Lithium Junior Poised for Breakout Year in 2022?

• E3 Metals, led by CEO Chris Doornbos, is a lithium technology and resource company based in Calgary, Alberta. The company possesses a 7 million ton lithium carbonate equivalent inferred mineral resource and is working on a Direct Lithium Extraction (DLE) technology, an ion exchange process to extract lithium from brines.
• E3 Metals' objective is to initiate a 20,000 ton per annum project by 2025-2026 and expand to approximately 150,000 tons of lithium products.
• The company is also exploring other markets like carbonate and lithium metal as battery technologies advance.
• Lithium is increasingly in demand due to its essential role in battery technologies. E3 Metals was founded six years ago, foreseeing the under-supplied lithium market, which was further emphasized by Tesla's production projections and the expansion of other OEMs into the space.
• E3 Metals is focused on a DLE technology, which was prototyped in 2021. The company plans to initiate the pilot around January, pushing towards commercial scale production. The success of this pilot is crucial for the company's future prospects.

E3 Metals, a lithium development company based in Alberta, Canada, is set up for an exciting year in 2022 as it advances its Clearwater lithium project towards production. With lithium demand surging, E3 Metals aims to capitalize on its large lithium resource and direct extraction technology to become a major supplier of battery-grade lithium products.

Company Overview

E3 Metals is developing the Clearwater lithium project, located in Alberta, Canada. The company is targeting initial production of 20,000 tonnes per year of lithium hydroxide, potentially ramping up to 150,000 tonnes per year to become one of the world's largest lithium producers.

E3 Metals was founded in 2016 to capitalize on the emerging lithium-ion battery and electric vehicle revolution. The company has focused on securing and developing a large lithium resource, while also innovating on direct lithium extraction technology to produce high purity lithium products directly from brine.

Massive Lithium Resource

The Clearwater project contains a large lithium resource, with 7 million tonnes lithium carbonate equivalent in the inferred category. Importantly, this is a lithium brine deposit, not a hard rock deposit, meaning the lithium is dissolved in brine and can be extracted through pumping and processing.

The brine deposit is hosted in the Leduc aquifer, a highly productive oil and gas reservoir that has been producing since the 1940s. The Leduc formation contains brine grading 75mg/L lithium on average, which is high grade for a brine deposit. Extensive oil and gas activity means the reservoir is extremely well understood.

E3 Metals' current focus area at Clearwater covers 160km x 45km, demonstrating the immense size potential of the resource. The company has plans to expand production well beyond the initial 20,000 tonnes per year, with a long-term target of 150,000 tonnes per year.

Proprietary Extraction Technology

In addition to its large resource, E3 Metals has developed a proprietary direct lithium extraction (DLE) technology to extract and concentrate lithium from brine. This ion exchange technology can upgrade brine from 75mg/L lithium to as high as 60% lithium in a single step, providing major cost advantages.

The company's DLE testing facility has successfully demonstrated the technology at small scale. E3 Metals is now focused on scaling up to pilot and commercial facilities.

The modular nature of the DLE process enables scalable and flexible production capacity. The technology can also likely be leveraged by the company at other global lithium brine deposits.

Near-Term Catalysts in 2022

E3 Metals has laid out a goal of hitting three major milestones in 2022 to significantly advance the Clearwater project:

1. Complete pilot lithium extraction facility. E3 aims to design, build and commission a pilot-scale DLE module by late 2022 to demonstrate commercial viability. The pilot has an estimated $3-4 million capital cost.

2. Drill wells at proposed production area. The company plans to drill 3 wells by mid-2022 in the initial lithium production area to support feasibility studies and reserves estimation.

3. Produce battery-grade lithium hydroxide. E3 intends to convert concentrated lithium from its DLE process into battery-grade lithium hydroxide at some scale to show the flow sheet from brine to final product.

Strong ESG Credentials

The Clearwater project offers ESG benefits including low-carbon extraction, no exploration footprint, and utilizing existing oil and gas infrastructure. Producing lithium in Canada also reduces reliance on less transparent foreign sources.

Rapidly Growing Lithium Market

Lithium demand is projected to grow over 5-fold by 2030 driven by electric vehicle and battery deployment. Supply is challenged to keep pace amid huge growth plans from automakers. This sets up a very favorable supply/demand imbalance for new lithium projects.

E3 Metals aims to aggressively expand production in sync with demand growth. Its 20,000 tonnes initial phase would already make it a top 5 global lithium producer based on current market size.

The Investment Thesis for E3 Metals

With its huge lithium resource, proprietary extraction technology, demonstration milestones on the horizon, and tailwinds from booming lithium demand, E3 Metals offers an attractive investment opportunity in the lithium development space.

The company offers leverage to higher lithium prices as it moves towards commercial production. Execution risks remain, but the Clearwater project checks many boxes in terms of resource size, grade, extraction innovation and scalability. E3 Metals has the potential to rapidly emerge as a major lithium supplier if it continues to successfully de-risk and commercialize its proprietary extraction process. Lithium investors would be prudent to keep a close eye on this exciting lithium junior in 2022.

Massive Upside Potential

The Clearwater project has the potential to produce 20,000 tonnes initially, scaling up to 150,000 tonnes per year. This would make E3 one of the largest lithium producers globally. The large resource size provides a massive upside as lithium demand grows.

First Mover Advantage

E3 aims to be one of the first companies to produce lithium directly from brine using its proprietary ion exchange technology. Being an early mover in commercial-scale production could allow E3 to quickly seize market share.

High Purity Lithium Products

E3's technology can produce high-purity lithium products sought after by battery manufacturers. This includes both lithium hydroxide and lithium carbonate.

Low-Cost Production

By producing high-grade lithium solutions directly from brine, E3 aims to be a low-cost producer compared to traditional evaporation pond and hard rock mining. This provides profitability upside.

Strong ESG Credentials

Producing lithium in Canada with a low environmental impact and leveraging existing infrastructure helps position E3 well with customers focused on sustainability and transparency.

Near Term Catalysts

E3 has clear milestones in 2022 that can demonstrate execution and derisk the Clearwater project, providing share price catalysts.

Top Management Expertise

The E3 management team has deep expertise in lithium, chemical engineering, project development and oil/gas production - key skills for the project.

First Mover Valuation

E3 still has a modest valuation compared to potential profitability if Clearwater is successfully commercialized. Attractive entry point.

Summary

E3 Metals offers a unique upside potential in the lithium space if it can execute its plans, making it a strong investment opportunity. The company could be primed for a breakout year in 2022.