E3 Lithium - Building Momentum Towards Commercial Lithium Production in Alberta

• E3 Lithium, founded in 2016, is developing one of the largest lithium assets in Alberta, boasting 24 million tons of lithium carbonate equivalent in the ground.
• The company has developed an ion exchange technology to extract lithium from brines, targeting a production start of 20,000 tons per year by 2026 with aspirations to eventually reach 250,000-300,000 tons.
• E3 Lithium has recently announced the introduction of a pilot plant aimed at proving the viability of its lithium extraction technology. The pilot plant focuses on two stages: brine preparation and direct lithium extraction.
• The company's proprietary technology mainly revolves around the material used in the ion exchange process, which distinguishes them in the market.
• Financially, E3 has approximately $14 million on hand, expecting the pilot to cost around $5 million. They are also anticipating grant funding to cover a significant portion of the pilot costs and are considering future capital raises to strengthen their balance sheet.

E3 Lithium is a lithium resource development company aiming to produce battery-grade lithium products in Alberta, Canada. The company has made steady progress over the past few years in advancing its proprietary direct lithium extraction technology and large lithium resource towards commercialization.

With several major project milestones anticipated in 2023, E3 Lithium appears well-positioned to continue creating value for shareholders. The upcoming commissioning of a pilot plant will be a crucial test of the company's extraction process, while an upgraded resource estimate, pre-feasibility study and initial lithium hydroxide production are other key catalysts on the horizon.

Large Lithium Resource Base in Alberta

E3 Lithium holds mineral rights over a major lithium brine resource in southern Alberta. The company's resource currently stands at 24 million tonnes of lithium carbonate equivalent, one of the largest undeveloped lithium assets globally.

The brines are located within oil-rich sedimentary basins that have been producing oil and gas for decades. E3 Lithium is focused on the Leduc and Bashaw aquifers at depths of 1,300-2,000 meters, which contain high concentrations of dissolved lithium within the brines.

Through extensive drilling and sampling over the past few years, E3 has gained a detailed understanding of the continuity and lithium concentrations within these aquifers. Ongoing work aims to progressively upgrade the resource estimate and convert more of the resource into mineable reserves ahead of commercial development.

Proprietary Direct Lithium Extraction Technology

At the core of E3 Lithium's strategy is its proprietary ion exchange technology for selectively extracting lithium from the brines. After extensive research and development, the company states it can achieve lithium recovery rates over 85% while producing concentrated lithium chloride solution grading approximately 60% lithium.

This direct lithium extraction (DLE) technology will be implemented at the well site, avoiding the cost and complications of pumping large volumes of brine to a distant processing plant. The technology's high selectivity for lithium provides major cost benefits by eliminating the need for extensive pre-treatment of the brines.

E3 Lithium has tested its DLE process at bench and mini-pilot scale over the past few years. The next crucial step is commissioning a field-scale pilot plant in mid-2023 to prove the technology under real-world conditions and collect data for commercial design.

Key Milestones Over the Next 12 Months

Pilot Plant Construction and Commissioning

• E3 Lithium is currently building a pilot plant next to one of its wells in the project area, with commissioning expected by Q3 2023.
• The pilot will process brine straight from the aquifer to test the DLE process at a scale equivalent to a commercial production well.
• Successful and efficient lithium extraction by the pilot will significantly derisk E3's development plans and underpin work on a feasibility study.

Upgraded Resource Estimate

• The company plans to issue an upgraded resource estimate in Q1 2023, likely at the Measured and Indicated levels.
• This increased confidence in the size and grade of the resource will be important for underpinning the project's feasibility studies.

Pre-Feasibility Study

• E3 Lithium aims to complete a pre-feasibility study by the end of 2023, providing crucial details on potential development scenarios.
• The study will evaluate options for the project's scope, infrastructure, costs and production profile.

Lithium Hydroxide Production

• As a final step in evaluating its process flow sheet, E3 plans to convert some pilot plant lithium chloride into battery-grade lithium hydroxide.
• Producing a sellable lithium product will demonstrate the commercial viability of the company's extraction technology.

Clear Pathway to Production

Subject to positive results from the upcoming project milestones, E3 Lithium has outlined a clear development timeline for the project:

• 2023-24: Complete feasibility study and make a final investment decision
• 2024-25: Detailed engineering, procurement and permitting
• 2025-26: Construction of initial 10,000 TPA lithium hydroxide production plant
• 2026: Commissioning and production ramp-up

The initial 10,000 TPA plant would serve as a commercial demonstration facility, with the potential to expand production rapidly in a modular fashion to match market demand. E3 Lithium estimates it could achieve a nameplate capacity of up to 20,000-30,000 TPA lithium hydroxide within a few years of the starter plant.

Upside Potential

E3 Lithium's large resource, advanced technology and clear development strategy provide several compelling reasons for investor upside:

• Strengthening lithium demand outlook, with prices reaching record highs. E3's production is timed to enter the market during a forecast supply deficit.
• Potential to significantly expand production by developing more of the 24M tonne resource. Modular project expansion creates flexibility to match supply with demand.
• Suite of patents provides a barrier to entry for the company's proprietary DLE technology in Alberta.
• Opportunity to produce high-purity lithium products from a low-cost brine resource, leveraging existing oilfield infrastructure.
• Strategic location in Canada provides low geopolitical risk versus other lithium development jurisdictions.
• Major mining companies active in Alberta oil sands may look to integrate lithium production into their operations.
• Production of battery materials aligns with environmental, social and governance (ESG) goals of governments and the public.

In summary, E3 Lithium has many ingredients needed for success in place - a large resource, differentiated technology, strategic location and an experienced team. While project development risks remain, upcoming milestones in 2023 provide opportunities for the company to substantially derisk its plans and illustrate the significant potential value of this project. For investors with a favorable outlook on energy transition and battery materials demand, E3 Lithium merits consideration as a promising emerging lithium developer.

The Investment Thesis for E3 Lithium

Strong lithium demand outlook

• Global lithium demand is forecast to grow at around 20% per year through 2030, fueled by electric vehicle and battery storage growth. Supply is struggling to keep pace, with many analysts predicting lithium shortages by mid-2020s.
• As a potential new entrant to the lithium market, E3 is well-timed to benefit from these strong demand fundamentals and forecast supply deficits.

Advantaged project economics

• E3's proprietary DLE technology is expected to deliver high lithium recoveries from brine at a lower cost than traditional evaporation.
• Developing a brine resource in Alberta provides access to extensive infrastructure and oil & gas expertise, lowering project capex.
• The modular, phased production approach provides flexibility to match supply growth with demand.

Solid financial position

• The company currently has a strong cash balance to fund near-term milestones. It expects to maintain a long runway to production without the need for capital raises in the near future.
• E3's largest shareholder is a major oil sands producer, Imperial Oil, providing confidence in the project.

Upside potential from resource expansion

• E3's current 24M tonne resource could likely support a much larger production scale. Resource upgrades along the development timeline offer significant upside.
• The company can leverage the expertise and infrastructure from its initial project to unlock more of its widespread brine resources in Alberta.

E3 Lithium provides leveraged exposure to forecast strong lithium market growth, with both near-term de-risking milestones and long-term resource upside potential. The company's progress and valuation appear attractive for investors bullish on lithium demand and the energy transition.