E3 Lithium Developing One of the World's Largest Lithium Resources

• E3 Lithium is developing one of the world's largest lithium resources from an aquifer in Alberta, Canada, aiming to start construction in 2026
• The company made significant progress defining the large 16 million ton lithium resource and successfully piloting its lithium extraction technology
• E3 benefits from a streamlined permitting process in Alberta and expects to be a leader in bringing new lithium production online in North America
• Financing the project is the next major hurdle, but E3 is pursuing multiple avenues including government grants, offtake agreements, and debt financing
• The company believes the long-term demand outlook for lithium remains strong despite near-term volatility, putting E3 in a good position as an early mover

As the electric vehicle revolution gains steam, securing adequate supplies of battery metals like lithium has become a top priority for automakers, battery producers and governments around the world. With demand set to outstrip supply later this decade, developing new lithium resources promptly will be critical. One company aiming to be part of the solution is Alberta-based E3 Lithium.

Developing a Major Lithium Resource

E3 Lithium is working to bring a significant new lithium resource into production from an aquifer in Western Canada. According to CEO Chris Doornbos, the company's resource now stands at 16 million tons of lithium carbonate equivalent (LCE) in the measured and indicated category - over 5 times larger than all other lithium resources in Canada combined.

The lithium is contained in brine that will be extracted using wells, similar to oil and gas production which is abundant in Alberta. This gives E3 a key advantage, as Doornbos explains, "We pump fluids and we move them and we process those fluids and that's what we do every day in Alberta. So we have a bit of an advantage there in terms of the skillsets and the people that we need to grow our business and be successful."

Interview with President & CEO Chris Doornbos

From Pilot to Production

In 2022, E3 made major strides in de-risking its project. The company successfully completed a pilot plant demonstrating its selected direct lithium extraction (DLE) technology, which eliminates the need for large, slow evaporation ponds common in other brine projects.

With the DLE provider now selected, Doornbos says the focus has shifted to completing a Pre-Feasibility Study (PFS):

"The engineering is now being completed for the plant site itself now that the first major component is direct lithium extraction. So that's underway right now and we're expecting results out hopefully by end of Q2."

The PFS will allow E3 to book its first lithium reserve and provide more clarity on the economics of the project. Doornbos believes it will show E3 is "definitely leading the charge in Canada" in terms of the size and timeline of its project. The company is aiming to begin construction of its first commercial plant in 2026.

Accelerating the Timeline

One of E3's key advantages is the regulatory framework in Alberta. The province has a well-defined process for permitting wells and Doornbos expects E3 to be able to obtain necessary permits relatively quickly.

"The licensing application process is very short - like the well license is 3 months. There's nowhere else in the world that that is the case - most of them are years, 2-3 years at least," he notes. "We'll move through the next stages of the process a lot quicker than our peers."

This streamlined process is critical given the industry's need for new supply in the near term. Many forecasts point to a significant lithium supply deficit opening up in the latter part of the decade. Being able to bring production online quickly will put E3 at an advantage.

Financing the Build

With a clear path to production, E3 is now turning its attention to financing the construction of its commercial facility. Doornbos says the company is looking at a range of options, including government grants, offtake agreements, and strategic partnerships.

The Canadian government is making significant funds available to support critical mineral projects, with billions earmarked. Accessing some of this non-dilutive capital could be a major boost for E3.

Off-take agreements, where a lithium customer provides funding in exchange for guaranteed supply, are another potential source of financing. Doornbos says there is strong interest from battery makers and automakers looking to lock in future supply.

Ultimately, the company expects to finance a large portion of construction with debt, which will require the completion of a full feasibility study. By selecting a proven, third-party DLE technology, E3 expects to be able to obtain a performance guarantee to help secure project financing.

Riding Out Market Volatility

The lithium market has seen significant volatility over the past year, with prices spiking to record highs before pulling back sharply. Doornbos attributes this to the relatively small size of the market currently and expects the swings to continue in the coming years as supply and demand attempt to balance.

However, he believes the long-term demand picture remains robust as the EV transition picks up pace. "If you look at the people who track these things, [they] are still predicting a significant shortage of most of the critical raw materials into the later part of this decade," he points out.

E3 expects to insulate itself from spot price volatility by signing off-take agreements with fixed pricing. This will provide certainty on the revenue side and allow the company to generate profits at a predetermined price point.

With a large, advanced-stage lithium resource and a clear path to production, E3 Lithium presents a compelling opportunity for investors looking to gain exposure to rising lithium demand. The company's location in a favorable jurisdiction, demonstrated extraction technology, and multiple financing options all bode well for its ability to execute its plans.

While the lithium market is likely to remain volatile, E3 appears well-positioned to ride out the turbulence and emerge as a significant lithium supplier. As CEO Chris Doornbos puts it, "The companies that are going to be able to be successful are the ones who have funding available. Companies who have the capital to continue to progress the project [and] make headway while we're in this down cycle are the ones who are going to lead with projects that can start making revenue in the short term."

E3 Lithium makes a strong case that it will be one of those leaders investors will want to watch closely.

The Investment Thesis for E3 Lithium

• Large, well-defined lithium resource (16 Mt LCE) in a stable jurisdiction (Alberta, Canada)
• Successful technology demonstrations significantly de-risk project
• Streamlined regulatory process accelerates timeline to production
• Aiming to be in construction by 2026, well ahead of looming lithium shortage later this decade
• Multiple financing options including government support, offtake agreements, debt funding
• Experienced team with a strong track record operating in Alberta

The interview with E3 Lithium CEO Chris Doornbos underscores both the significant opportunity and challenges in bringing new lithium production online to meet surging demand from the electric vehicle sector. While the lithium market is likely to see continued volatility in the short term, the demand outlook for the second half of the decade remains robust.

Companies like E3 that are well advanced and substantially de-risked will be in the best position to secure financing and move quickly into construction and production. With its large, clearly defined resource, demonstration of its extraction technology, and multiple financing options, E3 appears to have the key ingredients in place for success. The main question is whether the company can stick to its aggressive development timeline and navigate volatile market conditions to bring its lithium to market ahead of competitors.

The electric vehicle transition is unleashing unprecedented demand for battery metals including lithium, causing prices to spike to records and forcing automakers to scramble to secure future supply. With demand expected to significantly outstrip supply later this decade, the race is on to bring new lithium resources into production quickly. However, developing new mines and processing facilities is a time and capital-intensive process.

Companies with large, advanced-stage projects in favorable jurisdictions that can demonstrate a clear path to production will be in high demand from automakers and battery producers.

This opens up opportunities for strategic partnerships and creative financing options for near-term producers. Government support is also likely to be a key factor, with the U.S. and Canadian governments allocating billions to help spur new critical mineral supply chains in North America. Those companies that can tap into this government backing and pair it with off-take agreements and other funding sources will be in the strongest position to ride out near-term lithium market volatility and emerge as the go-to suppliers for the EV battery supply chain.

"The world is looking to fund critical minerals and I think that's an important note - like never before, there's an impetus that's bigger than just profit and revenue, it's about securing a national supply of critical minerals for this growing industry. There is a North American initiative to get these projects built and that will create the funding opportunities." - Chris Doornbos, CEO of E3 Lithium