Operator: 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.
Daniel Rosen: 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.
David Park: 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.
J. Robinson: 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.
Salah Gamoudi: 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.
David Park: 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: [Operator Instructions] Your first question comes from the line of Max Yerrill with BMO Capital Markets.
Max Yerrill: 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.
David Park: Thanks a lot, Max. Andy, why don't I turn that one to you? You're closer.
J. Robinson: 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.
Max Yerrill: 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.
David Park: 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.
Operator: Your next question comes from the line of Anthony Taglieri with Canaccord Genuity.
Anthony Taglieri: 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.
David Park: Andy, do you want to take that one? Or should we turn that to Salah?
J. Robinson: Why don't we let Salah handle that one, that would be useful, yes.
Salah Gamoudi: 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.
Anthony Taglieri: 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?
David Park: Andy, why don't you start with that one?
J. Robinson: 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.
Anthony Taglieri: 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.
David Park: 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.
Operator: Your next question comes from the line of Eric Boyes with Evercore ISI.
Eric Boyes: 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?
David Park: Andy, do you want to hit that?
J. Robinson: 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.
Eric Boyes: 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?
J. Robinson: 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.
Operator: Your next question comes from the line of Joseph Reagor with ROTH Capital Partners.
Joseph Reagor: 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?
David Park: 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.
J. Robinson: 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.
Operator: Your next question comes from the line of Theo Genzebu with Raymond James.
Theophilos Genzebu: 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.
David Park: 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.
Operator: Your next question comes from the line of Noel Parks with Tuohy Brothers Investment Research.
Noel Parks: 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.
David Park: Andy, that one is for you.
J. Robinson: 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.
Noel Parks: 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.
J. Robinson: 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.
Noel Parks: 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.
David Park: 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.
Operator: We have now reached the end of the Q&A session. This concludes today's call. Thank you for attending. You may now disconnect.