Developer Standard Lithium (TSXV, NYSE-A: SLI) is targeting a year-end investment decision on its $1.45-billion capex South West Arkansas (SWA) project, which would become the first large-scale lithium producing site in the oil-rich Smackover Formation. SWA, which Vancouver-based Standard is advancing with Norwegian oil producer Equinor (NYSE: EQNR) as part of the Smackover Lithium joint venture, is a planned commercial direct lithium extraction (DLE) project that would focus on a region with some of the highest recorded lithium concentrations outside South America. The partners aim to start construction early in 2027 and begin production in 2029, subject to the investment decision and financing. Standard’s efforts to develop SWA and the early-stage Franklin project in Texas come as U.S. authorities seek to reduce the country’s reliance on imported lithium. Both projects are in the Smackover Formation, a geological deposit that extends from central Texas to the Florida panhandle and is known for its long history of oil, gas and bromine production. Its brines also contain lithium. “When you look at the Smackover region’s potential in terms of the geology, we see a path just within our portfolio to at least 100,000 tonnes per year in the next 10 years, potentially up to 150,000 tonnes per year,” Jesse Edmondson, Standard’s vice president of government affairs, told The Northern Miner in an interview. Regional catalyst In its first stage, SWA is designed to produce 22,500 tonnes annually of battery-grade lithium carbonate over a modelled 20-year operating life, with expansion potential. Franklin’s preliminary economic assessment, filed Oct. 20, outlines annual capacity of up to 70,000 tonnes of lithium carbonate equivalent (LCE) over 20 years, with average production of about 65,000 tonnes. Initial production could begin in the early 2030s. “The majority of our focus now is on getting SWA over the finish line to a final investment decision and construction,” Edmondson said. “We really see this project as a catalyst for the whole region, where others will follow.” SWA hosts 1.18 million measured and indicated tonnes of LCE at an average lithium concentration of 442 milligrams per litre, according to a September 2025 resource. Inferred resources are estimated at 278,000 tonnes of LCE at about 355 milligrams per litre. Franklin, meanwhile, holds 1.77 million indicated tonnes of LCE at around 562 milligrams lithium per litre, according to a July resource. Inferred resources total 2.13 million tonnes of LCE at about 572 milligrams lithium per litre. Early mover Standard is “well positioned to be an early mover in extracting lithium from the Smackover region,” BMO Capital Markets mining analyst Raj Ray said in a recent note. “Equinor’s expertise in oil and gas subsurface development will be highly complementary to the development of the Smackover Lithium projects.” Standard owns 55% of Smackover Lithium and acts as operator, while Equinor owns 45%. Lithium concentrations at SWA, Franklin and other Smackover Formation projects are comparable to those found in South America. Those characteristics have drawn oil majors such as ExxonMobil, Chevron and Occidental Petroleum to the region in a bid to diversify their production and leverage their expertise in subsurface geology, drilling and brine handling. “The oil majors would be pumping a liquid out of the ground, effectively, so there are crossovers with what they already do,” Cameron Hughes, a London-based lithium market analyst at CRU, said in an interview. “We’ll see how much lithium actually comes from these projects, since most of these are still at a very early stage, but it is promising. These companies have a huge amount of capital behind them, so if anyone can bring projects online, it’s probably them.” Technological risks DLE technology is designed to recover lithium from underground brines, avoiding conventional evaporation ponds. Using DLE technology, U.S. critical minerals producer Element 3 said in February it had begun extracting lithium carbonate from water at its 3,000-tonne-a-year facility in Midland, Texas. Standard says its demonstration plant near El Dorado, Ark., which has been operating since 2020, has processed more than 160 million litres of Smackover brine. Still, scaling up DLE for commercial production from oilfield brines carries risks. “Despite how much you hear about it in the news and how often it pops up in the lithium conversation, DLE is still a fairly novel technology,” Hughes said. “There is a risk involved with that.” Due diligence Standard points to technical reviews by third parties such as the U.S. Department of Energy (DOE), which finalized a $225-million (C$316-million) grant for the SWA in January 2025 to pay for part of the project’s construction, as evidence that its DLE technology has been de-risked. SWA was added to the U.S. government’s FAST-41 permitting dashboard as a transparency project last year. The DOE completed its environmental review in May with a finding of no significant impact. In December 2025, Smackover Lithium said it had received indications of interest for more than $1 billion in project debt financing for SWA’s first stage from export credit agencies such as the Export-Import Bank of the United States (EXIM) and Export Finance Norway. Those expressions were not financing commitments; talks are ongoing. “Our project has been through due diligence so many times over the recent years in terms of DOE, EXIM Bank, Equinor and our offtake partners,” Edmondson said. “What we’ve done at that demonstration plant has been key to getting our project to where we’re at now. It’s taken time but the market is comfortable with DLE.” Offtake deals SWA has an after-tax net present value (NPV) of $1.28 billion and an 18.2% internal rate of return, according to a definitive feasibility study released in September 2025. Initial capital costs are estimated at $1.45 billion, including a 12.3% contingency. The NPV uses an 8% discount rate and the study assumes a long-term lithium carbonate price of $22,400 per tonne. Average cash operating costs are estimated at $4,516 per tonne and all-in sustaining costs at $5,924, including royalties, sustaining capital and closure costs. Those figures exclude the initial construction bill. “Certainly at current prices we can be economic,” Edmondson said. In September, Smackover Lithium said it had expanded its 10-year offtake deal with commodities trader Trafigura. The joint venture can elect to supply an additional 4,000 tonnes of lithium carbonate a year, bringing the maximum annual volume to 12,000 tonnes. Including an 8,000-tonne annual agreement with LG Energy Solution, Smackover Lithium has deals covering up to 20,000 tonnes of lithium carbonate annually, or about 89% of SWA’s planned output. This exceeds the joint venture’s initial offtake target of 80% if the optional volume is included. “We’ve now got sufficient offtake agreements in place to finalize project financing, and we’re finalizing those financing discussions with the banks,” Edmondson said. “Those have been long discussions. Technical due diligence is essentially done, and it’s about finalizing those term sheets and piecing together the equity portions. We’re very confident that we’ll be under construction on that project very early next year. We’re so close to putting those shovels in the ground.”
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