Executive Summary / Key Takeaways

• Standard Lithium (NYSE: SLI) is poised to become a significant domestic lithium producer, leveraging its high-grade Smackover brine resources in Arkansas and East Texas, underpinned by a proven Direct Lithium Extraction (DLE) technology.
• The company's Southwest Arkansas (SWA) project, targeting 22,500 tonnes per year of battery-quality lithium carbonate by 2028, is substantially de-risked by a strategic joint venture with Equinor and a $225 million conditional grant from the U.S. Department of Energy.
• SLI's proprietary DLE technology, developed with Koch Technology Solutions, demonstrates superior performance with over 95% lithium recoveries and 99% impurity rejection, offering a competitive edge in cost-efficiency and environmental sustainability.
• Despite being a pre-revenue company, SLI maintains a strong liquidity position, supported by milestone payments from Equinor and disciplined cost management, enabling it to fund project commitments through to a targeted Final Investment Decision (FID) by year-end 2025.
• The company's focus on high-grade resources, technological innovation (including next-gen solid-state battery materials), and robust partnerships positions it favorably in a competitive landscape, aiming for long-term value creation amidst evolving lithium market dynamics.

The Lithium Imperative and Standard Lithium's Foundation

The global energy transition hinges on a secure and sustainable supply of critical minerals, with lithium at its core. Standard Lithium Ltd. (NYSE: SLI), incorporated in 1998, has strategically positioned itself to address this imperative by developing world-class lithium brine properties in the United States. The company's overarching strategy centers on unlocking the value of the Smackover Formation's high-grade brine resources through advanced Direct Lithium Extraction (DLE) technology, fostering strategic partnerships, and maintaining rigorous capital discipline. This approach aims to establish SLI as a low-cost, environmentally friendly domestic source of battery-quality lithium, crucial for advancing electrification and new energy technologies.

The lithium sector has experienced significant volatility, marked by inflationary pressures, rising interest rates, and fluctuating lithium prices from their 2022 highs. However, signs of stability are emerging, with demand for lithium carbonate in the 2028 timeframe and beyond remaining robust. SLI's focus on what it can control—de-risking its projects and optimizing its technology—is paramount in this dynamic environment. The company's journey, from its early engagement with strategic partners like Equinor in 2018 to the continuous refinement of its DLE process at its demonstration plant since 2020, underscores a methodical approach to becoming a producer.

Technological Edge: Direct Lithium Extraction (DLE) and Beyond

At the heart of Standard Lithium's investment thesis lies its differentiated Direct Lithium Extraction (DLE) technology, a critical enabler for unlocking the vast Smackover brine resources. The company's partnership with Koch Technology Solutions (KTS) has been fundamental in developing and proving the efficacy of its Li-Pro LSS technology. This core technology offers significant tangible benefits over conventional extraction methods.

The commercial-scale DLE column at SLI's demonstration plant in El Dorado, Arkansas, has processed over 21 million gallons of brine through nearly 10,000 operational cycles. This continuous operation has consistently achieved lithium recoveries exceeding 95% and impurity rejection greater than 99%. These performance metrics are crucial as they translate directly into a more efficient and cost-effective extraction process. The commercial-scale DLE column deployed at the demo plant is identical to those planned for the Southwest Arkansas (SWA) project, providing critical learnings that simplify the flowsheet and operations, ultimately making projects "cheaper to build and cheaper to reliably operate." This technological advantage contributes significantly to SLI's competitive moat by enabling lower operating costs and a smaller environmental footprint, which are increasingly important factors for battery manufacturers and end-users.

Beyond DLE, Standard Lithium is actively engaged in research and development for next-generation battery materials. In partnership with Telescope Innovations (TELI), the company has developed a novel, low-temperature, patented process to produce battery-quality lithium sulfide. Lithium sulfide is a key raw material for many solid-state battery chemistries, representing a forward-looking opportunity. While not currently integrated into SWA offtake discussions, this initiative positions SLI at the forefront of evolving battery technology, offering potential advantages in flexibility, quality, cost, and safety for future market demands.

Strategic Partnerships and Project De-risking

Standard Lithium's strategic vision is significantly bolstered by its robust partnerships and substantial government support, which collectively de-risk its projects and accelerate its path to production. A pivotal development was the joint venture (JV) agreement with Equinor , a global energy major. SLI retained a 55% interest in its SWA and East Texas projects, selling a 45% stake to Equinor for gross and net considerations of US$160 million and US$133 million, respectively. This partnership provided an immediate US$30 million cash payment to SLI and a commitment from Equinor to sole fund initial project development up to US$40 million for SWA and US$20 million for East Texas. This non-dilutive capital infusion was critical, especially in challenging capital markets, as an equity financing of comparable size would have been significantly more costly.

The Equinor partnership also brings invaluable expertise, including subsurface and reservoir knowledge, project delivery, project finance, health and safety, sustainability, and commercial/offtake relationships. This integrated approach enhances the project management team's capabilities, driving efficiency and de-risking the development timeline.

Further reinforcing SLI's strategic position is the conditional $225 million grant from the U.S. Department of Energy (DOE) for the SWA project. This non-repayable grant, one of the largest awarded to a U.S. critical minerals project, underscores the project's strategic importance to national security, economic prosperity, and domestic energy independence. The SWA project also received a special designation under Executive Order 14241, ensuring increased transparency, accountability, and predictability in the permitting process. These federal endorsements not only provide significant financial backing but also streamline regulatory hurdles, reinforcing the project's development timeline.

Operational Momentum: Southwest Arkansas (SWA) and East Texas

Standard Lithium is making tangible progress on its flagship Southwest Arkansas (SWA) project and its promising East Texas assets. For SWA, all fieldwork for Phase 1 was completed in the second quarter of 2025. This included sampling from the Lester well, which yielded the highest lithium concentration to date from the SWA project area at 616 milligrams per liter (mg/L) in brine. This result suggests that previous resource assumptions were "broadly conservative" and supports the project as a "very good, robust Tier 1 asset."

The SWA project's brine production unit, now formally named the Reynolds unit, received unanimous approval from the Arkansas Oil and Gas Commission (AOGC) for Phase 1. Additionally, the AOGC approved a 2.5% royalty rate for Phase 1, establishing an important precedent for lithium development in Arkansas. The Definitive Feasibility Study (DFS) for SWA is in its final review process, with results expected in the coming weeks. This DFS will be critical for finalizing ongoing dual-track customer offtake and project financing discussions.

The SWA project is envisioned as a larger development, producing up to 45,000 tonnes per year of battery-quality lithium carbonate in two phases, each targeting 22,500 tonnes per year. This shift from lithium hydroxide to carbonate was a direct response to customer feedback. The first phase is targeting a Final Investment Decision (FID) by year-end 2025, with first production expected in 2028. Phase 2 is conceptually guided to follow approximately two years after Phase 1, allowing for the integration of learnings and contracting work. The initial phase is highlighted by a 20.2% unlevered pre-tax Internal Rate of Return (IRR).

In East Texas, Standard Lithium continues to expand its land position in areas identified with high-quality resources. Recent drill results have yielded exceptional lithium concentrations, up to 806 mg/L and an average of 644 mg/L. These grades are "unparalleled anywhere other than like a handful of projects in Chile and Argentina," positioning East Texas as a globally significant resource. The company plans to release a Maiden Inferred Resource Report on some of its East Texas properties later in the third quarter of 2025, which is expected to bring greater recognition to this "meaningfully underappreciated part of our asset portfolio." Additional reentry and resampling work on existing wells, along with drilling one new exploratory well, are planned to further confirm and expand resource understanding.

Financial Performance and Capital Discipline

As a pre-revenue development company, Standard Lithium's financial performance reflects its investment phase rather than commercial operations. For the second quarter ended June 30, 2025, the company reported a net loss of approximately $4 million. This contrasts with a net gain of $128.3 million in the prior-year quarter, which was primarily driven by a one-time $164 million gain from the sale of a 45% interest in its SWA and East Texas projects to Equinor . Normalizing for this one-time event, SLI demonstrated strong cost discipline. General and administrative (G&A) expenses declined by $4.5 million in Q2 2025, a result of back-office cost sharing with joint ventures, reduced advisory fees, and overall corporate cost management. Demonstration plant operations expense also decreased by $0.9 million due to reduced test work and cost sharing.

The company ended Q2 2025 with strong cash and working capital positions of $33.8 million and $30.6 million, respectively. While Equinor's initial sole funding for the joint ventures was exhausted during the quarter, leading to SLI making $8.3 million in JV capital contributions, the company managed to increase its cash position. This was achieved through active cost management, cost sharing, DOE grant receipts, and prudent use of its At-The-Market (ATM) program. Management is confident that the company has "adequate access to capital to move forward its value-accretive projects and activities, while maximizing shareholder value."

SLI's capital formation strategy prioritizes non-dilutive funding. This includes strategic partnerships like Equinor , which provides milestone payments of $40 million for SWA and $30 million for East Texas upon positive FIDs, to fund SLI's share of project development. The $225 million DOE grant is also a non-repayable award. The company is actively pursuing offtake and potential customer financing, alongside low-cost project debt, targeting 60% to 80% of total capital costs for SWA. Debt financing discussions are well underway with export credit agencies and commercial banks, progressing in parallel with offtake negotiations.

Competitive Landscape: Differentiating in a Crowded Field

Standard Lithium operates within a competitive global lithium market, facing established players like Albemarle Corporation , Sociedad Química y Minera de Chile S.A. , and emerging developers such as Lithium Americas Corp. and Piedmont Lithium Inc. . SLI's competitive positioning is primarily defined by its high-quality North American brine resources and its proven Direct Lithium Extraction (DLE) technology.

Compared to large-scale incumbents like Albemarle Corporation and Sociedad Química y Minera de Chile S.A. , SLI's operational scale is currently smaller. Albemarle Corporation (ALB) and Sociedad Química y Minera de Chile S.A. benefit from established global supply chains and economies of scale, leading to historically stronger revenue growth and profitability margins. For instance, Sociedad Química y Minera de Chile S.A. (SQM) has demonstrated consistent cash flow generation from its integrated mining and chemical operations. In contrast, SLI's financial performance, as a pre-revenue company, shows net losses in recent quarters (e.g., $4 million in Q2 2025), reflecting its investment phase. However, SLI's DLE technology offers a distinct advantage in processing efficiency, with over 95% lithium recoveries and 99% impurity rejection, which could lead to superior margins and faster innovation cycles once commercial production begins. This technological edge, combined with its focus on sustainable brine processing, differentiates SLI in a market increasingly valuing environmental responsibility.

Against North American focused developers like Lithium Americas Corp. and Piedmont Lithium Inc. , SLI's high-grade Smackover brine resources stand out. East Texas drill results, with lithium concentrations up to 806 mg/L, are "unparalleled anywhere other than like a handful of projects in Chile and Argentina." This higher concentration directly translates to lower extraction costs, as less equipment is needed to process the brine for a given amount of product, giving SLI a significant economic advantage. While Lithium Americas Corp. (LAC) and Piedmont Lithium Inc. (PLL) are also advancing projects, SLI's proven DLE technology, backed by Koch's performance guarantee, provides a higher degree of certainty in operational execution compared to some early-stage projects. The quality of SLI's partners (Equinor , Koch) and the federal support it has garnered further enhance its project credibility, a key factor for offtake counterparties interested in the "quality of the project and the probability that the project will actually happen."

SLI's strategy to secure binding offtake agreements with a diverse portfolio of customers, rather than non-binding memoranda, reflects a disciplined approach to market engagement. While the market for lithium has faced headwinds, demand for lithium carbonate in the 2028 timeframe remains strong, providing a favorable environment for SLI's planned production. The company's focus on securing its land position in high-quality resource areas, particularly in East Texas, also ensures long-term resource security, although the region has "plenty of room for ourselves and our competitors to play."

Outlook and Growth Trajectory

Standard Lithium is on the cusp of transitioning from a developer to a producer, with a clear roadmap for its flagship Southwest Arkansas (SWA) project. The company is targeting a Final Investment Decision (FID) for SWA by year-end 2025, with first production from Phase 1 expected in 2028. This initial phase is planned to produce 22,500 tonnes per year of battery-quality lithium carbonate. The Definitive Feasibility Study (DFS) for SWA is nearing completion, and its results, expected in the coming weeks, will be pivotal for finalizing offtake and project financing.

Management anticipates that the CapEx and OpEx estimates in the DFS will be competitive, positioning SWA as an "attractive and competitive project."

The company is actively engaged in dual-track negotiations for offtake agreements and project financing, with confidence in concluding these discussions in the fourth quarter. Debt financing discussions with export credit agencies and commercial banks are well underway, aiming to secure 60% to 80% of the total capital cost.

For its East Texas properties, Standard Lithium plans to release a Maiden Inferred Resource Report later in the third quarter of 2025. This report is expected to highlight the significant potential of these high-grade assets, which management believes are currently "meaningfully underappreciated." Further resampling and drilling work in East Texas will continue into late 2025 and early 2026, with a preliminary economic assessment to follow the resource report. The conceptual guidance for Phase 2 of the SWA project suggests an approximate two-year delay from Phase 1, allowing for strategic reassessment and integration of learnings.

Key Risks and Mitigations

Despite significant progress, Standard Lithium faces several risks inherent in large-scale resource development. Market uncertainty regarding lithium demand, price direction, and the pace of recovery continues to weigh on the sector. While SLI focuses on controllable factors, sustained low lithium prices could impact project economics and investor sentiment. The company mitigates this by focusing on a low-cost production model driven by high-grade resources and efficient DLE technology, aiming for resilience across price cycles.

Permitting and regulatory risks, though mitigated by the SWA project's designation under Executive Order 14241 for streamlined processes, remain a factor. The finalization of the $225 million DOE grant, while a high priority, could theoretically be at risk if not completed before a change in U.S. administration, potentially causing delays. SLI is actively working with the DOE to finalize the grant by mid-January. The initial rejection of the Arkansas royalty application highlighted the need for more clarity and benchmarking, but the AOGC provided a "pretty good steer for the direction of the royalty," which SLI is using to restructure its approach, expecting a satisfactory resolution by mid-year without impacting the project schedule.

Project execution risk is also present, given the complexity of building commercial-scale DLE facilities. However, the continuous operation of the demonstration plant for nearly 10,000 cycles, the performance guarantee from Koch Technology Solutions, and the deep project delivery expertise brought by Equinor significantly mitigate this risk. Finally, securing binding offtake agreements and the targeted debt financing are critical for the FID. SLI's strategy of engaging multiple potential offtakers and advancing financing discussions in parallel aims to ensure these crucial elements are in place by year-end 2025.

Conclusion

Standard Lithium is charting a compelling course toward becoming a cornerstone of the domestic lithium supply chain. The company's investment thesis is firmly rooted in its access to globally significant, high-grade Smackover brine resources in Arkansas and East Texas, coupled with its proven and continuously optimized Direct Lithium Extraction technology. Strategic partnerships with Equinor (EQNR) and substantial federal backing from the U.S. Department of Energy have profoundly de-risked its flagship Southwest Arkansas project, providing critical capital, expertise, and a streamlined path to commercialization.

With a targeted Final Investment Decision for SWA by year-end 2025 and first production anticipated in 2028, Standard Lithium is transitioning from a developer to a producer. Its focus on cost discipline, technological innovation, and a diversified offtake strategy positions it favorably within a competitive and evolving market. While challenges such as market volatility and project execution risks persist, the company's robust foundation, including its superior DLE performance and strategic alliances, underpins its potential to deliver significant long-term value to shareholders and contribute meaningfully to American energy independence. The ongoing development of next-generation battery materials further highlights SLI's commitment to sustained technological leadership in the critical minerals sector.