction milestones. We concluded the Federal Environmental Review under NEPA with a FONSI and a clear green light to proceed. We selected and contracted with key construction partners who will lead us confidently through project execution. And we continue to steadily advance the commercial and financing processes as the two final primary deliverables required before taking FID.

Our team, together with Equinor and our advisors, remains focused on completing the remaining work with discipline and on terms that support the long-term value of the project. Our expectation remains to approve FID and begin construction at Southwest Arkansas later this year, with first commercial production targeted for 2029. You should expect to hear frequently from us in the coming months as we conclude all remaining work and progress against our timelines. Standard Lithium continues to be extremely well positioned, poised for growth with a portfolio of high quality and scalable assets, including in East Texas, to be a leading domestic critical minerals producer in the United States.

Thank you again for joining us today. Operator, I'll turn it back to you.

[Operator Instructions] Your first question comes from the line of Max Yarrow with BMO Capital Markets.

On the debt financing piece, is there any color you can share on which parts of the due diligence the lenders are working through and maybe which parts have been completed and how this is tracking maybe relative to your expectations?

Thanks, Max. First, I'll say there are a number of workstreams that the export credit agencies are pursuing in parallel. So technical diligence, including site visits, environmental due diligence, financial due diligence, insurance-related due diligence, financial due diligence, there are multiple work streams that have been pursued in parallel. I think there continues to be Q&A along all of them. However, no material red flags have been raised. No material concerns have been raised. So diligence continues to be made. We should be coming near the end of that diligence period. But that diligence then supports commercial negotiations around specific terms and conditions. And some of those negotiations are happening in parallel as well.

Your next question comes from the line of Theo Genzebu with Raymond James.

The off take you reiterated the expectation to finalize them by 3Q and you've indicated that you have a pretty good sense of the counterparties and volumes durations and pricing mechanisms, but can you just help us understand what the remaining gating items are today and are they like primarily you know commercial terms final credit approvals or documentation or something else?

Sure, great question. I'll first restate that we have the utmost confidence that we'll be able to bring offtake agreements to the table and announce prior to the end of the quarter. They may take the form of one additional offtake agreement or potentially two. I would say the agreements are, there have been heavily negotiated in parallel. So there are multiple parties we are talking to at this point in time, but that gives us a lot of confidence that at, by the end of the quarter, we will have offtake announcements that we can tell you are FID-able. And yes, I think that's probably the best I can do in answering your questions without getting into too much confidential detail on the nature of those discussions.

Yes, that's great. Great color on that. So appreciate that. Okay. And then just looking at the both construction contracts are in place with the limited notices to proceed. Can you give us a sense of what work is like actively advancing pre-FID? And like how much schedule benefit that could provide that those could provide once you issue the full notices to proceed?.

Andy, can you take that one?

Yes, sure, Theo. Yes. I mean, the work that's happening right now from the two contractors, whether it's S&B and Hatch on the CPF contract, which is an EPCC contract, or Wood on the EPCM for the well field. The work that's going on right now is, like, full confirmation of the FEED design, the design assumptions, integrating that into a full holistic schedule. We're going with key deliverables, key milestones set up internally so that we have a fully integrated schedule between the two main contractor groups and obviously us as the owners. So that's one of the first items.

Second is detailed design on key components of the work. Third, which is really important, is kind of vendor outreach, so fact checking some of the key vendor packages which might which might sit on the critical path. For the project, talking to some of the key vendors, getting ground truth in some of the design assumptions, et cetera, and really just getting a feel for who the actual vendor packages are going to go out to once we take full FNTP for the contractors.

So we're doing all of this work basically, to ensure that the schedule which has been agreed in the two sets of contracts in the EPCC and the EPCM makes sense, they can adhere to, and that the vendors who are going to form a key part of the delivery are fully up to speed of kind of expected vendor package delivery dates, et cetera So it's It really is kind of a holistic exercise right now, Theo, to make sure that we're on top of cost, on top of schedule, and that the full kind of project execution team is getting familiar. The working groups are getting set up. All the kickoff meetings are being helped. And yes, the full integrated delivery team is getting fully up to speed once we take FID to really have a seamless transition straight into construction. Hope that's helpful.

No, that's great. And yes, definitely look forward to seeing that roll out.

[Operator Instructions] Your next question comes from the line of Joseph Reagor with ROTH Capital Partners.

I guess first, just kind of following on all this conversation about financing. And off takes, if you guys think back six, 12 months ago, where you were hoping to be by now, do you feel like everything's still on the same schedule? Has there been any slowdowns or any things that are actually sped up, you know, since we can't really see with everything that's going on behind the scenes?

Thanks, Joe. I think the most candid way of answering that is, you know, earlier in the year, we were hopeful that we would be in a spot to FID by the end of the second quarter. We're clearly not there. For at least a quarter now, we have been signaling end of year FID, and we think we're very much on track for that. So with that revised schedule in mind, we think we are tracking well with respect to offtake and project finance to be able to hit that date.

Okay, that's helpful. And then as you guys look forward to the PEA for East Texas, what do you -- I mean, we're assuming it looks good. How fast do you think you can advance that project from, say, PEA? Would you guys go through like the full process PFS feasibility study or would you jump over straight to feasibility study? And then like, you know, what's a reasonable number of years between PEA and potential financing and building?

Andy, why don't you take that one?.

Yes, sure. Thanks for the question, Joe. I mean, obviously, one of the great advantages is we're not seeking, I think, as we've publicly disclosed before, there's a high degree of homogeneity in the brine resources in general from where we are in Southwest Arkansas and East Texas, and you'll see more of that obviously in the PEA once that's out. But what that means is that we don't need to fully reinvent the wheel every time we move to a new project, Joe. So there's a certain efficiency that we will gain as we move from project to project. Again, hoping to continue to use the same execution teams the same basic flow sheet, et cetera et cetera.

So i guess without giving you a specific number, I think you know we expect to see some efficiencies in our project definition process going from this PEA to move the moving towards an FID for East Texas projects in sequence. And it's going to be, I suspect, shorter than what we've seen through the multiple definition steps for SWA, right? So it's going to be a more efficient process. That said, they're pretty large projects so there's certainly some additional scale.

I think as we've talked about before, our general footprint in East Texas is large. The Franklin project and the maiden inferred resource that came out last year, you sort of saw a sense of the scale of that first of the Texas projects. And so, as we think about execution, There's both scale to consider as well as kind of a simplified flow sheet. So we expect to see a general efficiency, a general shortening. So we may skip one step in that definition, but it will follow, I think, as efficient a time line as we can hope to achieve in the normal context of getting the necessary capital, moving the project to FID, et cetera.

Okay. All right. That's helpful, too. One last thing, if I could. As you have gone through the financing due diligence process, has there been any specific pushback around either brine quality or the pretreatment side of the business? I know that there's been some commentary out there from some of your competitors about cleanliness of the brine day 1, number of impurities, that kind of stuff. Has there been any pushback from your finance people on that?

Andy, I'll let you take that one as well.

Yes, sure. In simple terms, no, Joe. But the reason for that is because of demonstration plant. The fact that we can take people around, obviously we've taken the ECAs, the lenders, all of their advisors around the demonstration plant. They've seen us processing kind of 60 to 90 gallons a minute on a continuous basis from raw brine right the way through to battery quality carbonate at the demo plant full flow sheet. I think they've got very comfortable with how well proven, how well de-risked that is.

So I think, again, as we've been fairly candid in the past, Joe, it took us some years to figure out some of the pretreatment aspects of the Smackover brines, but because we operated that demo plant now, we've been running it for 6 years, 24/7, 365 days a year using real brine. We have we've been able to iron out our kinks for our brine assets to a very high level of confidence. And that's why we're ready to take this project commercial and why the lenders are certainly.

Your next question comes from the line of Noel Parks with Tuohy Brothers Investment Research.

I apologize if you touched on this already. I got on a little bit late. But I wonder, could you talk a little bit about the status of your most recent technical work in East Texas, progress on the requirements for delineation, et cetera, whether there have been any surprises or either positive or negative, or any new thinking you have as you continue with your analysis?

Andy, I'll turn this one to you as well.

Okay. Thanks, Noel. Yes, the work that we've been doing over sort of the last period since we put out the maiden inferred resource for the Franklin project is really been reentry back into the three wells that we drilled a couple of years ago. So we went back into those resampling the brines in a more detailed way. We have done a whole suite of reservoir testing in the Smackover across that project footprint. Yes, that really forms the basis of what's going to be going into the PEA, so really getting an understanding of the reservoir productivity in the project area.

At the same time, we've obviously been doing a lot of additional test work to ensure that the flow sheet works with the concentration, the higher concentration of the East Texas brines. That's been going on in the background as well. So, yes, we you know, we're looking forward to getting that PEA out there. I think it's going to be a chance for the guys to get a feel for what we're really talking about within that jurisdiction. We think it's going to be pretty important for us.

And yes, there's going to be obviously continued test work. But as I sort of mentioned to Joe on the previous question, we're very fortunate that we don't have to start from scratch in any of this. Like it's always just for the subsurface team, it's another level of understanding from what we already know in Southwest Arkansas, so it's adding to the team's knowledge. Similarly, on the process flow sheet, it really is sort of incremental improvements based on what we've been doing for the last several years anyway.

So it is optimization, trying to make things in very simple terms, cheaper and easier to build and operate is always the goal and so that's very much the spirit as we kind of continue all of that technical definition work on the Franklin project and then obviously we've got other projects within East Texas as well that we continue to advance all of the leasing and kind of technical definition work on as well. So there's a lot of work happening in the background now.

And I had a question sort of more broadly, I guess, about lithium macro. And clearly you had discussions in progress with potential counterparties, offtakers, for some time. And so I guess a couple of things. Are there very similar outlooks among the different parties similar to yours at Standard around sort of, you know, a longer term pricing dynamics. And for lithium, I guess I'm thinking about, you know, compared to a few years ago, say 5 years ago, market globally is less opaque than it was, but I'm just sort of wondering, I don't know if just your thoughts on sort of visibility into the market for the longer term?

Sure, I'll try and address that one. I'll say there's been a lot of dialogue with offtakers and potential offtakers with, with respect to market conditions. It's clear that there's very strong demand for a battery grade lithium carbonate in the 2029 and beyond market window. I think based off where we are in discussions with different counterparties, there is a general belief in a band in which lithium is likely to trade.

So you know, I think there's enough of a meeting of the minds on how where prices are set and where prices are likely to be that we're able to get to offtake agreements in the timeframe that we're talking to you about. There are indices out there that we have agreement on how we'll use, and there's a fair amount of discussion about the range and where pricing may go forward. And it's supportive of pricing. the work you would have seen from our feasibility studies we put out as well.

There are no further questions at this time. Thank you for attending, and you may now disconnect.

Ladies and gentlemen, welcome to the 2026 Annual General and Special Meeting of Shareholders of Standard Lithium Ltd. Please note that the meeting is being recorded. I would like to introduce David Park, the CEO of the company.

Mr. Park, the floor is yours.

Good morning, and welcome to the Annual General and Special Meeting of the Shareholders of Standard Lithium. My name is David Park, and I'm the Chief Executive Officer of the company. We're hosting this year's meeting virtually via live webcast. Registered and duly appointed proxy holders of the company entitled to vote may attend and vote at the meeting through the virtual webcast. This past year has been highlighted by significant achievements and milestones reached for Standard Lithium.

We made substantial progress in advancing and derisking our world-class lithium projects, including our Southwest Arkansas project as well as our East Texas properties. We continue to work closely with our joint venture partner while strengthening relationships with potential customers and industry leaders. We remain excited about the pathway ahead for our company. Due to personal circumstances, Robert Cross, the Chair of the Board of Directors of Standard Lithium, is not able to attend and preside over the meeting. As such, and in accordance with Standard Lithium's bylaws, I will preside as Chairperson of the meeting in Mr. Cross' absence.

Before we get started, as this is a virtual meeting, it's necessary to set out a few rules for the orderly conduct of the meeting. Only registered shareholders or duly appointed proxy holders are entitled to ask questions and securely vote at the meeting in real time. Only shareholders of record at the close of business on May 20, 2026, are entitled to vote through the virtual webcast. Voting on all matters will be conducted by electronic poll and registered shareholders or duly appointed proxy holders who have properly logged in with their control number and wish to vote can click the voting button on the left side of the webcast.

In the interest of time, we've now opened the poll to vote on the matters before this meeting. You'll be asked to vote for, withhold or against, as applicable, the matters before this meeting. If you have already voted by proxy, it's important that you do not vote again here at the meeting unless you intend to change your initial vote. You may choose to vote on the resolutions immediately or wait until the conclusion of the discussions prior to casting your vote. We will provide enough warning for everyone to cast their vote prior to closing the polls. Questions in respect to a motion can be submitted by registered shareholders and duly appointed proxy holders by using the Ask a Question button on the virtual interface.

When asking a question, please indicate your name, which entity you represent, if any, and confirm whether you are a registered shareholder or a duly appointed proxy holder. The meeting will now come to order. I will ask Natasha Vlajnic of Cassels Brock & Blackwell, Corporate Counsel to the company, to act as the Secretary of this meeting. I will ask that Jennifer Villareal of TSX Trust Company, registrar and transfer agent of the company, act as the scrutineer of the meeting.

I've been advised that as the company used the notice and access procedure to deliver the meeting materials for this meeting, the notice and access notification, together with the form of the proxy were mailed to all shareholders of record at the close of business on June 12, 2026, and the meeting materials were posted on the company's website on May 20, 2026.

TSX Trust Company has provided proof of service of such mailing, and I direct that a copy of such proof of service be annexed to the minutes of this meeting as a schedule. The scrutineer has advised me that prior to the meeting, proxies were received from the holders of a sufficient number of common shares to constitute a quorum. I direct that the final formal report of the scrutineer be annexed to the minutes of this meeting as a schedule. I declare the meeting validly called and properly constituted for the transaction of business.

In the interest of expediting the business of this meeting and in accordance with the corporate statute and the bylaws of the company, I will move all motions with respect to the business for which this meeting has been called as set out in the notice of Annual General and Special Meeting and no motion needs to be seconded. I now present to the meeting the audited financial statements of the company for the financial year ended December 31, 2025, together with the report of the auditor thereon. Copies of such documents have been mailed to the shareholders who have requested them, and it is not proposed to read them here at the meeting.

The company auditor is PricewaterhouseCoopers, Chartered Professional Accountants. I now move that PwC be reappointed as the auditor of the company to hold the office until the close of the next Annual General Meeting of Shareholders at a remuneration to be fixed by the Board of Directors of the company. I now move that the number of directors of the company be set to 9 for the ensuing year. The company's bylaws provide a process requiring advance notice to the company in respect to any person seeking to be nominated for the election at today's meeting.

The company did not receive notice of any director nominations in connection with the meeting within the prescribed time periods. Accordingly, the only persons eligible to be nominated at the meeting for election to the Board of Directors of the company are the 9 individuals nominated by management as set out in the company management information circular, each to hold office until the next Annual General Meeting of Shareholders or until his or her successor is duly elected, unless his or her office is earlier vacated in accordance with the bylaws of the company.

The management nominees are Robert Cross, Dr. Andrew Robinson, David Park, Jeffrey Barber, Dr. Volker Berl, Claudia D'Orazio, Anca Rusu, paul Collins, Karen Narwold. I now move for the nomination of each of these 9 persons nominated by management as directors of the company. I now move for the adoption of the full text of the shareholder resolution set out on Page 29 of the management information circular reapproving the company's option plan.

I now move for the adoption of the full text of the shareholder resolution set out on Page 32 of the management information circular, reapproving the company's incentive plan. As mentioned earlier, voting today will be conducted by electronic polls. Polls are open and registered shareholders and duly appointed proxy holders who have properly logged in with their control number and wish to vote will be able to see on the screen the motions being brought forth at this meeting.

Please register your votes now if you have not already done so. We'll provide approximately one more minute to complete the electronic polls. Once the electronic polls, the voting button -- once the electronic polls closed, the voting button will disappear and your votes will automatically be submitted.

[Voting]

The polls are now closed.

I've been advised by the scrutineer that based on the ballots and proxies deposited for the meeting and the preliminary results of the electronic voting, each motion put forward at the meeting has been voted in favor, and thus, I declare each motion carried. I declare that the formal business of this meeting is now terminated. I would ask the scrutineer to compile the report regarding the voting results on all business matters, and I direct that the results be included in the minutes of this meeting. I thank you for attending the meeting.

Ladies and gentlemen, thank you for attending today's meeting. You may now disconnect.

Ladies and gentlemen, thank you for standing by, and welcome to Standard Lithium's First Quarter 2026 Conference Call. [Operator Instructions]

It is now my pleasure to turn today's call over to Daniel Rosen, VP of Investor Relations and Strategy for Standard Lithium. Please go ahead.

Thank you, and welcome, everyone. I'm joined today by David Park, our CEO and Director; Andy Robinson, President, COO and Director; Salah Gamoudi, Chief Financial Officer; 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 today, including any related to company performance, expectations 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.

I will now turn the call over to David.

Thanks, Dan, and I appreciate everyone joining us today. We've had an active first quarter and year-to-date as we continue to advance important milestones and deliverables of the company. We achieved major operational milestones at our demonstration plant in Arkansas, including the processing of over 1 million barrels of live Smackover brine going back over the last 6 years. Our large-scale demo plant is the first of its kind and is critical to everything we've been able to accomplish at Standard Lithium. It's provided a robust data set to support the scalability and derisking of our selected process technology and flow sheet. It has also strengthened our first-mover advantage within the Smackover formation, where we have the only shovel-ready project that's preparing to take a final investment decision, our Southwest Arkansas project. We've also been working diligently to advance the remaining work streams required prior to a final investment decision, and we've made meaningful progress on all fronts.

In the first quarter, we announced our first binding commercial offtake agreement with Trafigura, a global commodities leader with an established presence across battery metals, including lithium. Smackover Lithium will supply Trafigura with 8,000 metric tons per year of battery quality lithium carbonate over a 10-year period, beginning at the start of commercial production. We'll address the status of each of the remaining work streams and how it supports our overall plan, which remains to take FID at the Southwest Arkansas project and begin construction in 2026.

And with that, I'll pass it over to Andy.

Thanks, David. We're pleased to announce the achievement of several meaningful operational milestones at our demo plant in El Dorado, Arkansas, which operates a full brine lithium carbonate flow sheet. We've now processed over 1 million barrels of real brine pumped in real time from the Smackover formation. This has completed over 15,000 direct lithium extraction or DLE cycles and met the fundamental performance targets for the core process technology that's going to be used at the SWA project. This includes 95% plus lithium recovery and 99% plus rejection of key contaminants as consistent with the performance guarantees in place on our licensing agreement with Aquatech. We've done this with roughly 340,000 man-hours over 6 years of operating with 0 incidents, underscoring Standard Lithium's strong commitment to operational safety and best practices.

The demo plant will continue to serve as a critical platform for process flow sheet optimization, operational data collection, engineering design input and training of our core team of 38 engineers and operators to prepare them for the commissioning and operation of our first commercial facility, the SWA project. At the beginning of the year, we laid out the 4 primary deliverables to be completed prior to taking FID, namely contract execution with the key construction vendors, receiving the NEPA approval from federal regulators, finalizing customer offtake agreements and closing the project financing.

For the vendor contracts, we're pursuing an engineering, procurement, construction and commissioning or EPCC model for the downstream portion of the project, which contains the central processing facility and includes the direct lithium extraction and battery quality lithium carbonate conversion process. We're pursuing an engineering, procurement and construction management or EPCM model for the upstream or well field and pipeline portion of the project. We're currently finalizing agreements with our selected partners in these 2 key roles and expect for both of these to be completed in the second quarter as previously indicated.

Each contract contains a limited notice to proceed provision in order to immediately progress key work items and to optimize the construction schedule prior to taking a final investment decision. The full notice to proceed will immediately follow positive FID. On the regulatory front, the project is required to go through an environmental assessment under NEPA triggered by a $225 million grant from the Department of Energy. The DLE is leading this process, which is nearing its formal conclusion after more than a year of review and engagements, and we expect it to be completed in the second quarter as per the federal permitting dashboard. We do not expect any further mitigation measures or conditions to be imposed or any additional federal government reviews or approvals to be required in order to take a final investment decision.

Overall, we received strong government support throughout this process for our projects, which received the FAST-41 transparency project designation as a priority U.S. critical mineral project. Turning to our dual track customer offtake and project financing processes. Smackover Lithium alongside our experienced financial advisers continues to make excellent progress. With our planned 22,500 tonnes of annual nameplate lithium carbonate capacity, we're targeting for approximately 80% of that production to be under long-term offtake contracts. Our first offtake agreement with Trafigura for 8,000 tonnes represents over 40% of targeted offtake.

The partnership expects to reach agreements on all remaining advanced offtake negotiations by the third quarter. We remain focused on securing the best possible terms under these agreements in order to support our project financing efforts. All material offtake terms must be agreed upon before the final sizing and structure of the project finance package can be determined. The joint venture remains confident in its ability to reach a positive outcome in these customer negotiations, thus allowing for FID to be taken and for construction to begin in 2026.

Assuming we begin construction on this time line, we expect to achieve first commercial production in 2029. I just want to round out my remarks by touching on East Texas. We're continuing to improve the definition of our resource position through additional drilling and process test work at the Franklin project and in the region more broadly. We're aiming to release the preliminary economic assessment, or PEA, for the Franklin project in the second half of 2026 and plan to follow that with a preliminary feasibility study, PFS in early 2027.

It's important to outline the project economics of that world-class resource in order to gain further recognition for this important and underappreciated part of our asset portfolio. We'll continue to work on maiden inferred resource reports for our 2 other potential projects in the area, all while continuing to expand our leasehold footprint in East Texas.

And now I'll turn it over to Salah to discuss our financial results.

Thank you, Andy. For the first quarter ended March 31, 2026, we reported a net loss of $2.7 million as compared to a loss of $1.6 million for the quarter ended March 31, 2025. In the quarter, G&A decreased slightly by $0.1 million, while demonstration plant costs increased by $0.4 million year-over-year. The slight decrease in G&A demonstrates our continued commitment to cost discipline as despite growth in employee headcount and activity in order to support the development of our portfolio of projects, we have found offsetting cost savings in certain audit, legal and consulting expenses. The demo plant increase was driven by higher personnel and supply costs associated with R&D activities along with maintenance and site improvement activities.

As mentioned by Andy, the work that we do at the demonstration plant is and will continue to be critical and a real differentiator for us. Additionally, we incurred a noncash foreign exchange gain of $2.2 million during the quarter. This foreign exchange gain was due to having significantly higher average U.S. dollar cash balances as a result of our $130 million follow-on offering in October of last year as well as fluctuations in exchange rates between U.S. and Canadian dollars and the resultant noncash accounting impact on those cash balances held by one of our Canadian dollar functional currency entities.

Below operating expenses on the income statement, we recorded a higher investment loss from joint ventures of $1.5 million for the quarter versus $1 million in the prior period. This increase reflects expanded operational activity at the Smackover Lithium partnership level in connection with commercial and financing initiatives as well as increased corporate and administrative support as project development activities progress. We also recorded a $0.8 million loss on the fair value of our contingent FID payments, which are to be received by Standard Lithium from our partner, Equinor, should we reach a positive FID at our SWA and our East Texas projects by certain dates.

This was primarily related to revisions to assumptions on expected milestone timing rather than a change in the overall probability of achieving FID. We also recognized $1 million in additional interest income year-over-year, driven by our higher average cash balances. We ended the quarter with strong cash and working capital positions of $141 million and $139.5 million, respectively. Standard Lithium made JV capital contributions of $17.9 million during the first quarter, of which $9.6 million and $8.3 million went towards SWA and East Texas, respectively. For Southwest Arkansas, the contributions allow us to continue to advance key project milestones as we approach FID and enable us to continue advancing technical and engineering work streams. For East Texas, the contribution is primarily for advancing our understanding of the resource, continuing to expand our leasehold footprint and continuing along a path through a preliminary economic assessment with a preliminary feasibility study to follow.

Securing an attractive and comprehensive project finance package is a critical part of the final investment decision for SWA. The approximate $1.5 billion of base project CapEx per our DFS in addition to potential cost overrun facilities, reserve accounts or other incremental capital requirements are expected to be financed by a combination of senior secured project debt, our $225 million grant from the DLE as well as respective funding contributions from Standard Lithium and Equinor.

The joint venture is targeting approximately $1.1 billion total in senior secured limited recourse project debt supported by 3 leading major export credit agencies, including the Export Import Bank of the United States and Export Finance Norway, along with a strong syndicate of commercial banks. The remaining 55% pro rata equity contribution required by Standard Lithium will be supported by the proceeds from our equity raise last year. Any cost overrun facilities, contingencies, minimum working capital balances or reserve accounts over and above base project CapEx requirements remain subject to negotiation with the lenders with quantums to be determined.

We have already received expressions of interest from the ECAs and commercial banks exceeding our total targeted project debt. Additionally, initial responses included indicative terms that were consistent with our expectations and validated certain assumptions regarding the cost, term structure and conditions that are customary for project debt facilities of this nature. While we await finalization of our remaining commercial offtake agreements, which will ultimately finalize the size and structure of the SWA project debt, we continue to progress important project financing work in the interim around due diligence, structuring and documentation credit and other approvals, such that we are in a position to reach financial close and draw down shortly thereafter. In other words, the offtake process is not holding up advancement of the project financing work streams as we remain on our targeted time lines.

I will now turn it back over to David for closing remarks.

Thanks, Salah. We understand how important 2026 is for Standard Lithium as we approach a final investment decision for the initial phase of our Southwest Arkansas project. We'll provide timely updates as we conclude all remaining work in the coming months and progress against our plan, which remains to approve FID and begin construction in 2026. Standard Lithium continues to be extremely well positioned, poised for growth with a portfolio of high-quality and scalable assets, including in East Texas, and to be a leading domestic critical minerals producer in the United States. Thanks again for joining us today.

Operator, I'll turn it back to you.

[Operator Instructions] Your first question comes from the line of Max Yerrill with BMO Capital Markets.

As you work through the vendor contracting process, I was just wondering how the cost is either tracking towards maybe what you expected from the get-go.

Thanks a lot, Max. Andy, why don't I turn that one to you? You're closer.

Yes, sure. Sounds good. Thanks, Max. Yes, I mean, obviously, the DFS is still pretty current in the FEED study that underpins that DFS. So a lot of the original vendor buildup that went into that is still pretty fresh. Obviously, we are going to be releasing the 2 principal contracting entities on a limited notice to proceed in the very near future. And at that point, they're going to be refreshing through vendor outreach, some of the expected costs. We have not seen pricing change significantly where we have been tracking pricing to date. But in the contracting vendor engagement process, we have made allowances for escalation and tariffs to be there in our pricing model right now. So we've been keeping an eye on it, and that will get formalized as we go through that LNTP process prior to taking the final investment decision. Hopefully, that answers your question, Max.

And then maybe one more. And from where we were when you guys set off on the offtake pricing in the offtake discussions, we've seen a huge rally in the lithium prices. Are there any goalposts changing on potential floors or ceilings from when you started the offtake discussions? Any color you can share there would be very helpful.

Yes. Thanks a lot, Max. Good question. Lithium carbonate pricing has improved materially over the last year. You're well aware of that. As a result of that, starting in about the fourth quarter and then the first quarter of this year, we had more counterparties come back to the table that were able to present us with pricing mechanisms that worked for us and supported our financing than we had last year. So I would say probably the best way of thinking of it is there is more depth to our discussions, and we are running a competitive process to finalize our offtake agreements.

We have our first agreement in place with Trafigura, as you're well aware, for 8,000 tons. And now we are working with multiple counterparties to finalize agreements. We think we know who those counterparties are going to be. We have a good feel for the volumes, the duration and the pricing mechanisms and feel much better about it than I would have last fall.

Your next question comes from the line of Anthony Taglieri with Canaccord Genuity.

Maybe just on CapEx at the project level for this year, what would be sort of a reasonable expectation for spend there, just given that construction is probably going to be starting towards the end of the year. Some thoughts there would be helpful.

Andy, do you want to take that one? Or should we turn that to Salah?

Why don't we let Salah handle that one, that would be useful, yes.

Sure. Happy to. So what I would say is that from a go-forward perspective, as Andy mentioned, we'll be releasing the EPC contractors on a limited notice to proceed basis, and that's where you're going to eventually find whatever the final CapEx print is. Once those procurement activities have been kicked off, you've gotten sort of live real vendor quotes that's when we'll be able to define a specific number. But what I would say is, in general, we don't expect there to be a huge variation, as Andy mentioned, because our FEED study that the DFS was based on was done fairly recently and involved a lot of direct contact with vendors and quotes collected and things like that.

So as we're moving forward, however, we do have to account for other things that can come up in regards to capital requirements. And so there are contingencies that may be required as part of our debt financing process. As Max mentioned earlier on the call, cost overrun facilities, debt service reserve accounts, minimum working capital balances and things like that can increase your capital requirements above and beyond the base CapEx to actually build the facility. And so we'll be working to define that as we go forward on both the EPC contracting side, but also on the side of our negotiations and discussions with the project lenders.

Okay. Great. Maybe just on East Texas. Any early views or high-level framing you guys could give us just relative to SWA in terms of economics? Like how should we be thinking about modeling this project moving forward, I guess, pre-PEA, obviously?

Andy, why don't you start with that one?

Yes, for sure. I mean, Anthony, it's -- obviously, we have not released any economic assessment of the Franklin projects or any of our land holdings in East Texas to date. I think one of the things that I would say is that in our experience over the last many years, the grade of lithium is extremely important in the economics of DLE-based projects. And so as we move from the Southwest Arkansas project, where kind of our average grade is in the 400 to 500 milligrams per liter lithium and we go into East Texas, where we're typically seeing 500 plus into the 600s and 700s and even into 800s the in East Texas. We expect that to be working very much in our favor. And so I think that's going to be interesting and positive in the future.

As I said, we're going to be working -- we're just selecting a vendor to complete the PEA right now. We expect to get it out as soon as we can. It's going to be in the second half of this calendar year. We expect the economics to look favorable, frankly. These are world-class resources. The assets are quite incredible in terms of just the size and the quality of the assets. So these are very, very, very high-quality assets that are highly amenable to DLE processes and extensions of the flow sheet that we're going to be building at SWA Phase 1. So we're looking to carry across all of that huge amount of learning from the demo plant from the engineering and FEED studies for SWA Phase 1, translating that into higher-grade assets in East Texas, we think that's going to be a good story.

That's great. And then maybe just one more, if I might. Have offtakers started asking you questions about East Texas, like maybe when you might think that project to be in production? Like how does that start factoring into these discussions? I imagine, obviously, the focus is SWA right now, but I imagine as an offtaker, they'd be looking at longer-dated production time lines and where you might get to eventually.

Yes, I'll take that. I would just say the offtakers we're talking to are people that want to be partners for us -- with us for a long time. So the specific negotiations are very Southwest Arkansas focused. But their interest in entering into long-term partnership with Standard Lithium is driven beyond Southwest Arkansas, and it's -- they're very attracted by the potential we have in East Texas, so we can continue to grow together.

Your next question comes from the line of Eric Boyes with Evercore ISI.

For the first, we spent a lot of time talking about sensitivity to lithium price and CapEx. But can you maybe talk to the production volume variability of DLE, if any, in Southwest Arkansas?

Andy, do you want to hit that?

Sure, Dave. Yes. I mean, Eric, we've designed the facility at Southwest Arkansas Phase 1 to be effectively constrained, if you like, by the production of lithium carbonate. So we designed for how much lithium carbonate we want to produce on an annual basis and then we design everything else around that in terms of the brine supply. We have -- because of the quality of the resource at Southwest Arkansas, we have, in very simple terms, more brine than we need to support the operation of that facility. So what that means is we expect to be able to run the facility at nameplate for a very long period of time, multi-decades of operation because of the relative size of the resource that we have relative to the production facilities.

We will see some natural small-scale fluctuations in annual capacity. But in simple terms, we have a plant that we can more than supply with resource to main good even production capacity at the facility. So that's sort of the general philosophy. So we would not expect to see large-scale fluctuations of the plant on an annual basis. And obviously, that's the basis for the long-term offtake contracts that we're also in the process of finalizing and signing.

Okay. Appreciate that. And then my second is another on East Texas. How much of the Southwest Arkansas engineering package can you realistically kind of replicate down there? Maybe what parts of the design are likely or would need to change?

Yes. No, I'll take that one, I guess. We're extremely fortunate. One of the reasons why we're in the Smackover, Eric, is that the geochemistry of the brines is really from an engineering and flow sheet design point of view, really very similar from one region that we're operating into the next. And so in simple terms, we're able to translate directly large parts of the -- either both the demo plant, the Southwest Arkansas flow sheets into East Texas. There are some -- it's actually a little simpler in East Texas. We don't have any sour gas for the most part to deal with in our project areas. So there are certain parts of the flow sheet that can be minimized or removed when we translate from Southwest Arkansas to East Texas. So that's going to be helpful.

But for the most part, we're moving with similar flow sheet. And so we definitely hope to be able to translate established vendors from Southwest Arkansas, obviously, established contracting partners from Southwest Arkansas into East Texas. So the general -- very much the philosophy of why we're in the Smackover is that we can, to a large extent, replicate our flow sheet, introduce simplicity, introduce efficiencies, maintain key vendor, supplier and contractor relationships so that we can minimize redesign cycles, minimize shortened time lines, increase efficiencies, optimize where it makes sense, et cetera. So it really is intending to modularize as much as we can and kind of copy paste as much as is reasonable from one project to the next to kind of get those production efficiencies, both on construction and then on operation.

Your next question comes from the line of Joseph Reagor with ROTH Capital Partners.

Most things I want to touch on were already asked, but just one kind of bigger picture question. I've been seeing a lot more talk of across multiple oilfield locations, the potential to recover other minerals, not just lithium, but from the brines and from the wastewaters and also some government support for this, things that are on the critical minerals list of rare earths. Any opportunity there for you guys? I guess, to isolate with Southwest Arkansas, but maybe with East Texas to add other potential minerals to your revenue profile?

Sure. I'll start with this and then turn it to Andy as well. First, you are correct. Southwest Arkansas is -- we're solely focused on lithium for the Southwest Arkansas project. So I think you should not include that in any expectation of any revenue stream. With East Texas, we do have the opportunity to pursue other minerals. And with that, I'll turn it to Andy to flesh that one out.

Yes. Joe, yes, I mean, we identified in the maiden inferred resource assessment, we kind of -- we spoke to the potential bromine and potash resource, which is there as well, both of which are high quality and very sizable. So as we move forward to the PEA, I think we haven't made a decision as yet whether to include potential economics of those other resources in the PEA. But certainly, we very much understand that there are some very high-quality resources there. Those are the ones that we've identified so far, so bromine and potash. There may well be other potential within the Smackover brines in East Texas. But I think from a simple grade and magnitude point of view, those are probably the ones that we're going to advance and figure out a little bit more in the future.

Your next question comes from the line of Theo Genzebu with Raymond James.

Just one for me, I guess, left over. Just on the NEPA, I believe it was mentioned in the past that there was like a public commentary period. Can you just update us on that or like progression there? I know you're expecting the process to be completed by end of the second quarter. So any extra light you can shed there would be great.

Yes, great question. We feel very confident where we sit with respect to the NEPA process. The public comment period is closed. We believe the report is finalized or near finalized, and we hope to have some good news here this quarter on that respect. So it has gone -- the process has moved forward, and we have not encountered any negative surprises along the way.

Your next question comes from the line of Noel Parks with Tuohy Brothers Investment Research.

It was interesting just to hear about the discussion so far about brine characteristics and brine content also across your different target regions. And I just wondered from the original sort of South Arkansas demo to Southwest and then to East Texas now. I'm just curious about the sort of the reservoir characteristics and whether they're actually also fairly uniform across these different Smackover regions, just things about pressure, how they behave under sort of a depletion replenishment cycle. Just wondering if there's any variation on that.

Andy, that one is for you.

Yes, no worries. Noel, yes, look, obviously, the package that the bromine facilities in Southern Arkansas, that's been operating for 6 decades now. So a huge amount of information there on how the Smackover reservoir produces and also can be reinjected. We've been able to lean on just an absolutely gigantic amount of data as to how the formation behaves. When -- as we have moved through -- obviously, we're working with a package of leases in Lafayette and Columbia counties for the Southwest Arkansas project.

We've been, I think, over the years, incredibly pleasantly surprised by the producibility of that project area. And so we've got some great quality rock and very comfortable with its ability to both produce brine and to reinject the tail brine, the waste brine, spent brine back into the formation to maintain pressures for multi-decadal production. As we move into East Texas, it's fair to say based on what we've learned in the region working with LANXESS over there, very large footprint. They've got 150,000-plus acres of leases in Union County in Arkansas, all of the work that we've done in and around Southwest Arkansas. We were highly deliberate when we started the work in East Texas 5 years ago. We understand how to look for the best areas of porosity and permeability in the formation, whereabouts in the formation those are found, how to position project, et cetera. And so because we sort of had that huge first-mover advantage in the Smackover.

As we've expanded our footprint, I think we've been very deliberate and coherent in terms of building out lease packages and project positions to absolutely take advantage of the areas of the Smackover, which we know sort of in simple terms, work best because I think your point is a good one. is that the Smackover from a reservoir point of view is quite variable. There are areas with lower porosity and therefore, lower permeability. There are areas of more complex geological structures where there's a lot of faulting and discontinuity of flows. And so those are areas that we've specifically avoided when we started 5 years ago in East Texas.

So I think we've been very deliberate in terms of where we've positioned our projects in the Smackover to take advantage of the same reservoir characteristics that we've come to know working on the LANXESS project in Southwest Arkansas. So hopefully, that answered your question.

Certainly does. And I think from that, it's fair to say that as far as sort of the competitive lead you would have against other entrants or other players that maybe aren't so active right now, it would seem to reinforce that even more in other words you can't just jump in and lease what's unleased and expect great results everywhere.

Yes. I won't speak to other people's projects, but the quality of the reservoir definitely varies spatially, both east-west and north-south across and along the formation. And so I think, yes, as a project developer, one needs to be very deliberate to pick the right rock that will actually support production, and that has been very much our philosophy right from the start and something we've very deliberately applied as we've expanded our footprint and the resources in the area.

Terrific. And then on the offtake financing picture, I was just curious, in terms of the partners you're talking with, of which I imagine are kind of the usual suspects you expect to be interested in lithium. I was just wondering if any of those parties themselves are in partnership with other strategic or financial parties. And I guess I was thinking that compared to a few years ago, when EV-related capital was driving a lot of the interest. Now that you have the AI power capital also thinking about energy storage, also pushing its way into the mix. I just wondered if -- whereas a few years ago, you were talking with a particular type of manufacturer and now it's that manufacturer and some other type of fund, for example, that is anxious to get exposure to lithium stepping up alongside them.

Interesting question. I'll just say on the offtake side, from day 1, we've been focused on seeking out partners or customers with strong balance sheets that are exposed to various segments of the lithium market. And we are involved in discussions with players that represent all those different demand nodes for lithium at this point in time. So we're very careful not to put all our eggs in the EV basket. Obviously, important to have exposure to that basket. It's a very large part of the market, but it's not the only part. And we're going to make sure that we are exposed to the AI and data center trade as well. So we're involved in discussions with all of those parties. But the -- and then I'll say on the project financing side, it's -- again, it's export credit agencies that we are talking to about providing the non or limited recourse financing for the project.

We have now reached the end of the Q&A session. This concludes today's call. Thank you for attending. You may now disconnect.

Hello, everyone. Thank you for joining us, and welcome to the Standard Lithium's Fourth Quarter 2025 Earnings Call. [Operator Instructions]

I will now hand the call over to Daniel Rosen Vice President of Investor Relations and Strategy for Standard Lithium. Please go ahead.

Thank you, and welcome, everyone. I'm joined today by David Park, our CEO and Director; Andy Robinson, President, COO and Director; Salah Gamoudi, Chief Financial Officer; 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 today, including any related to company performance, expectations 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.

I will now turn the call over to David.

Thanks, Dan, and I appreciate everyone joining us today. We had a busy and productive fourth quarter as we advanced and completed multiple important milestones and deliverables for the company. We filed a positive definitive feasibility study for the SWA project in a maiden inferred resource report for our first project in East Texas, the Franklin project.

The DFS for SWA demonstrates the attractiveness and cost competitiveness of our first commercial project being developed alongside our SMAC over lithium JV partner, Equinor, which is expected to have production capacity of 22,500 tonnes per year of battery-quality lithium carbonate in its initial phase. The maiden resource estimate for the JV's Franklin project in East Texas highlights the size and quality of its brine position with some of the highest reported lithium in brine grades in all of North America. It provides a strong foundation for future scalable production and is a key step towards the ultimate goal of reaching production of over 100,000 tonnes of lithium chemicals per year in Texas through multiple projects.

We obtained the final regulatory approval required for SWA from the Arkansas Oil and Gas Commission for integration receiving unanimous support for our application for the Reynolds Brine unit, where the initial phase of the project is planned to be developed. And we continued to strengthen our own financial position while also progressing the export credit agency led project financing for the SWA project.

In October, Standard Lithium closed and upsized $130 million underwritten public offering. We saw strong support from institutional investors in an oversubscribed order book. underscoring the belief in our strategy and the quality of our assets. Additionally, Smackover lithium received indications of interest for over $1 billion in project financing, for the SWA project, led by 3 major export credit agencies, including the Export-Import Bank of the United States and Export Finance Norway and supported by a strong group of commercial banks. Interest came in at competitive indicative terms and exceeds the targeted debt alone.

To begin 2026, we've been working diligently to advance the remaining work streams needed to reach a final investment decision for the SWA project. We've made meaningful progress on all fronts, including the signing of our first binding commercial offtake agreement with Trafigura, a global commodities market leader with an established presence across battery metals, including lithium. Spec over lithium will supply Trafigura with 8,000 metric tons per year of battery quality lithium carbonate for over a 10-year period beginning at the start of commercial production. We'll address the status of each of the remaining work streams and how it supports our plan to take FID and begin construction in 2026.

To provide an update on the key project-related developments and deliverables ahead I'll pass it over to Andy.

Thanks, David. The 4 primary deliverables to be completed prior to taking FID a contract execution with key construction vendors receiving National Environmental Policy Act or NEPA approval from the federal regulators, finalizing customer offtake agreements and closing the project financing. We're pursuing an engineering, procurement, construction and commissioning or EPCC model for the downstream portion of the project, which contains a central processing facility and includes a direct lithium extraction and battery-quality lithium carbonate conversion process.

We're pursuing an engineering, procurement and construction management or EPCM model for the upstream or well field and pipeline portion of the project. We are close to finalizing agreements with our preferred partners in these roles and expect for both of these to be completed in the second quarter. Each contract will contain a limited notice to proceed upon signing in order to immediately progress key work items and optimize the construction schedule. The full notice to proceed will immediately follow a positive final investment decision.

On the regulatory front, the project is required to undergo an environmental assessment on the NEPA triggered by our $225 million grant from the Department of Energy. The DOE is leading the environmental assessment process, which is progressing well. The project completed all necessary field work and baseline environmental studies for input into the EA in 2025. DOE has completed all necessary consultation with other federal agencies and travel nations and has completed the draft EA report for public comment. We expect NEPA process to be completed in the second quarter as per the Federal Permitting dashboard. Overall, we've received strong government support throughout this process for our project which received a fast 41 transparency project designation.

Turning to our dual track customer offtake and project financing processes, Smackover lithium, alongside our experienced financial advisers continues to make progress as reflected by our first binding commercial offtake agreement and the indications of interest received to support the project debt, which Salah will touch on in more detail.

Of our planned 22,500 tonnes of annual nameplate lithium carbonate capacity, we're targeting for approximately 80% of that production to be under long-term offtake contracts. Our first offtake agreement with Trafigura for 8,000 tonnes represents over 40% of targeted offtake for the initial phase of the SWA project. Joint venture is in advanced commercial negotiations with multiple additional parties with the aim to complete this process as soon as practical. We remain focused on securing the best possible terms under these agreements in order to support our project financing efforts, and to help mitigate risk from negative price fluctuations while maintaining attractive price upside for our stakeholders.

Of the remaining pre-FID deliverables, we believe completing the customer offtakes has the most potential timing variability given the nature of these negotiations. All material offtake terms must be agreed upon before the final sizing and structure of the project finance package can be determined. With that said, we continue to advance project financing due diligence, documentation, credit and other approvals in parallel, such that we're in a position to reach financial close and draw down shortly thereafter.

The joint venture remains confident in its ability to reach a satisfactory outcome in these customer offtake negotiations, thus the land for FID to be taken and for construction to begin in 2026.

Assuming we begin construction on this time line, we would expect to achieve first commercial production in 2029. We also want to touch on our priorities for East Texas in 2026 for the Franklin project and the region more broadly, we intend to continue to improve the definition of our resource positions through additional drilling and process test work. We're aiming to release a preliminary feasibility study for the Franklin project within the next 12 months, demonstrating the project economics of that world-class resource and hopefully achieving further recognition for this important and underappreciated part of our asset portfolio. We'll continue to work on made and inferred resource reports for our 2 other potential projects in the area, all the while continuing to expand our leasehold footprint in East Texas.

And now I'll turn it over to Salah to discuss our financial results.

Thank you, Andy. For reference, all numerical references that I will be making today are in U.S. dollars. For the fourth quarter ended December 31, 2025, the company reported a net loss of $35.7 million as compared to a $24.7 million loss during the quarter ended December 31, 2024. The biggest drivers of this year-over-year increase in our net loss are onetime in nature and not reflective of underlying business trends, namely, we incurred a $6.8 million increase in impairment expense a noncash charge related to the LANXESS property project and a noncash $3.4 million increase in foreign exchange loss.

The LANXESS property project impairment is a result of the termination of our previous memorandum of understanding with LANXESS, a cessation of discussions with LANXESS on further advancement of the project, the execution of a new site services agreement, which defines our go-forward relationship with LANXESS in regards to our demonstration facility but does not contemplate further commercial development.

And finally, a refocus of our efforts and capital allocation towards our Southwest Arkansas and East Texas projects. As a result, we recognized a full $26.5 million impairment expense of our exploration and evaluation assets associated with the LANXESS property project in the fourth quarter. Independent of this, Standard Lithium will continue to run and operate its industrial scale DLE and carbonation demonstration plant at LANXESS existing bromine site as it has been doing successfully for roughly the last 6 years.

The foreign exchange loss was due to having significantly higher average cash balances during the fourth quarter as a result of our $130 million follow-on offering in October and the resultant noncash accounting impact of changes in exchange rates on those cash balances. For the quarter, as compared to the quarter ended December 31, 2024, G&A of $2.9 million increased by $0.2 million, driven primarily by increases in employee-related expenses associated with expanding our team as we continue to mature and transition from early-stage project development towards construction and eventual production.

Demonstration plant costs of $1.4 million increased by $0.6 million as a result of higher personnel costs and indirect allocations associated with process refinement and testing as well as operator training and support of future potential commercial production. Share-based compensation expense of $1.5 million increased by $0.3 million due to increased long-term incentive compensation for our management employees as we expanded our team as noted above and to better align compensation and shareholder value creation.

Below operating expenses on the income statement, -- we recorded a higher investment loss from joint ventures of $3.2 million for the quarter versus $0.3 million in the prior period. This increase reflects expanded operational activity and related expenses at the Smackover lithium JV level in 2025 and as we advance to releasing our 2 technical reports at SWA and East Texas.

We also recorded a $0.4 million gain on the fair value of our contingent FID payments to be received by Standard Lithium from our JV partner, Equinor, should we reach a positive FID at our SWA and/or East Texas projects by certain dates. As we continue to achieve milestones and get closer, the value of our contingent FID payment assets have increased as reflected by the gain. We also recognized $0.9 million in additional interest income for the quarter driven by our higher average cash balances for part of the period.

For the full year 2025, the company reported a net loss of $48.4 million Full year results are compared to our last audited period, a shorter 6-month fiscal stub period ended December 31, 2024, in our reported financials. This is due to changing the company's fiscal year-end from a June 30 fiscal year-end to a December 31 calendar year-end in the fourth quarter of 2024 to better align our reporting cycle with how we manage the business and align with our peers. Therefore, -- we have kept our focus today on fourth quarter comparables instead of the full year 2025.

Moving on to our balance sheet. We ended the quarter with strong cash and working capital positions of $152.3 million and $147.6 million, respectively, as compared to cash and working capital positions of $31.2 million and $27.5 million in the prior year, respectively. This higher cash position is primarily reflective of the follow-on offering we completed in October, which generated net proceeds of $122.2 million and continued use of our ATM facility, partially offset by our capital contributions made to the SWA and East Texas projects and general operating expenses. The follow-on offering will help to support our expected required equity contribution into the SWA project at FID as well as continuing to progress development work in East Texas.

The sole project funding requirements by Equinor into the JVs as part of the original agreement were exhausted during the second quarter of 2025. with standard lithium and Equinor subsequently making their own respective capital contributions based on a 55%, 45% ownership split. Standard Lithium made JV capital contributions of $9.6 million during the fourth quarter, bringing the 2025 total to $29.1 million as reflected on our cash flow statement. For the full year, $16.1 million and $12.9 million went towards SWA and East Texas, respectively.

Securing an attractive and comprehensive project finance package is a critical component of the final investment decision for SWA. The approximate $1.5 billion of base project CapEx per our DFS in addition to potential cost overrun facilities, reserve accounts, or other incremental capital requirements are expected to be financed by a combination of senior secured project debt, our $225 million grant from the DOE as well as respective funding contributions from Standard Lithium and Equinor. The joint venture is targeting approximately $1.1 billion total in senior secured limited recourse project debt supported by leading export credit agencies and commercial banks.

Last year, we conducted a market sounding of global commercial banks that are active in the project financing debt market. The response is included in indicative terms that were consistent with the expectations of the JV and validated certain assumptions regarding the cost, term, structure and conditions that are customary for project debt facilities of this nature. The commercial bank expressions of interest, combined with those of the exceeded our total targeted project debt. The remaining 55% pro rata equity contribution required by Standard Lithium will be supported by the proceeds from our recent equity raise. Any cost overrun facilities or reserve accounts over and above base project CapEx requirements remain subject to negotiation with the lenders with quantums to be determined.

I will now turn it back over to David for closing remarks.

Thanks, Salah. Standard Lithium continues to be extremely well positioned with a portfolio of high-quality and scalable assets. and as a domestic champion for securing critical minerals production in the United States. Our SWA project is well engineered, well defined, and we have an exciting and important year ahead of us as we approach a final investment decision. We delivered critical project milestones in the fourth quarter and to begin this year, and we intend to provide multiple updates in the coming weeks and months as we conclude our pre-FID work streams and push to approve FID at SWA before moving quickly to construction in 2026.

Thanks again for joining us today. Operator, I'll turn it back to you.

[Operator Instructions] Our first question comes from the line of Anthony Taglieri from Canaccord Genuity.

David and team. So just curious maybe on the offtake discussions and how those might have changed over the last 6 to 12 months. the rising price environment we've seen. Has it changed the number of parties and level of interest? Is there more caution given the price volatility? Have we seen changes to pricing mechanisms. Maybe some color there would be great.

Yes, great. Thanks for the question. I'll take this one. I would say -- the market clearly has evolved in a positive direction in the last 6 months. Lithium pricing has moved to levels that are more consistent with reinvestment support. As a result, I think it's fair to say there are more counterparties that have reemerged in as interested parties in discussions that are willing to enter into agreements with us that would be supportive of the financing that we're looking to put in place. So I would say the last 6 months has been a positive and has helped us move forward.

That said, as you'll note, these agreements have taken longer to put in place than we would have thought -- they're quite complex agreements need to survive through multiple cycles. They're multiyear agreements, multi-hundred million dollar agreements. So making sure that these transactions work for not just us, but our lenders, our shareholders and our partners is extremely important. So long story short, we're moving in the right direction. The market environment is supportive of what we're trying to do. And if anything, it's brought more potential counterparties to the table.

Great. That's helpful. Maybe just as a follow-up. So should we expect to see another offtake agreement, for example, prior to the financing concluding? Or would we expect sort of the next wave of offtake agreements sort of happen at the same time?

No. It's been our plan since day 1 to have over 80% of our volumes contracted prior to FID with multiple counterparties -- so I think you should expect to see some announcements with respect to 1 or 2 potential counterparties that will in the coming quarter that should be supportive of the financings we're looking to put in place.

Your next question comes from the line of Max Yerrill from BMO Capital Markets.

Just understanding that the project debt sounds like it's contingent upon finalizing the offtake agreements. Are there any clauses or caveats that the project debt lenders are looking for in those offtake contracts? And then maybe a follow-up is, is that 80% target an internal standard strategic decision? Or is that one that the project debt lenders are looking for?

Thanks, Max. What I'd say is the 80% is an internal target. But as a whole, what percentage we contract will be a function of the terms we have in place across a portfolio of different agreements.

So long story short, we're looking for take-or-pay contracts with creditworthy counterparties that as a portfolio provide sufficient price support that our lenders can get comfortable with the quantum of debt we're looking at putting in place. So it's really a portfolio approach. It is not any 1 specific deal has to meet certain specific terms.

Got it. That's helpful. And then are we still looking at a roughly 2-year construction period, and I assume that if all goes to plan this year, the bulk of the CapEx will still be 2027, 2028 for Phase 1?

Sure. Why don't I turn that one over to Andy.

Yes. So, thanks, Max. Yes, the construction period, I think we're guiding towards commercial production in '29. As we are concluding our discussions with the contracting counterparties. We're refining the construction schedule.

And importantly, the precommissioning, commissioning and start-up schedules as well max, so that we are kind of getting ourselves set up for success during the commissioning and startup process so that we can hit commercial operation to align well with the offtake contracts that David was just talking about. So it is a fully integrated process so that the -- not only the construction but the full commissioning and start-up period is fully aligned with the offtake contracts that we're negotiating and signing at the moment. So yes, we're looking towards commercial production, 2029, assuming FID and construction this year.

Your next question comes from the line of Theo Genzebu Great.

Thanks, everyone, I appreciate the color around the path towards FID -- but out of the things that you've disclosed in the press release, is there any 1 single gating item to FID that downs out amongst them that you would consider?

I'll go first and then Andy, maybe you can round it out. There are a number of different things, which we need to accomplish prior to FID. Andy already hit on EPC agreements finalization of the NEPA process, finalization of offtake agreement and then closing the project debt financing.

I would say that the more than likely, it is the offtake agreements that are the hardest to predict the exact timing of when they come in place and get finalized. But everything is -- we're working all these streams in parallel, but they all have to work with each other. I don't know, Andy, if you had anything else you wanted to say there.

I mean not really. I mean, Theo, there are several things, obviously, which are very tightly under our control, and we're moving those forward as quickly as possible. As we mentioned, we guided to concluding the NEPA process, that federal permitting process this Q2 period. Similarly, for the EPCM and the EPCC contracts, we obviously have a tight grip on those and getting those to conclusion. We've talked about the offtake process and sort of that is less under our immediate control to fully and tightly direct the time lines. But as I mentioned before, that's going extremely well.

And everything concludes with the debt piece at the final stage. So we have a full team. I think as we mentioned before, Theo, we've got a fully integrated team across the standard lithium and the Equinor partners, driving us towards an FID conclusion this year. And yes, we're excited to get this one into construction and moving it forward as quickly as we can.

Sure. Let me just add on that there is a healthy market for domestic lithium in the 2029 and beyond time frame. And we are -- and we remain in advanced commercial negotiations with multiple parties. And we're committed to providing you updates as time goes by on the progress we're making on these initiatives.

Great. And I guess just picking backing off of the off-taker conversation. Is there any specific sector of counterparties where we're seeing the most like constructive discussions or more, I guess, advanced discussions currently?

From day 1, we're always looking at multiple counterparties across trading house battery manufacturers and auto OEMs, and we remain in discussions with all 3 of those. We didn't want to put all our eggs in 1 basket. We wanted a diverse portfolio of customers, and that's still what we're heading towards.

Got you. Okay. And then maybe just last one for me. Just on the ATM program, how do you think about that, I guess, usage from here? I assume it still remains truly opportunistic -- or could it be used more actively if the stock stays supportive ahead of FID?

And I turn that one to you, Salah?

Thanks, David. Yes. So what I would say there is that we do have approximately $25.5 million left in our current ATM program. We plan to use that going forward prudently in a paced way. It is one of the tools that we can use to fund our expansion in East Texas as well as fund a portion of our needs at Southwest Arkansas, especially pre-FID. And it helps to cover corporate overhead expenses as we go along.

So I think the ATM will continue to be used as a prudent tool, but it will not be most likely used in a way that it will be our primary source of funding our projects in the future.

Your next question comes from the line of Joseph Reagor from ROTH Capital Partners.

And one follow-up and then one other different questions. So on -- you talked a lot about FID already, but is there any opportunity given that you've got a decent balance sheet right now to get started on any early earth work stuff in order to maybe even push up the time line to price reduction? Or -- is there permitting stuff and other things going on that prevent you from really getting started or the capital has just done enough anything like that?

Great question. Andy...

Yes. I'll pick up initially and hand it back. Thanks, Joe. Yes, look, I mean, we've got a construction schedule, which is being integrated right now. with both of our key contracting parties. Like I said, we've got the EPCM and the PCC. We were finding the schedule to try and optimize it as best as we can.

I think the biggest time saving, what we're focused on right now, Joe, we're not genuinely constrained by earthmoving Earthworks kind of enabling works type activities, really kind of what's on the critical path for us is honestly additional engineering early vendor outreach procurement type activities.

Those are the things, and that's really the focus of why we're going to be issuing a limited notice to proceed to the main contracting team so that we can kind of maintain that construction schedule by doing that early stage kind of more kind of the EP parts of the various packages to keep the schedule moving along. That's really where our focus is rather than earthworks because the amount of earthworks that we have are relatively minimal and don't sit on the critical path of the construction schedule.

Okay. That's helpful. And then I don't think anybody touch on it. yes. So with the LANXESS write-off, -- should we look at that as the company focusing on the JV specular lithium JV and just simply the grade is higher in all of those areas. So there's no logical reason to return to the LANXESS project? Or is there anything else to read into that?

No, Joe, I think you nailed it. This is all about prioritizing, focusing and executing and prioritizing where we have the best grade. So our future is Southwest Arkansas and then growing into East Texas. I don't know, Andy, if you want to comment on the quarter..

Yes. No, I mean, you're exactly right. And Joe, like our future, we want to build bigger projects. That's this first one the 22,500 at Southwest Arkansas Phase 1, it's the right-sized project for us in the JV to build the first one. But really, the true scale comes in East Texas, where we can build some really pretty sizable projects given the extent of the resource, the grade the grade of the resource and then our continued understanding as we move through engineering and construction of this first one making the subsequent projects, larger, cheaper to build, et cetera. So we're looking to grow out into the much larger project portfolio in East Texas where we can see some really substantial scale.

Your next question comes from the line of Noel Parks from Tuohy Brothers Investment Research.

Just had a few. In the discussion of expenses before, it was mentioned that sort of process refinement and testing was a component of the expense growth. And I was just wondering, that sort of work, is that more or less unique to Southwest Arkansas? Or is that something that once it's accomplished and you need to turn more towards East Texas that it will be roughly replicable so that's work that will be more or less done onetime only essentially.

Andy, do you want to take that one?

Yes, sure. Yes, I mean, look, these are direct project learnings that can be applied across the whole portfolio of project. We're in this unique situation that we have the demo plant running now and Solar mentioned, it's 6 years now, that's been operating, but that's now certainly one of the largest fully continuous DLE demo plants in North America, we continue to get just excellent data out of that plant.

We continue -- so not only do we get process learnings, optimizations in terms of how we can make the process easier to run, potentially cheaper to build. But right now, that plant also forms a really crucial function as we effectively are developing the core team of operators who during that commissioning process that I talked about a little earlier on, they will be taking over eventually from the commissioning team from the contractor side and running the plant.

And so the demo plant continues to be this truly unique sort of training tool to get the core team of operators fully used to processing Smackover brine into battery-quality lithium carbonate material -- that's what we do every day at the demo plant, and it's truly a unique opportunity. We see the industry in general has struggled, I think, a little bit with commissioning and start-up activities on many projects across many different asset and processing types because what we do at the demo plant is such an excellent kind of mini corollary of what we do at the first commercial plant, it really is this kind of a unique -- this unique training tool.

So yes, we continue to be pretty comfortable kind of incurring expenses there because it's going to pay off sort of large scale over the next sequence of projects.

Great. And I mean, just directionally, do you have a sense of sort of over the next few years where you might sort of peak and then flat out as far as the export category?

I can let -- Salah can talk about actual cost. I think we intend to keep that demo plant running for kind of the foreseeable future, Noel. Until the point that team members are fully transferred. It served its purpose. And then there may be some other application for it elsewhere at some point in the future, but that's not been determined to date really is intended to be kept running for certainly the foreseeable future to be this critical training tool to allow us to move into a smooth commissioning and ramp up as we can expect to achieve.

Got it. And any thoughts on sort of the cost would be great?

No, happy to opine on that, Noel. So I would expect that in the future, our demo plan expenses will be very consistent with the expenses that you saw come through during the fourth quarter of this past year.

Great. Okay. That's definitely helpful. And I guess a pump only other one was maybe just again, thinking about East Texas, can you just sort of maybe characterize where you are in the process of the required drilling to gather data in East Texas, I'm assuming that still the focus is very much on delineation. And so just kind of wondered maybe what inning you think you are for establishing, I guess, the baseline for, say, a PFS going forward?

Andy, why don't you take that?

Yes, sure. Yes. So we've got several project areas in East Texas, Noel. The only one which is sort of public, if you like, is the Franklin project, which is sort of centered on Franklin County. So that's the best defined project within our portfolio of projects in East Texas to date, and it's the one that we issued a maiden inferred resource on.

So that particular project, the Franklin project, where we are right now is we've been engaging in well reentry work. for the last quarter or so, actually 2 quarters now in all gaining a different reservoir data, resampling the wells, retesting and starting to get a much more complete understanding of the subsurface.

At the same time, we have been doing some additional process testing work on the East Texas brands. That work will continue, certainly for the next quarter or 2. There is some additional drilling planned within the Franklin project area. -- that's currently targeted to be later on this year. And we're going to be integrating both that additional process testing work with additional subsurface exploration work and delineation along with quite a lot of additional leasing in the Franklin project area with a view to producing kind of the first economic study, so a PFS. I think that we're guiding within the next 12 months, we wanted to be as soon as it's feasible, Noel.

We think it's going to be a very important report for kind of the investors in standard to truly get a sense of the real value that's present within our East Texas portfolio, a number is only one of the projects. But there's a lot of huge unrealized value in our existing portfolio that we really want to kind of get that out and show it to the market.

Great. And actually, you mentioned leasing. Are there any new entrants on the scene in East Texas?

I think we see more or less the same suite of other companies working in the Texas area. No, we've not seen anything change substantially in the last sort of 3, 6 months, basically. So I would say leasing activity in general is moving along at a brisk pace. There is competition within the area. But it's maintaining, I would say, it's fairly stable as we're seeing it currently.

Your next question and final question comes from the line of Eric Boyes from Evercore.

And just one for me. Can you speak to where you may be seeing any inflationary pressures for Southwest Arkansas CapEx items and how you're going about mitigating those?

Andy, that one is for you as well.

You should be taking -- Eric, yes, look, the FEED study is obviously pretty fresh still. And we feel pretty comfortable with where the vendor pricing kind of is relative to what we integrated into that FEED study as we conclude the EPCC and the EPCM contracts, obviously, we have allowed for some price growth and inflationary effects in the final contract amounts.

So you will see some of that when those are finally announced. But because we did a very wide and extensive vendor outreach over a very conservative set of kind of engineering assumptions when we did the FEED work. We're not seeing a lot of actual real price growth in the key vendor packages to date.

At this time, there are no further questions. This concludes today's call. Thank you for attending, and you may now disconnect.

For our next fireside chat, we have the pleasure of hosting a lithium panel with Lithium Royalty Corp. CEO, Ernie Ortiz; and Standard Lithium's CEO, David Park.

So just a brief background. Lithium Royalty Corp. looks to invest in the battery materials space with a focus on lithium companies. Now has 37 royalties in its portfolio. It's had its IPO back in March 2023 and now has, I believe, 4 cash-flowing royalties. And Ernie was previously an investment analyst at a hedge fund in Greenwich, Connecticut, a Senior Associate at Credit Suisse in New York as part of chemicals team, where he led the bank's primer on lithium in 2014.

Briefly on Standard Lithium, near commercial lithium company focused on the sustainable development of a portfolio of high-grade lithium-ion properties in the U.S. and in partnership with Equinor, the company is advancing its Southwest Arkansas project and prospects in East Texas. So David joined Standard Lithium last year. He's been working closely as a senior adviser to the company. It was critical in securing the partnership with Equinor. He brings decades of energy and industrial experience from his time at various Koch entities, most recently the President of KSP. So maybe I'll just leave it to you guys just to give any further introduction to the company and what it is that you do?

Sure. So by way of background, for Lithium Royalty Corp, we started Lithium Royalty Corp. in 2018 as a private enterprise. We raised $50 million through a private vehicle. Our first royalty was actually over the Mt. Cattlin project that was operated by Galaxy at the time. And now it's owned by Rio Tinto.

We then IPO-ed, as Patrick said, in 2023. We raised $150 million of capital. It was actually the only IPO on the TSX that year. It was good times and the bad times in the sense that we got the IPO done, we got the growth capital to continue to foster our strategy for growth. But as you've seen, it's been a downturn since early 2023. In fact, fourth quarter of this year is probably going to be the first year -- our first quarter of year-over-year pricing growth. So we're looking forward to tailwinds going forward.

As Patrick mentioned, we now have 37 royalties diversified globally. Our key projects in operation right now are Sigma Lithium in Brazil, the largest hard rock producer in the Americas. We also have Zijin Mining's Tres Quebradas project, which is in Argentina and that started production in the third quarter of this year and aiming to ramp up further in 2026, and other ones will also be Ganfeng Lithium's Mariana project in Salta, Argentina. And we are actively looking at additional opportunities. We have a healthy balance sheet, no debt, $27.5 million in cash.

Great. So I'm David Park, CEO of Standard Lithium. Standard was formed in 2017 by Andy Robinson and Robert Mintak to develop a resource, a portfolio of projects throughout the Smackover basin in Southern Arkansas and East Texas. We have a large land base around the region. We're a first-mover in the area, and we're able to secure attractive land packages we continue to build on. I became familiar with the story approximately 4.5 years ago when I was running an investment group for Koch Industries, and we made $100 million investment in Standard Lithium. That investment helped Standard work closely with Koch to build a demonstration unit in Southern Arkansas, and for the last 4-plus years, have worked to derisk and optimize our direct lithium extraction technology.

Where we are now is, we're working to develop a 22,500-tonne lithium carbonate project, the Southwest Arkansas project together with our partner, Equinor. It is a $1.5 billion project approximately. We see that being funded with approximately $1 billion worth of nonrecourse project financing from export credit agencies. Our partner, Equinor, has a very strong balance sheet as well as a lot of capability. They have the ability to fund their portion of the project. And we -- I forgot to mention, we're the recipients of the $225 million grant from the U.S. Department of Energy that has survived a series of reviews, and we're out the back end of that successfully.

From a financing perspective, about a month ago, we raised $130 million of equity to fund our portion of the project. So we are continuing to advance towards construction in 2026 and looking to produce in 2028. That would be our first project. And then we see ourselves with a portfolio of projects we have to be able to expand over the next 10 years and potentially get to approximately 150,000 tonnes per year of production from the Smackover basin.

Great. And maybe just starting off high-level, broader industry demand question is pretty topical. We're seeing companies like Ganfeng calling out pretty robust demand growth next year. Citi -- our own Citi research estimates are calling for 30% battery demand growth in 2026 with ESS driving a large share of that. So from your perspective, maybe I'll start with Ernie, what's your base case scenario for 2026 lithium demand? And what are the key indicators investors can look forward to gauge demand health?

Sure. So I think our base case is 25% demand growth for lithium for next year, but we think there's a very healthy possibility of 30% plus. So we'll have to see how the monthly data shapes up for both EVs and energy storage. Key indicators that we track across the cycle, and they're very -- they're pointing to very bullish demand trends going to '26 are electrolyte prices and the seasonality for the first quarter. So electrolyte kind of the liquid, what's cathode and the anode, that. LiPF6 prices have doubled in the last 3 months. We saw a similar situation back in 2020, 2021, which led to a very bullish cycle for the lithium price.

Other key things that we look at is seasonality between the fourth quarter to the first quarter. Typically, EV sales decline by 25%, more or less, fourth quarter to first quarter. It is very seasonal EV demand trends with promotions and end of subsidies and the like that make that big, pronounced impact. But this coming quarter for the first quarter, we're seeing battery companies guiding to maybe down [ 5% ] to maybe even flat, which is something that we last saw in 2021, which then led to the bigger price run in '21 and '22. So you're seeing further down the chain, very bullish demand trends that speak to the underlying health of the demand. And of course, this is all being led by energy storage.

And then more on an end market basis. We think energy storage is probably going to make up around 27% of the overall industry by the end of this year. So the forecast that we've seen is a growth of anywhere from 50% to 70%. Then you're talking about mid-teens to high teens growth for lithium overall. And that's just -- that's only from energy storage. Keep in mind, I think consensus supply growth for next year is 20%. So once you add in the EV component, you're likely looking at a deficit going into 2026. That's just -- is kind of base case 25% demand growth, but we think 2026 is going to be -- is shaping up to be a very solid year and probably tightening of the supply-demand balance very considerably.

Got it. And then maybe just a follow-up on ESS demand and sort of clicking down there. Like what are some of the proof points that you're seeing here in the U.S.? Why is that so critical to energy security, data security? What are these structural demand drivers going to be?

Sure. So we are seeing -- one of the beautiful things about energy storage is that it's more diversified than, say, EVs. EVs, call it, 70% of global demand more or less is from China, whereas for energy storage, it's a lot more diversified.

So in the U.S., we're seeing the growth really being led by AI and data center build-out. You guys likely have seen, but NVIDIA put out a white paper about a month or so ago saying that for data centers, you really need battery storage to be part of the solution because of batteries, you can better optimize the unit so that it doesn't impact the overall data centers from potential differences in voltages and power mechanics for the unit. And actually, we were just at the Arkansas Lithium Summit and the head of Google's Power division was there. It's the first I've seen big tech at a lithium conference, and they mentioned how for their data centers, they're essentially using battery storage and particularly LFP because it's scalable and ready to be deployed today.

Other things that you're seeing beyond the U.S., in Europe, you've had incredible deployment of renewables that now they're actually adding a lot of energy storage to try to catch up to their renewable usage. You guys probably saw an article, I think, came out this week where, in some cases, they're actually turning off some of the windmills in some of the plants because they have too much power. So they're actually deploying energy storage to catch up to the investments they've already had in the upstream side of the power business.

And of course, the Middle East has an abundance of solar power and Vision 2030 is a key hallmark for Saudi Arabia. So they're using energy storage as a way to promote that growth. So very diversified, very global. Each region has different kind of demand dynamics, but they're all growing incredibly quickly.

That's very helpful. And then David, maybe just -- we've heard a lot of voices in the industry talk about the U.S. being more than a decade behind China in terms of the battery supply chain. So can you just -- what do you think is needed to catch up or perhaps just close the gap? And where does Standard and Arkansas fit into that picture?

Yes, I would say the U.S. government recognizes that they have a problem, that we have a problem that they are decades behind China in building out not just upstream, but the midstream and the downstream battery supply chain. I can tell you that there is a recognition of a problem from the White House, from Department of Commerce, from Department of Energy, from Department of Defense and even the Treasury now.

I do believe there -- while there's a recognition of a problem, they may have -- they're under resourced to deal with the issue. And the biggest resource that they're missing is qualified people to evaluate their investment decisions. They have hundreds of things they're trying to advance and move forward. They're just struggling to get through. So what is really needed is not just a chasing of headlines and announcements, but a sustained investment to address the root cause of the problem.

And I guess just related to that, like it's obviously been in the headlines, you've even seen equity investments at this point like -- I mean, is there anything else that needs to be done, whether it's on the funding side or even perhaps accelerating the permitting side and what may or may not -- or what has this or has this not meant for your company at this point?

Yes. So first, I'll say, permitting needs to be addressed. Fortunately, for us, it's not a big issue. Our projects are on private lands, and we would not have to go through any federal review process, if it was not for taking the DOE grant. That said, we were FAST-41. We were put on a FAST-41 program to expedite, prioritize critical minerals projects. We are under a federal review, but we expect that to round up, run its course successfully by year-end. So that would be about a 9-month process. So I don't think that's an issue at least for us. But overall, if you're hard rock mining, open pit mining public lands in the west, it's a real problem, and it needs to be dealt with.

As far as tools they have at their disposal. Commerce just finished a Section 232 investigation into China is manipulating the markets. We're told that report is on the President's desk. We know the House Committee on China just had a report -- they just published a report on China manipulating critical minerals pricing. A couple of weeks ago, a number of critical minerals executives, including Jon Evans from Lithium Americas, were testifying in D.C.

There is a common understanding that there has been, I'll just say, dumping that has been happening in order to make sure projects are not developed in the Western Hemisphere. And now there is a whole portfolio. Someone at Commerce said they have 15 different tools to deal with it. I don't know what all 15 are. But I can tell you, they're talking about price support. They're talking about investments. They're talking about tariffs. There's a number of different mechanisms at this point in time. And there's even an initiative underway that would be not unilateral approach, but it would be multilateral with some of our allies as well.

That's a good segue. I guess, Ernie, I guess, within the current portfolio, there's not a high concentration of royalties or assets in the U.S. But maybe for those which may or may not have trade agreements, like how do you see this U.S. government involvement or potential actions affecting the current portfolio? And does it change the calculus at all on how you approach acquisitions in the pipeline?

Sure. That's a good question. So we have three assets today in the U.S., mostly in the west. I think with the reinvigoration and the energy and the promotion of domestic supply here in the U.S., we're probably looking at more U.S. assets than we have in the past. But like you said, a lot of our royalties are in allied countries. So by royalty count, we have a major presence in Canada, particularly in Quebec. So we think that could be a very strong source of supply for the U.S. We also have royalties in Australia and Brazil, that could also be very important to feed the domestic supply chain.

So I think there's -- the demand growth is still so robust that there's going to be a need for lots of sources of supply. I think we're well positioned to capture not just U.S. growth, but global growth. And we are looking at potentially investing further in the U.S. given the more pro-business and pro-mining type attitude that we've seen in the last few years or so.

Got it. And then I guess just maybe a question for both of you. I mean this has also been a source of funding or derisking at this point, but large consolidation in the industry. You have largest lithium companies who struggle to bring projects on time or on budget. Now those same companies have gone through pretty extensive CapEx cutting cycles when you could argue countercyclical investment is more prudent at this point. So I mean, are we just at the beginning of large global oil majors, mining majors getting involved here? And then maybe additionally, what that has meant for both of your companies?

Sure, I'll take it first. Our 45% partner, Equinor is a top 10 global energy company. They are -- they have a very strong balance sheet, but they also build and operate global energy projects around the world. So -- and they're very hands on. They're a 45% partner, but they've seconded over 20 people to our project team, very integrated in everything we're doing. So that's an example of one major, very active.

Our neighbors in Southern Arkansas and in East Texas, adjacent lands, Exxon, Chevron, OXY, they're all there. They're all advancing. We've been -- Exxon came in about 2 years ago. We've been there 7 or so. They all have very strong balance sheets. They all have very good engineers. They all have very smart people. They will figure it out, but they haven't selected their technology. They haven't demonstrated technology. They're still building out their land bases. They have aggressive plans. I think they'll be successful eventually. But right now, I think they're watching in this period and positioning themselves to be fast followers or potentially acquirers down the road.

Yes. I would agree. I think you've seen some great moves by likes of Equinor, by Exxon, but those have probably been the most advanced. The rest of the projects are probably 2030 and beyond, when probably the market needs additional sources of supply. I would say probably the energy companies have been more visionary than perhaps the mining companies, because in mining, probably outside of Rio, we haven't really seen any major investments from any major mining companies. And especially with Rio Tinto's Capital Markets Day tomorrow, it's going to be interesting to see how they stage their lithium investment. So that's going to be interesting for mining, the supply growth.

But we do see bigger players entering the industry, I guess, in the last cycle, we did see CATL, I guess, moving further downstream with their lepidolite mine. So I wouldn't be surprised to see maybe some of the battery companies themselves is also trying to get more involved. Gotion, another battery company in China, also has domestic sources of supply in China. So I think that level of involvement is also not out of the question, and a lot of them are -- have been able to tap the capital markets in Hong Kong and have a lot of money to deploy.

I'll also mention in May of this year, we were in China, we met with battery companies, converters. And even sort of at the lows in pricing, everyone wanted product for '26, '27 and '28. So I wouldn't rule out kind of downstream investment into the upstream.

Yes. I'll also just add, none of this is very surprising. This is large public companies managing their quarters in cyclical commodity businesses. You've seen this movie before, across commodities and across different periods of time. Things get rough, people start cutting cost, they start laying off people, they start deferring projects and then pricing whips back and then they try and rehire people, and you've seen the movie before.

Yes. And David, I guess, maybe just pivoting to Standard more specifically, you've had some exciting developments recently. So maybe just give us a quick recap of the Southwest Arkansas project, sort of milestones that are coming up? And I know it's early stages, but if you could touch on Franklin project as well.

Sure. I'll go back in time a little bit. So in 2025 alone, Andy Robinson and the project team have done just a fantastic job of finalizing front-end engineering and design, and wrapping up our Definitive feasibility study this summer. Then we work very closely with the state of Arkansas to get through their unitization process, which is really a force pooling process, put in place a royalty regime that would work for us and just tick off all the things we needed to do from an Arkansas regulatory perspective. So we kind of hopped through the engineering work, the feasibility study work and the Arkansas regulatory.

We are looking forward from a Southwest Arkansas project, we are -- we've been working for last 9 months or so with an adviser to help us put in place our offtake agreements and our debt project financing. We are in very short order going to be able to announce, are putting together our letters of intent for our debt financing package. So that looks very good. I was hoping to be able to say something today, I can't, but we're close.

Though those agreements will be -- need to be supported by long-term take-or-pay agreements from off-takers. We've been involved in a dialogue with a large group of off-takers over the last year. We believe we're going to be in a position to make some positive announcements on that side, in the coming weeks as well. So there's a lot of balls in the air. And then our finalization of the NEPA process hopefully by year end. So those are upcoming milestones getting us to construction in '26 and production in '28.

As far as our Franklin project, so at the same time, we're moving Southwest Arkansas forward, Franklin is -- will be our first project in East Texas. We have a very good resource in Southern Arkansas. The resource in East Texas is larger and higher quality in terms of lithium concentrations. We believe our best projects that get built will actually be our portfolio of products in Texas. Arkansas had first-mover advantage for a number of reasons, some of it regulatory environment and some of -- it was the first land position we had.

But the way we're looking at it now from a development time line, we see ourselves having 22,500 tonnes of production from Southern Arkansas in '28 and then we start layering on in every 2 or 3 years, additional projects from there. East Texas, we believe there's three or four large projects there. So our plan would be by 2035 to try and build out about 150,000 tonnes of lithium production there with each project successfully having better economics.

Great. And maybe just as you move towards commercial scale DLE deployment in North America and get some government support here, are you seeing a shift in the investor perception on DLE? I mean, maybe this is a question for both of you. And technology was described as unproven, I think there was a lot of noise out there in both directions, like how have you seen the perception shift?

Yes. First, I'll say huge shift in investor interest in lithium overall. So we went through a period of time, first quarter of 2025, where it was hard to get an investor meeting. You -- the small cap, mid-cap prospective lithium developer, no one was interested in hearing the story. That started picking up in the June time frame and has been -- through the fall has -- there have been robust series of discussions that have happened. So lithium itself is in favor, and we're getting quality meetings with quality names, and we were able to do a financing and I'd say, opportunistic financing on the heels of a non-deal road show based off the interest we had about a month ago.

The DLE side of things, I think the fact that Standard has been operating an industrial scale demonstration facility for 5 years has helped. I think the fact that we are running a commercial scale column, the exact same size we're going to build out when we build our facility has helped materially. I think the fact that we've survived diligence from Koch Industries, from Equinor, from the Department of Energy has helped. And then with export credit agencies, we have now gone through the lender-technical adviser diligence process and got out the back end of that successfully as well. So is there some novelty or newness to what we're doing? Absolutely. But we've derisked it as far as we possibly can, and it's time to build it.

That's great. And maybe, Ernie, just like how you think about participating in assets that aren't sort of in your core, which has typically been hard rock?

Sure. So I think we are open to DLE, I think for us it's much more asset-specific as opposed to just investing for the technology. But I would agree with David that I think there has been an evolution towards DLEs, especially with China now having many projects that are successful. Now we're seeing the ramp-up of Eramet, the Centenario project in Argentina. So that will be one to track to see how the DLE there is progressing.

I think also one of the benefits of probably Eramet and Standard is that they're starting with good grades to begin with. So applying the technology is probably a lot easier than perhaps some of the -- there's other companies that have much lower grades that we think might be tougher. And that's not necessarily just because of DLE, just because it's a much lower quality project to begin with. But we are open to it.

I think -- at current stages, we're prioritizing assets that are more advanced or near-term cash flow as far as deploying our dollars for additional royalty investments. So by design, that doesn't lead to, I guess, a lot of DLE opportunities that we're evaluating. But as those projects derisk and get closer to commercial production, they will be a larger size of our pipeline.

If I could just add because you raised a good point. DLE is not going to be successful everywhere. There are a lot of companies and a lot of projects proposed that are looking to develop what I would consider low-quality resources with technologies that may not be that proven. The two most important things to look at when considering a direct lithium extraction project, are what is the lithium concentration and then what percentage of that lithium are you getting out from your extraction process.

We know from our demonstration facility that we're running at the back end of a Lanxess facility that the economics of developing 200 parts per million or milligrams per liter project are not robust. The capital intensity, just kills you. You need to be looking at projects with lithium concentrations north of 400. So 400 to 600 parts per million is where our Southwest Arkansas project is. East Texas, we're seeing 600 to 800 parts per million. So really, it all starts with the quality of the resource, like every mining or any oil and gas operation. DLE is not a magic bullet that just works anywhere.

Got it. That's great. And I want to pivot just a little bit back to sort of pricing trends both near term and then sort of long-term sort of commercial offtake discussions. But maybe, Ernie, for you. I think you talked a little bit about inventory levels. I think what surprised us this year is that maybe the demand was understated, the sort of elasticity of supply to respond to prices was maybe overstated and that's what we've seen. Price has start to recover, but how does that take shape into the early part of 2026?

Sure. So there's very few new greenfields coming online in 2026. Probably at the earliest you could see some greenfields maybe in the fourth quarter of 2026, but that's kind of at the absolute earliest. So you really -- and the restarts that are potentially, say, with Bald Hill, or other assets in Australia, those probably also come in, in 2027.

So we think 2026, just given the supply constraints and the positive demand dynamics, could have a very robust pricing year. In the last two prior upturns we've seen pricing growth of 3.5x and over 10x. And if you look at it from the trough to the peak, so that would imply anywhere from $2,000 to $6,000 a tonne as far as peak pricing. That's a very big range. So it's hard to see, I guess, such a big range where it ultimately goes, but I would suggest '26 is going to be a very strong year for pricing and then '27, perhaps it moderates as those new entrants or the restarts occur, but it will still be at healthier levels than we were in the last 2 years, and it will probably be -- lead to very successful outcomes for growth, both Standard and LRC.

That's helpful. And David, maybe just on medium-term or long-term price or however you want to frame it, just what you -- what sort of do you think incentive levels need to be to fulfill all this incremental demand? And then like how do you think about the competitiveness of your asset throughout what is likely to be many different cycles?

Sure. So we are in active dialogue with a number of players looking to procure lithium in the 2028 and beyond time frame. There is a common recognition across lithium consumers that they need to play their role to bring lithium on. They know that current pricing is not sustainable. They know that they will need to play a role in providing floor price support and providing take-or-pay obligations to help support the debt portion.

Long term, I would say, I believe lithium pricing needs to be north of $18,000 a tonne to probably closer to $20,000 a tonne to see lithium projects being developed to hit that demand situation. Right now, as far as the market participants that are looking to sign long-term offtake agreements. And I'll be candid. EVs are still licking their wounds, right? They're licking their wounds from the investments they've made in the past period of time. So they're the most gun-shy portion of the market now. Even though their procurement groups know they need the lithium to come on in 2028 and beyond. Their financial teams and executive suites are really making it difficult for them to enter into those agreements at this point in time.

Global trading houses are very aggressive right now. Battery manufacturers are more aggressive right now as well. They are all seeing the energy storage or BESS segment of the market growing, data center-driven grid stability side of things. And I think that's where you're seeing strongest sentiment and demand pull right now.

And I guess just a follow-up there. I mean, like we've seen some unique structures, like is anything starting to materialize in terms of prepays or anything close to sort of the fixed cost. The fixed price contracts of old? Or is there anything that you...

Yes, so I'd say it's -- for a resource developer, it's an interesting balance where we're -- we want to support the debt, but we don't want to kill the equity story. And so there is a willingness to enter into floor pricing discussions, but the art is setting the floors at a level that doesn't cause a ceiling to be put in place at a level that kills your upside. So there's price discovery that's underway, is the best way I can describe it.

I missed something in your first question -- in your last question, I mean, which is our cost structure, we're -- first quartile cost structure, we're under $6,000 a tonne with sustaining capital and royalties and everything thrown in there. We can -- we're a long-life asset, 20-plus year reserve life. We can survive and prosper in volatile markets. We just need to get it built.

Awesome. Well, we're almost at time there, so we'll leave it there. So please join me in thanking David and Ernie.

Great. Thank you.

Ladies and gentlemen, thank you for joining us, and welcome to the Standard Lithium's Fiscal Third Quarter 2025 Earnings Call. [Operator Instructions]

I will now hand the conference over to Daniel Rosen, Vice President of Investor Relations and Strategy for Standard Lithium. Daniel, please go ahead.

Thank you, and welcome, everyone. I'm joined today by David Park, our CEO and Director; Andy Robinson, President, COO and Director; Salah Gamoudi, Chief Financial Officer; 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 today, including any related to company performance, expectations 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.

I will now turn the call over to David.

Thanks, Dan. And I appreciate everyone for joining us today. We had a very busy and productive third quarter as we successfully executed on multiple key milestones that we had set out to achieve.

We completed a Definitive Feasibility Study for our South West Arkansas Project, highlighting both the attractiveness and cost competitiveness of our first commercial project being developed alongside our Smackover Lithium JV partner, Equinor. The SWA project is expected to have initial production capacity of 22,500 tonnes per annum of battery-quality lithium carbonate, producing 447,000 LCE tonnes of proven reserves over its model 20-year operating life or 38% on of the 1.2 million measured and indicated resource.

Average lithium concentrations in brine are expected to begin at 549 milligrams per liter and produce at an average lithium concentration of 481 milligrams per liter over the period, demonstrating what we believe to be very small declines in lithium concentration and result in production over the projected operating life.

The DFS is highlighted by a 20.2% unlevered pretax IRR with competitive average operating cost of about $4,500 per tonne, all-in cost of approximately $5,900 per tonne over the operating life an all-in Class III CapEx estimate of $1.45 billion, which includes a 12.3% contingency. The project is well engineered, defined and ready to progress to a final investment decision following a few remaining milestones that we will discuss. Construction is expected to commence in 2026, shortly after reaching FID with first production targeted in 2028.

We also released a maiden inferred resource report for our Franklin project in East Texas. This report for Smackover Lithium's first of 3 planned projects in East Texas region of the Smackover highlights the size and quality of its brine position with some of the highest reported lithium in brine grades in all of North America. It includes 2.2 million tonnes LCE of lithium at an average grade of 668 milligrams per liter as well as 15.4 million tonnes of potash, a newly added mineral to the USGS 2025 draft critical mineral list and 2.6 million tonnes of bromine. It provides a strong foundation for future scalable production, and it marks a key step toward the ultimate goal of reaching production of over 100,000 tonnes of lithium chemicals per year in Texas through multiple projects.

As we've said, Standard Lithium is more than a single project company. We believe East Texas to be a meaningfully underappreciated part of our portfolio, and we expect this report to be a key step towards achieving more appropriate recognition for this world-class asset.

Following third quarter close, in October, we closed an underwritten public offering of 29.9 million common shares at a price of $4.35 per share for gross proceeds of approximately $130 million. We received strong support from institutional investors, highlighted by an oversubscribed order book and our ability to upsize the transaction by $10 million, which underscores the confidence in our strategy and the quality of our assets. This fundraise was an important milestone for the company and a key derisking step that will put us in a strong position to reach FID at SWA.

Lastly, we expanded our leadership team with the appointment of Michael Lutgring as General Counsel. This addition to the leadership team is critical as we strengthen our capabilities, bring further expertise in-house and continue our growth and development as a company.

To provide more detail on key project-related developments and deliverables ahead, I'll pass it over to Andy.

Thanks, David. The release of 2 technical reports since our last earnings call is a tremendous achievement and a testament to the hard work and dedication of our joint venture project teams over the last few years.

For the Franklin project and East Texas more broadly, we intend to continue to improve the definition of our resource positions through additional drilling and process test work in the coming quarters. Our general goals for 2026 are to move towards a preliminary feasibility study for the Franklin project and demonstrate the project economics, that world-class resource, work on maiden inferred resource reports for our other potential projects in the area and to continue to expand our leasehold footprint in East Texas. However, my comments today will be more focused on the SWA project.

We have successfully completed a number of critical milestones that we set out to achieve as we push closer to reaching FID. This includes completion of the final regulatory approval required from the Arkansas Oil and Gas Commission, which we obtained about 2 weeks ago. We received unanimous approval for our integration application for the Reynolds Brine Unit where the initial commercial phase of the SWA project is planned to be developed. Integration is the formal process, which combines any remaining nonleased mineral interests into an approved brine production unit and is a key derisking step for any future production from that unit.

Looking forward, the key remaining milestones between here and FID relate to environmental, construction, funding and commercial items. On environmental, as required by our $225 million grant from the DOE, we continue to work closely with the DOE on completion of an environmental assessment for the project. The assessment has been drafted and submitted for a review with our designation as a FAST-41 transparency project under the federal permitting dashboard. We expect to be in a public comment period later this month, and the overall estimated completion date is currently around year-end.

With respect to construction, we are in the final stages of selection and contracting with an EPC who will lead the building of our central processing facility as well as a separate EPCM contractor who will lead the development of our well field. We intend to have these finalized prior to year-end.

Turning to the ongoing dual-track project financing and customer offtake processes, we've made significant progress in advancing these negotiations alongside our experienced financial advisers. We look forward to being able to provide an update in short order on the leading potential debt financiers that have expressed support for our project and providing confidence in our ability to secure the approximately $1 billion in debt that we are targeting to build the project.

Additionally, we have allocated a material portion of our projected annual production volumes to parties where customer offtake is steadily progressing towards binding contracts. We expect to have many of these key deliverables squared away before year-end with a formal FID in early 2026. A parallel execution of multiple work streams means that we are aiming to start construction very shortly after FID with the goal of first production in the second half of 2028.

Now I'll turn it over to Salah to discuss our financial results.

Thank you, Andy. To begin, I want to clarify that all numerical financial references that I will be making are in U.S. dollars. For the third quarter ended September 30, 2025, we reported a net loss of $6.1 million as compared to a loss of $4.8 million during the quarter ended September 30, 2024. For the quarter, as compared to the quarter ended September 30, 2024, G&A increased by $0.3 million, driven primarily by increases in employee-related expenses associated with expanding our team as we continue to mature and transition from early-stage project development and derisking activities towards construction and eventual production.

Share-based compensation expense increased by $0.9 million period-over-period, reflecting our increased focus on structuring incentive plans to more closely align employee compensation with share performance and value creation. Below operating expenses on the income statement, we recorded a higher investment loss from joint ventures of $0.9 million for the quarter versus $0.4 million in the prior period. This increase reflects expanded operational activity at the Smackover Lithium JV level and related expenses in 2025 as we advanced towards the release of our 2 technical reports.

We also recorded a $0.5 million gain on the fair value of our contingent FID payments to be received by Standard Lithium from our JV partner, Equinor, should we reach a positive FID at our SWA and/or East Texas projects. As we continue to achieve milestones and approach target FID decision dates, the value of our contingent FID payment assets have increased as reflected by the gain.

Moving on to our balance sheet. We ended the quarter with strong cash and working capital positions of $32.1 million and $29 million, respectively. This cash position does not include the follow-on offering we completed in October, which generated net proceeds of $122.2 million. As a reminder, the sole funding requirements by Equinor into the JVs as part of the original agreement were exhausted during the second quarter of this year with Standard Lithium and Equinor now making their own respective capital contributions based on a 55%-45% ownership split. As a result, Standard Lithium made JV capital contributions of approximately $11.2 million during the third quarter, bringing the total year-to-date up to $19.5 million as reflected on our cash flow statement. Despite this contribution, through active cost management, cost sharing, cost recoveries through our DOE grant receipts and liquidity provided through prudent use of our ATM program, we were able to maintain our cash position during the quarter.

This was further bolstered by the follow-on offering last month, which helps support our expected equity contribution into the SWA project at FID and continuing to progress development work in East Texas.

Securing an attractive and comprehensive project financing package is a critical component of the final investment decision for SWA. The $1.45 billion of project CapEx is expected to be financed by a combination of senior secured project debt, the $225 million grant from the DOE as well as respective funding contributions from Standard Lithium and Equinor. The JV is targeting approximately $1 billion in total project debt, supported by leading export credit agencies and commercial lenders. The remaining contribution required by Standard Lithium will be reduced by the $40 million FID milestone payment due from Equinor as well as proceeds from the recent equity raise.

I will now turn it back over to David for closing remarks.

Thanks, Salah. On a final note, I wanted to share that we recently played a leading corporate role in organizing the Arkansas Lithium Innovation Summit that took place in Little Rock 2 weeks ago. The event was highlighted by a strong keynote address from Arkansas Governor, Sarah Huckabee Sanders. The excitement around developing a domestic lithium, upstream and midstream supply chain centered around the Smackover formation was remarkable.

Standard Lithium continues to be extremely well positioned with a portfolio of high-quality and scalable assets, and we're excited by the prospect of being a domestic champion for securing critical minerals production in the United States. We're highly encouraged by the critical milestones we delivered in the third quarter, and we expect to provide multiple updates in the coming months as we seek to conclude our ongoing project financing and customer offtake processes, finalize selection of our key SWA project vendors and approve FID before moving to construction at SWA in 2026.

Thanks again for joining us today. Operator, back to you for questions.

[Operator Instructions] There are currently no questions at this time. So this concludes today's call. Thank you for attending, and you may now disconnect.

Sorry, Aaron, it looks like we may have had a question.

I do see a question come in. Your first question comes from the line of Joseph Reagor with ROTH Capital.

Just one quick thing. On the FID payment, the $40 million, how does that work from a structure standpoint? As soon as you make the FID decision, you triggers the $40 million payment? Or is it part of like as the funds go into the JV, they just contribute an extra $40 million?

Joe, this is Salah. I'm going to take that question. As soon as we -- the JV Board between us and Equinor decides to take FID and move forward at South West Arkansas or for that matter, East Texas in a further year, Equinor will owe Standard Lithium parent company USD 40 million. So that will be a payment from Equinor to us upon taking FID, which would be approved at the JV Board level.

Okay. So if you guys make an FID and then for any reason, it changes at a later date, you still get the $40 million upfront?

I would say correct because we took FID. However, I don't believe that we would take FID and then back out at a later date.

[Operator Instructions] There are no further questions at this time. And this does conclude today's call. Thank you for attending. You may now disconnect.