Lithium Tech Co. Starts Building Water-Saving Extraction Demo

Lithos Group Ltd. (LITS:CBOE.CA;LITSF:OTCMKTS;FSE:YU8;WKN:A3ES4Q) announced it has started manufacturing a demonstration-scale modular field unit for two Tier 1 lithium producers using its AcQUA™ technology, which allows lithium to be extracted from brine without using water-intensive, environment-damaging evaporation ponds.

Chief Executive Officer Scott Taylor said the development was a milestone the company has been working toward "since day one."

"Given the maturity of the supply chain and demonstrated performance of our patent-pending electro-pressure membrane AcQUA™ technology stack, our aim was to demonstrate bench scale results with customer field brines and move immediately to the field to deliver results," Taylor said. "When we bought the technology, we also acquired a robust and proven commercial-scale supply chain. We are on track to earn revenue in the fourth quarter of 2024."

In January, Technical Analyst Clive Maund predicted that the stock was about to break out. It did start to rise from the CA$0.60s in much of January to the CA$0.70s in February, reaching as high as CA$0.86 on February 20.

On Monday, Maund wrote that the latest AcQUA™ news was sure to continue to push the stock higher.

"This news makes clear why the stock has been under strong accumulation, the evidence of which we have observed in recent weeks," Maund wrote. "The latest stock chart for Lithos, shown below, makes clear that it is very well placed to begin another strong upleg, and the news just out is thought likely to trigger its commencement."

Maund strongly recommended Lithos stock for immediate purchase.

The Catalyst: Cuts Down on Water Use, Processing Time

The AcQUA™ system assembly is scheduled for factory acceptance testing in July. Once the modular system passes factory acceptance testing it will immediately be deployed to the field for site acceptance testing, Lithos said.

That testing requires 1,500 hours (or about 2.5 months) of operational performance validation with each customer.

Lithos has said is working with "four tier-1 lithium companies and two supermajor energy companies in North and South America to help display the commercial viability of its technology," Beacon Analyst Ahmad Shaath wrote in a January research report.

Headquartered in Denver, Colorado, Lithos Group aims to "become the global standard in economically efficient, sustainable lithium production," the company said. AcQUA™ spans the whole value chain from the conditioning and pretreatment of raw brines, the primary bottleneck, through the direct lithium extraction (DLE) phase to the polishing and purification of battery-grade lithium feedstock. About 70% of global lithium resources are hosted in brine.

"The technology enables lithium brine resource operators to deploy field-ready extraction solutions that will substantially reduce water consumption by recycling upwards of 98% of the input brine water, boost existing production by up to 300% with optimal re-injection, curtail the use of toxic chemicals, cut processing time by more than 90% and substantially eliminate the use of evaporation ponds in the pretreatment and concentration phases of production," Shaath explained.

As for DLE, it could nearly double the production of lithium from brine, Goldman Sachs analysts wrote in a research note. It could boost recoveries to 70−90% from 40−60%, thereby improving project returns.

Lithos has two fully operational facilities, a 4,000-square-foot laboratory in Denver, Colo., and a 55,000-square-foot complex, permitted to produce pilot-scale lithium hydroxide, in Bessemer, Ala. In January, Lithos subsidiary Aqueous Resources applied for a follow-on US$30 million grant from the U.S. Department of Energy (DOE) to expand the Alabama facility. Awardees will be announced this May.

Opportunities 'More Electric Than Ever'

An important component of electric vehicle (EV) batteries, lithium is also used to strengthen alloys, as a high-temperature lubricant, and as a drug to treat bipolar disorder.

Demand for the element has been rising steadily since 2020 and is expected to continue to at least 2035, Statista data show. Projections indicate that by then, demand will have reached 3,829,000 metric tons of lithium carbonate equivalent, a 317.5% increase from 917,000 metric tons in 2023.

Similarly, the lithium market is projected to continue growing to US$6.4 billion in value by 2028 from US$2.5 billion in 2023, according to Markets and Markets. This change reflects a 20.4% compound annual growth rate (CAGR).

"The market has observed stable growth throughout the study period and is expected to continue with the same trend during the forecast period," the report said.

Katusa Research purported the lithium market could have a major breakout this year, citing its use in EVs and storage batteries as key drivers. 

"The opportunity in lithium is more electric than ever," Katusa wrote.

Ownership and Share Structure

About 57% of Lithos is held by insiders and management, the company said. According to Reuters, this includes CEO Taylor with nearly 15% or 12 million shares, Independent Director Michael Westlake with 0.73% or 600,000 shares, and Independent Director Kevin McKenna with 0.05% or 40,000 shares.

About 27% of the company is held by strategic entities. The rest is retail.

Lithos has a market cap of CA$56.4 million with about 81.7 million shares outstanding. It trades in a 52-week range of CA$0.98 and CA$0.51.

Important Disclosures:

1. Lithos Group Ltd. is a billboard sponsor of Streetwise Reports and pays SWR a monthly sponsorship fee between US$4,000 and US$5,000. In addition, Lithos Group Ltd. has a consulting relationship with an affiliate of Streetwise Reports, and pays a monthly consulting fee between US$8,000 and US$20,000.
2. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Lithos Group Ltd.
3. Steve Sobek wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.
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