Standard Lithium(SLI) - 2024 Q4 - Annual Report

Condensed Consolidated Interim Financial Statements Condensed Consolidated Interim Statements of Financial Position Total assets increased by $15.9 million to $275.4 million by June 30, 2025, with shareholders' equity also rising by $15.8 million | Metric | Dec 31, 2024 (in thousands) | Jun 30, 2025 (in thousands) | Change (in thousands) | | :-------------------------------- | :-------------------------- | :-------------------------- | :-------------------- | | Total Assets | $259,496 | $275,399 | +$15,903 | | Current Assets | $33,305 | $37,443 | +$4,138 | | Non-current Assets | $226,191 | $237,956 | +$11,765 | | Total Liabilities | $31,439 | $31,547 | +$108 | | Shareholders' Equity | $228,057 | $243,852 | +$15,795 | | Cash | $31,177 | $33,787 | +$2,610 | | Investment in Joint Ventures | $146,158 | $152,164 | +$6,006 | | Financial asset - FID | $48,138 | $51,421 | +$3,283 | Condensed Consolidated Interim Statements of Comprehensive (Loss) Income The company reported a net loss of $6.5 million for the six months ended June 30, 2025, a significant shift from $120.6 million net income in 2024, primarily due to the absence of a large deconsolidation gain | Metric (Six months ended June 30) | 2025 (in thousands) | 2024 (in thousands) | Change (in thousands) | | :-------------------------------- | :------------------ | :------------------ | :-------------------- | | Net (loss) income | $(6,532) | $120,606 | $(127,138) | | Basic (loss) earnings per share | $(0.03) | $0.67 | $(0.70) | | Diluted (loss) earnings per share | $(0.03) | $0.66 | $(0.69) | | Loss from operations | $11,658 | $18,107 | $(6,449) | | Gain on deconsolidation of subsidiaries | $— | $164,099 | $(164,099) | | Fair value gain on financial asset - FID | $3,283 | $391 | +$2,892 | | Investment loss from Joint Ventures | $(2,244) | $(158) | $(2,086) | Condensed Consolidated Interim Statements of Changes in Equity Total equity increased by $15.8 million to $243.9 million by June 30, 2025, driven by share issuances and compensation, partially offset by a net loss | Metric (Six months ended June 30) | Dec 31, 2024 (in thousands) | Jun 30, 2025 (in thousands) | Change (in thousands) | | :-------------------------------- | :-------------------------- | :-------------------------- | :-------------------- | | Total equity | $228,057 | $243,852 | +$15,795 | | Share capital | $235,782 | $254,832 | +$19,050 | | Reserves | $36,040 | $38,313 | +$2,273 | | Accumulated deficit | $(37,849) | $(44,381) | $(6,532) | | Shares issued under ATM (gross proceeds) | $12,706 (2024) | $18,484 (2025) | +$5,778 | | Share-based compensation | $3,251 (2024) | $3,286 (2025) | +$35 | Condensed Consolidated Interim Statements of Cash Flows Overall cash increased by $2.6 million to $33.8 million by June 30, 2025, driven by increased financing from share issuances, despite higher investing cash outflows | Metric (Six months ended June 30) | 2025 (in thousands) | 2024 (in thousands) | Change (in thousands) | | :-------------------------------- | :------------------ | :------------------ | :-------------------- | | Net cash used in operating activities | $(7,040) | $(9,054) | +$2,014 | | Net cash (used in) provided by investing activities | $(8,239) | $23,594 | $(31,833) | | Net cash provided by financing activities | $17,859 | $12,365 | +$5,494 | | Net change in cash | $2,610 | $26,977 | $(24,367) | | Cash, end of period | $33,787 | $38,667 | $(4,880) | | Joint Venture capital contributions | $(8,250) | $— | $(8,250) | | Proceeds from issuance of shares | $18,484 | $12,706 | +$5,778 | Notes to the Condensed Consolidated Interim Financial Statements 1. Nature of Operations Standard Lithium Ltd. explores and develops US lithium brine properties, with significant joint venture investments, and its shares are listed on TSXV and NYSE American - Principal operations: Exploration and development of lithium brine properties in the USA[9] - Significant investments in two joint venture arrangements for lithium brine projects and production facilities[9] - Common shares listed on TSX Venture Exchange (TSXV) and NYSE American, LLC under symbol "SLI"[9] 2. Basis of Presentation Interim financial statements are prepared under IAS 34, supplementing annual IFRS, with a fiscal year-end change to December 31 and retrospective presentation currency shift from CAD to USD Statement of compliance The interim financial statements are prepared in accordance with IAS 34 and IFRS Accounting Standards, on a going concern basis - Prepared in accordance with IAS 34, Interim Financial Reporting[10] - Should be read in conjunction with audited consolidated financial statements for the six-month fiscal period ended December 31, 2024, prepared under IFRS Accounting Standards[10][11] - Prepared on a going concern basis[11] Basis of presentation (currency, functional currency) Financial statements are presented in USD; Standard Lithium's functional currency is CAD, subsidiaries' is USD, with foreign currency items translated at reporting date rates - Presented in United States dollar (USD)[13] - Functional currency of Standard Lithium is Canadian dollar (CAD), while functional currency of all subsidiaries is USD[13] - Foreign currency denominated monetary assets and liabilities are translated using the rate of exchange prevailing at the reporting date, with gains or losses included in earnings[13] Change in fiscal year-end Fiscal year-end changed from June 30 to December 31, 2024, to align reporting with business management - Fiscal year-end changed from June 30 to December 31, effective November 18, 2024[14] - Reason for change: To align reporting cycle with business management[14] Change in presentation currency Presentation currency changed retrospectively from CAD to USD, effective July 1, 2024, due to USD-denominated assets/liabilities and industry consistency - Presentation currency changed from CAD to USD, effective July 1, 2024, applied retrospectively[15] - Reason for change: Most significant assets and liabilities are USD-denominated, and for consistency with peer companies in the mining industry[15] - Amounts for June 30, 2024, and prior periods were remeasured in USD based on average rates[17] Critical accounting estimates and judgments Financial statements require management judgments, estimates, and assumptions, continuously evaluated, though actual results may differ - Preparation of financial statements requires management judgments, estimates, and assumptions[18] - Estimates are continuously evaluated based on experience and expectations of future events[18] - Actual results may differ from these estimates[18] 3. Summary of Material Accounting Policies Significant accounting policies in these interim financial statements are consistent with those disclosed in the consolidated financial statements for the six-month fiscal period ended December 31, 2024 - Significant accounting policies are consistent with those disclosed in the consolidated financial statements for the six-month fiscal period ended December 31, 2024[20] 4. Deconsolidation of Subsidiaries Standard Lithium deconsolidated SWA Lithium and Texas Lithium on May 7, 2024, after Equinor acquired a 45% interest, recognizing a $164.1 million gain and now using the equity method | Metric (Three and six months ended June 30, 2024) | Amount (in thousands) | | :------------------------------------------------ | :-------------------- | | Fair value consideration received | $30,000 | | Financial asset – FID | $46,695 | | Fair value of investment | $147,023 | | Less: net assets | $(59,619) | | Gain on deconsolidation of subsidiaries | $164,099 | - Equinor acquired a 45% interest in SWA Lithium and Texas Lithium on May 7, 2024, leading to their deconsolidation[21][22] - The Company retained a 55% interest and now accounts for these as joint ventures using the equity method[22][24] 5. Equity Method Investment in Joint Ventures Investment in joint ventures increased to $152.2 million by June 30, 2025, from $146.2 million, primarily due to capital contributions, despite a $2.2 million loss | Metric (Six months ended June 30) | 2025 (in thousands) | 2024 (in thousands) | | :-------------------------------- | :------------------ | :------------------ | | Balance, December 31, 2024 | $146,158 | N/A | | Capital contributions | $8,250 | $— | | Loss from investment in Joint Ventures | $(2,244) | $(158) | | Balance, June 30, 2025 | $152,164 | N/A | | Company's share of net loss (6 months) | $2,244 | $158 | - Equinor agreed to solely fund the first $40.0 million and $20.0 million of development costs for SWA Lithium and Texas Lithium, respectively[26] - Standard Lithium is to receive $40.0 million and $30.0 million in milestone payments for SWA Lithium and Texas Lithium, respectively, contingent on final investment decisions[26] 6. Investment in Aqualung Equity investment in Aqualung increased to $5.4 million by June 30, 2025, from $2.3 million, primarily due to a $2.8 million fair value gain from an Aqualung equity transaction | Metric (in thousands) | Dec 31, 2024 | Jun 30, 2025 | Change | | :-------------------- | :----------- | :----------- | :----- | | Balance | $2,335 | $5,350 | +$3,015 | | Effect of change in fair value | N/A | $2,752 | +$2,752 | | Effect of foreign exchange translation | N/A | $263 | +$263 | - Aqualung is a privately held entity developing carbon capture technology[28][29] - Investment classified as a financial asset measured at fair value through profit or loss[28] - Fair value gain of $2.8 million recorded during the six months ended June 30, 2025, primarily due to an equity transaction by Aqualung[29] 7. Exploration and Evaluation Assets Exploration and evaluation assets remained stable, increasing slightly from $26.446 million to $26.452 million by June 30, 2025, with minor evaluation costs | Metric (in thousands) | Dec 31, 2024 | Jun 30, 2025 | Change | | :-------------------- | :----------- | :----------- | :----- | | Commercial Plant Evaluation (Lanxess 1A) | $6,000 | $6,000 | $0 | | Exploration and Evaluation | $20,446 | $20,452 | +$6 | | Total | $26,446 | $26,452 | +$6 | 8. Demonstration Plant Operating costs for the DLE Demonstration Plant decreased for the three and six months ended June 30, 2025, primarily due to lower personnel and test work expenses | Cost Category (in thousands) | 3 months ended Jun 30, 2025 | 3 months ended Jun 30, 2024 | 6 months ended Jun 30, 2025 | 6 months ended Jun 30, 2024 | | :--------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Personnel | $842 | $1,265 | $1,488 | $2,278 | | Reagents | $18 | $4 | $40 | $17 | | Repairs and maintenance | $25 | $8 | $56 | $18 | | Supplies | $204 | $419 | $302 | $711 | | Test work | $6 | $240 | $9 | $342 | | Office trailer | $16 | $27 | $23 | $44 | | Other | $26 | $46 | $74 | $65 | | Total costs | $1,137 | $2,009 | $1,992 | $3,475 | 9. Share Capital Share capital increased significantly due to common share issuances under the ATM program and share-based compensation, with options and RSUs rising, while DSUs decreased Authorized capital The company is authorized to issue an unlimited number of common voting shares without nominal or par value - Authorized to issue an unlimited number of common voting shares without nominal or par value[33] At-the-market (ATM) equity program The ATM program allows issuance of up to $50 million in common shares, with 25.3 million shares issued for $40.9 million gross proceeds by June 30, 2025 | Metric (Six months ended June 30) | 2025 | 2024 | | :-------------------------------- | :--- | :--- | | Common shares issued under ATM | 11,162,960 | 9,186,700 | | Average price per share | $1.66 | $1.38 | | Gross proceeds (in thousands) | $18,484 | $12,706 | | Net proceeds (in thousands) | $18,037 | $12,143 | - ATM program allows issuance of up to $50 million of common shares[33] - Total of 25,327,409 common shares issued under ATM program for gross proceeds of $40.9 million as at June 30, 2025[36] Options The balance of outstanding options increased to 12.7 million by June 30, 2025, with a weighted average exercise price of $2.40 | Metric | Dec 31, 2024 | Jun 30, 2025 | Change | | :-------------------------------- | :----------- | :----------- | :----- | | Balance of options | 10,647,246 | 12,678,698 | +2,031,452 | | Weighted average exercise price | $2.80 | $2.40 | $(0.40) | | Options granted (6 months) | N/A | 2,556,452 | N/A | | Options expired (6 months) | N/A | (525,000) | N/A | | Weighted average fair value of options granted (6 months) | $0.76 (2024) | $1.10 (2025) | +$0.34 | Long-term Incentive Plan (RSUs, DSUs) The Long-term Incentive Plan allows for options, RSUs, and DSUs, not exceeding 10% of outstanding shares, with RSUs converting to common shares upon vesting | Metric | Dec 31, 2024 | Jun 30, 2025 | Change | | :-------------------------------- | :----------- | :----------- | :----- | | Balance of RSUs | 1,780,614 | 3,208,452 | +1,427,838 | | RSUs Granted (6 months) | N/A | 1,463,192 | N/A | | Balance of DSUs | 2,425,609 | 2,294,394 | (131,215) | | DSUs Granted (6 months) | N/A | 501,856 | N/A | | Conversion of DSUs to common shares (6 months) | N/A | (633,071) | N/A | - Plan allows for issuance of options, RSUs, and DSUs, not exceeding 10% of outstanding common shares[40] - RSUs convert automatically into common shares upon vesting[40] - DSUs may be redeemed upon retirement or termination[40] Share-based compensation expense Total share-based compensation expense for the six months ended June 30, 2025, was $3.286 million, a slight increase from $3.251 million in the prior year | Award Type (in thousands) | 3 months ended Jun 30, 2025 | 3 months ended Jun 30, 2024 | 6 months ended Jun 30, 2025 | 6 months ended Jun 30, 2024 | | :------------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Options | $868 | $347 | $1,756 | $1,157 | | RSUs | $643 | $— | $987 | $— | | DSUs | $355 | $223 | $543 | $2,094 | | Total | $1,866 | $570 | $3,286 | $3,251 | 10. Related Party Transactions Key management compensation for the six months ended June 30, 2025, was $3.5 million, consistent with prior year, with related party receivables and payables also increasing | Metric (in thousands) | 6 months ended Jun 30, 2025 | 6 months ended Jun 30, 2024 | | :-------------------- | :-------------------------- | :-------------------------- | | Management and director fees | $982 | $1,508 | | Share-based compensation | $2,563 | $2,017 | | Total compensation to key management | $3,545 | $3,525 | | Metric (in thousands) | Jun 30, 2025 | Dec 31, 2024 | Change | | :-------------------- | :----------- | :----------- | :----- | | Receivables – related parties (Joint Ventures) | $1,739 | $1,274 | +$465 | | Accounts payable – related parties (Joint Ventures) | $4,000 | $4,000 | $0 | | Accounts payable – related parties (Management and directors) | $795 | $397 | +$398 | - Incurred $6.0 thousand in research and development services from Telescope Innovations Corp. for the six months ended June 30, 2025[46] 11. Financial Instruments and Financial Risk Management Financial assets, including FID and Aqualung investments, are measured at fair value using Level 3 unobservable inputs, with the company managing credit, liquidity, and foreign exchange risks Fair value hierarchy The fair value hierarchy categorizes inputs into three levels, with Financial asset – FID and Investment in Aqualung classified as Level 3, and no transfers between levels - Fair value hierarchy based on three levels of inputs: Level 1 (quoted prices), Level 2 (observable inputs other than quoted prices), and Level 3 (unobservable inputs)[48] - Financial asset – FID and Investment in Aqualung are classified as Level 3[49][51] - No transfers between Levels 1, 2, or 3 during the periods ended June 30, 2025, and December 31, 2024[49] Financial asset - FID The Financial asset – FID increased to $51.4 million by June 30, 2025, with fair value determined by discounted cash flow, primarily increasing due to the passage of time | Metric (in thousands) | Dec 31, 2024 | Jun 30, 2025 | Change | | :-------------------- | :----------- | :----------- | :----- | | Financial asset – FID | $48,138 | $51,421 | +$3,283 | | Fair value gain (6 months) | $391 (2024) | $3,283 (2025) | +$2,892 | - Fair value determined using a probability-weighted discounted cash flow methodology[52] - Increase in fair value primarily attributable to the passage of time[52] Investment in Aqualung Investment in Aqualung increased to $5.4 million by June 30, 2025, with fair value determined by market inputs and company-specific information, and a gain from an equity transaction | Metric (in thousands) | Dec 31, 2024 | Jun 30, 2025 | Change | | :-------------------- | :----------- | :----------- | :----- | | Investment in Aqualung | $2,335 | $5,350 | +$3,015 | | Fair value gain (6 months) | $— (2024) | $2,752 (2025) | +$2,752 | - Fair value determined using observable market-based inputs and company-specific information, considering market trends and comparable public companies[28][29][53] - Gain primarily resulted from an equity transaction completed by Aqualung[29][53] Risk management framework The Board of Directors oversees the risk management framework, which identifies, analyzes, controls, and monitors risks, with policies regularly reviewed - Board of Directors has overall responsibility for risk management framework[54] - Framework identifies, analyzes, sets limits, controls, and monitors risks[54] - Policies are reviewed regularly to reflect changes in market conditions and company activities[54] Credit risk Credit risk primarily stems from cash deposits, with maximum exposure equal to total financial assets, and most cash held with two institutions exceeding insurance coverage - Credit risk arises principally from cash deposits[56] - Maximum credit risk is the total of financial assets (cash and financial asset – FID)[56] - Substantially all cash is held with two financial institutions, with amounts exceeding insurance coverage[56] Liquidity risk Liquidity risk is managed through careful working capital management, aiming to ensure expenditures do not exceed available resources, with working capital at $30.6 million | Metric (in thousands) | Jun 30, 2025 | Dec 31, 2024 | Change | | :-------------------- | :----------- | :----------- | :----- | | Working capital | $30,605 | $27,533 | +$3,072 | - Manages liquidity risk by careful management of working capital[57] - Objective is to ensure expenditures do not exceed available resources[57] Foreign exchange risk The company is exposed to foreign exchange risk from USD-denominated assets and liabilities, not using derivatives, where a 10% CAD/USD change would impact comprehensive loss by $2.2 million | USD Denominated Assets/Liabilities (in thousands) | Jun 30, 2025 | Dec 31, 2024 | | :------------------------------------------------ | :----------- | :----------- | | Cash | $21,528 | $8,057 | | Investment in Aqualung | $5,350 | $2,335 | | Accounts payable | $44 | $47 | - Exposed to currency risk through USD-denominated assets and liabilities[59] - Does not use derivative instruments to reduce foreign currency risk[59] - A 10% increase/decrease in CAD relative to USD would result in a change of approximately $2.2 million in comprehensive loss for the year to date[59] 12. Capital Management Capital management aims to safeguard project pursuit and maintain a flexible common equity structure, with plans to fund operations and projects using existing cash and other financing - Objectives: Safeguard ability to pursue exploration/development and maintain flexible capital structure[62] - Current capital structure: Common equity, no long-term debt or revolving credit facility[62] - Equinor fulfilled its $60.0 million sole funding commitments for joint ventures in Q2 2025[61] - Plans to spend existing cash and utilize other financing for projects and administrative costs[64] 13. Contingencies The company faces a securities class action lawsuit alleging misrepresentations regarding its LiSTR DLE technology, which it intends to defend vigorously, with no provision recorded due to an uncertain outcome - Securities class action lawsuit filed on January 27, 2022, alleging misrepresentations regarding LiSTR DLE technology and lithium recovery percentage[65] - Company intends to vigorously defend against the action[66] - No provision recorded as of June 30, 2025, due to no probable outcome that can be reasonably determined[66] 14. Subsequent Events Subsequent to June 30, 2025, the company issued 3.475 million common shares under its ATM program, generating $9.1 million in gross proceeds and $8.9 million net proceeds | Metric | Amount | | :-------------------------------- | :----- | | Common shares issued under ATM | 3,475,000 | | Average price per share | $2.62 | | Gross proceeds (in thousands) | $9,100 | | Net proceeds (in thousands) | $8,900 |