Table 21.7: Bromine Processing Facility Operating Costs
| Cost Area | Annual Cost ($ million) | Cost ($/t Bromine) |
|---|
| Labour | 3.5 | 70 |
|---|
| Maintenance | 8.1 | 161 |
|---|
| Power and Natural Gas | 5.7 | 113 |
|---|
| Reagents and Consumables | 29.6 | 592 |
|---|
| G&A | 0.9 | 18 |
|---|
| Total | 47.8 | 955 |
|---|
Notes:
| 1. | Figures may not sum due to rounding. |
| 2. | The annual cost is based on 50,000 tpa bromine production. |
| 21.3.6 | General and Administrative |
G&A costs include the G&A labour as well as G&A expenses. The G&A expenses include road and other general maintenance, health and safety related expenses, human resources, site administration (office supplies, garbage handling), environmental monitoring, information technology and telecommunications, sales and marketing, customer relations and other contract services. The G&A labour includes salaries for management, administrative, shipping and receiving and security personnel of the site.
Franklin ProjectEast Texas, USNI 43-101 Technical Report on Preliminary Economic Assessment
The results of the economic analysis represent forward-looking information that is subject to a number of known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially from those presented here. Forward-looking statements in this Report include, but are not limited to: timing and amount of future cashflows from operations, forecast production rates and amounts of lithium and bromine produced from the Franklin operation, estimation of the mineral resources and the realization of the mineral resource estimates within the production plans, the time required to develop the Project based on the development plan, statements with respect to future prices of lithium and bromine and the ability to capture a share of the lithium and bromine markets, assumptions regarding production dilution and losses, the expected grade of the material delivered to the process plant, metallurgical recovery rates, and sustaining capital costs, NPV, IRR, payback period, Project life, production, cashflows and other financial and operational metrics, as well as Project closure costs and reclamation, timing and conditions of permits required to initiate project construction, maintaining production activities, project closure, and assumptions regarding geotechnical and hydrogeological factors.
The reader is cautioned that the actual results of mining operations may vary from what is forecast. Risks to forward-looking information include, but are not limited to, unexpected variations in grade or geological continuity, as well as geotechnical and hydrogeological assumptions that are used in the development plan. There could be seismic or climate events during the construction, operations, closure, and post-closure periods that could affect predicted production, timing of the production, costs of future production, capital expenditures, future operating costs, permitting timelines, potential delays in the issuance of permits, or changes to existing permits, as well as requirements for additional capital. The plant, equipment or metallurgical or production processes may fail to operate as anticipated. There may be changes to government regulation of mining operations, environmental issues, permitting requirements, and social risks, or unrecognized environmental, closure costs and closure requirements, unanticipated reclamation expenses, title disputes or claims and limitations on insurance coverage.
The PEA is preliminary in nature and includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that this PEA will be realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
The Project has been evaluated using a discounted cashflow analysis. Cash inflows consist of annual revenue projections for the Project. Cash outflows such as capital, pre-production costs, operating costs, taxes, and royalties, are subtracted from the inflows to arrive at the annual cashflow projections. Cashflows are compiled on an annual basis and are taken to occur at the end of each yearly period.
To reflect the time value of money, annual net cashflow projections are discounted back to the start of construction using an 8% discount rate. The discount rate appropriate to a specific project depends on many factors, including the type of commodity and the level of project risks, such as market risk, technical risk, and political risk. The discounted present values of the cashflows are summed to arrive at the NPV for the Project.
Franklin ProjectEast Texas, USNI 43-101 Technical Report on Preliminary Economic Assessment
| 22.3 | Financial Model Parameters |
The financial analysis was based on:
| ■ | Royalty agreements described in Section 4; |
| ■ | Lithium carbonate process recovery outlined in Section 13; |
| ■ | Mineral resources presented in Section 14; |
| ■ | Production plan and assumptions detailed in Section 16; |
| ■ | Process plan and assumptions detailed in Section 17; |
| ■ | Projected infrastructure requirements outlined in Section 18; |
| ■ | Lithium price assumptions in Section 19; |
| ■ | Permitting, social and environmental regime discussions in Section 20; and |
| ■ | Capital and operating cost estimates detailed in Section 21. |
All costs within the financial model are expressed in Q2 2026 US dollars.
Within the financial model, a lithium recovery of 89.25% is estimated across all periods of the Project life. Section 13 provides the process recovery leading to an approximate total of 1,292 kt lithium carbonate recovered over the 20-year Project life. No bromine or potash recovery is considered in this economic case.
Long-term lithium prices are detailed in Section 19 and are derived from a market study prepared by Global Lithium (2026) for US market destinations. The long-term lithium price of $22,400/t was kept consistent throughout the life of the Project.
Lithium payability was incorporated at 99.5%.
For the purposes of the capital cost estimate, the operating cost estimate, and the financial analysis, no foreign exchange rates are included. All monetary values are reported in US dollars.
| 22.3.4 | Transportation and Selling Costs |
Transportation and selling costs have not been included. The expectation is that the buyer will be responsible for transportation costs from site. There is provision for the selling costs in contingency.
Royalties in the financial model are applied according to the royalty agreements described in Section 4.
Franklin ProjectEast Texas, USNI 43-101 Technical Report on Preliminary Economic Assessment
| 22.3.6 | Property Purchase Agreements |
No purchase agreements for surface rights have been made.
QP Wendlandt has not independently reviewed the taxation information and has fully relied upon information supplied by Standard Lithium for all content related to taxation and to tax inputs in the financial model. This information is used in support of the after-tax financial analysis. QP Wendlandt considers it reasonable to rely on Standard Lithium for the tax information because the Company obtained guidance from independent tax advisors.
The financial model for the Project incorporates US federal and Texas state corporate income taxes and credits, depletion and depreciation.
For the after-tax cashflow model, the following principal tax assumptions were applied to the Franklin Project.
US and State income taxes:
| ■ | US and State income tax of 21.59% (21% federal / 0.75% Texas net of federal benefit); and |
| ■ | Loss carryover to the next year(s) is permitted where a net loss in any given year occurs. Net operating losses are limited to 80% of any future income until fully used. |
| 22.3.7.2 | Depreciable Capital Expenditures |
Depreciable capital expenditures include assets used in the mining and quarrying of metallic and nonmetallic minerals and the milling, beneficiation and other primary preparation of such materials. Capital expenses are depreciated according to the following schedule:
| ■ | Property and equipment expense - expensed as incurred; |
| ■ | Facilities capital expense - 7-year modified accelerated cost recovery system (MACRS); |
| ■ | Equipment capital expense - 7-year MACRS; |
| ■ | Reinjection capital expense - 7-year MACRS; |
| ■ | Transportation / pipeline capital expense (to and from facilities) - 7-year MACRS; and |
| ■ | Infrastructure – 39-year MACRS. |
| 22.3.7.3 | Lease Rights (Depletable Capex) |
The taxpayer takes the greater of cost (Units of Production) or percentage depletion.
| ■ | Lithium percentage depletion is based on applying a rate of 22% to “gross income from the mining”. |
| ■ | Bromine percentage depletion is based on applying a rate of 5% to “gross income from the mining”. |
Franklin ProjectEast Texas, USNI 43-101 Technical Report on Preliminary Economic Assessment
| ■ | The amount of percentage depletion deducted may not exceed 50% of the “net income from property” in the year. Net income includes gross income, less direct expenses and allocable indirect costs (including overhead). |
| 22.3.7.4 | Severance Tax Considerations |
Currently, Texas does not levy a severance tax directly on the production of lithium in and of itself.
| 22.3.7.5 | Sales Tax Considerations |
Sales tax has been assumed to be included, where applicable, in the capital and operating cost estimates.
Lithium qualifies as an “applicable critical mineral” for the §45X advanced manufacturing production credit if it is converted to lithium carbonate or lithium hydroxide or purified to at least 99.9% lithium by mass.
| ■ | The credit amount for applicable critical minerals, including lithium, is generally 10% of production costs; |
| ■ | Costs incurred by the taxpayer with respect to production of critical minerals include costs that are paid or incurred by the taxpayer inclusive of direct and indirect materials costs, respectively, and any costs related to the extraction of raw materials in the US or US territory; and |
| ■ | Lithium remains eligible through production after December 31, 2030 at the full rate, then phases out as outlined in Table 22.1. |
Table 22.1: IRC 45X Credit
| Calendar Year of Sale | Credit Value % |
|---|
| 2030 (and earlier) | 100% |
| 2031 | 75% |
| 2032 | 50% |
| 2033 | 25% |
| 2034 (and beyond) | Eliminated |
No extraordinary tax rulings, advance income tax rulings, or project-specific negotiated fiscal incentives have been assumed beyond those generally available under existing federal and state legislation applicable to mining projects in Texas.
All tax calculations were prepared on a nominal basis consistent with the financial model assumptions and reflect legislation in force as of the effective date of the PEA.
Working capital is the capital required to fund operations prior to receiving revenue from the finished product. It is defined as the current assets minus the current liabilities. The financial model estimates working capital by subtracting 30 days of direct operating costs from 30 days of revenue. Over the Project life, working capital nets to zero.
Franklin ProjectEast Texas, USNI 43-101 Technical Report on Preliminary Economic Assessment
| 22.3.9 | Closure and Reclamation |
Closure costs include an annual insurance bond amount of 5% based on the well abandonment cost ($18 million) and a lump sum cost incurred in the year following the completion of the Project. Sections 20 and 21 detail the closure requirements and costs for the Project.
Total Project capital is described in Section 21.
Operating costs have been applied as described in Section 21.
No salvage value is applied within the financial model.
No escalation or inflation is applied. All amounts are expressed in constant Q2 2026 terms.
All model outputs are expressed on a 100% basis with no adjustments for financing assumptions. Standard Lithium’s economic interest in the Project is 55%.
Based on the economic analysis, the Project generates positive before- and after-tax discounted cashflows. The after-tax NPV 8 for the Project is $4,992 million. The after-tax IRR for the Project is 24%. The after-tax Project payback period is 3.1 years.
The cashflow forecast on an annual basis is shown in Table 22.2.
Figure 22.1 shows the distribution of yearly and cumulative after-tax cashflows and NPV 8.
Table 22.3 shows the before- and after-tax financial statistics.
The PEA is preliminary in nature and includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that this PEA will be realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability.
Franklin ProjectEast Texas, USNI 43-101 Technical Report on Preliminary Economic Assessment
