Standard Lithium(SLI) - 2023 Q1 - Quarterly Report

Condensed Consolidated Interim Financial Statements Statements of Financial Position Standard Lithium's total assets slightly decreased to $170.9 million as of September 30, 2023, driven by lower cash partially offset by higher exploration assets | | September 30, 2023 (in thousands CAD) | June 30, 2023 (in thousands CAD) | | :--- | :--- | :--- | | Total Current Assets | $38,606 | $62,049 | | Total Non-current Assets | $132,269 | $111,448 | | TOTAL ASSETS | $170,875 | $173,497 | | Total Current Liabilities | $14,761 | $13,249 | | Total Non-current Liabilities | $789 | $872 | | TOTAL LIABILITIES | $15,550 | $14,121 | | TOTAL EQUITY | $155,325 | $159,376 | - Cash decreased significantly by 37.6% from $59.6 million to $37.2 million during the quarter[2] - Exploration and evaluation assets increased by 22.2% from $99.9 million to $122.1 million[2] Statements of Comprehensive Income (Loss) The company reported a net loss of $9.7 million for the three months ended September 30, 2023, a substantial increase from the prior year, driven by higher operating and share-based payment expenses | Metric (in thousands CAD) | Three months ended Sep 30, 2023 | Three months ended Sep 30, 2022 | | :--- | :--- | :--- | | Demonstration plant operations | $3,383 | $2,876 | | Share-based payments | $2,740 | $790 | | Consulting fees | $1,151 | $501 | | Loss from operations | ($10,288) | ($2,113) | | Net loss for the period | ($9,734) | ($1,558) | | Total comprehensive (loss) income | ($6,918) | $2,058 | - Basic and diluted loss per share was ($0.06) for the quarter, compared to ($0.01) for the same period in the prior year[3] Statements of Changes in Equity Total equity decreased by $4.1 million to $155.3 million at September 30, 2023, primarily due to the net loss, partially offset by share-based payments and currency translation adjustments | Equity Component (in thousands CAD) | Balance, June 30, 2023 | Changes in Q1 2024 | Balance, Sep 30, 2023 | | :--- | :--- | :--- | :--- | | Share capital | $272,419 | $253 | $272,672 | | Reserves | $35,888 | $2,614 | $38,502 | | Deficit | ($148,707) | ($9,734) | ($158,441) | | Accumulated other comprehensive loss/income | ($224) | $2,816 | $2,592 | | Total Equity | $159,376 | ($4,051) | $155,325 | Statements of Cash Flows The company experienced a net decrease in cash of $22.4 million during the quarter, primarily due to significant cash usage in investing and operating activities | Cash Flow Activity (in thousands CAD) | Three months ended Sep 30, 2023 | Three months ended Sep 30, 2022 | | :--- | :--- | :--- | | Net cash used in operating activities | ($6,442) | ($6,849) | | Net cash used in investing activities | ($16,725) | ($4,581) | | Net cash from (used in) financing activities | ($29) | $69 | | Net change in cash | ($22,429) | ($4,995) | | Cash, end of period | $37,183 | $124,070 | - Cash used in investing activities increased significantly year-over-year, driven by a $15.7 million investment in exploration and evaluation assets[5] Notes to the Condensed Consolidated Interim Financial Statements Note 1: Nature of Operations Standard Lithium Ltd. is a Canadian company focused on the exploration and development of lithium brine properties in the United States - The Company's principal operations involve the exploration and development of lithium brine properties in the USA[6] Note 5: Exploration and Evaluation Assets The company's exploration and evaluation assets grew to $122.1 million as of September 30, 2023, primarily due to significant investments in Texas Properties and the South West Arkansas Project | Project (in thousands CAD) | Balance, June 30, 2023 | Balance, Sep 30, 2023 | Change | | :--- | :--- | :--- | :--- | | California Property | $25,805 | $26,562 | $757 | | South West Arkansas Project | $29,731 | $33,365 | $3,634 | | Commercial Plant Evaluation (Lanxess 1A) | $25,356 | $30,285 | $4,929 | | Texas Properties | $19,060 | $31,907 | $12,847 | | Total | $99,952 | $122,119 | $22,167 | Note 7: Demonstration Plant Operating costs for the demonstration plant totaled $3.4 million for the quarter, an increase from the prior year, primarily driven by personnel, testwork, and reagents | Cost Component (in thousands CAD) | Three months ended Sep 30, 2023 | Three months ended Sep 30, 2022 | | :--- | :--- | :--- | | Personnel | $1,190 | $1,309 | | Testwork | $785 | $322 | | Reagents | $629 | $435 | | Supplies | $385 | $751 | | Repairs and maintenance | $338 | $7 | | Total Costs | $3,383 | $2,876 | Note 8: Share Capital This section details the company's equity structure, including stock options and long-term incentive plans, with new grants and a $2.5 million share-based payment expense recorded Stock Options During the quarter, 1.75 million new stock options were granted and 100,000 exercised, resulting in 9.82 million options outstanding at quarter-end | Stock Option Transactions | Number of options | Weighted average exercise price | | :--- | :--- | :--- | | Balance at June 30, 2023 | 8,170,000 | $4.43 | | Options exercised | (100,000) | $1.40 | | Options granted | 1,750,000 | $4.00 | | Balance at Sep 30, 2023 | 9,820,000 | $4.38 | - Of the 9.82 million options outstanding at September 30, 2023, a total of 8.07 million were exercisable[19] Long-term Incentive Plan The company recorded a $2.5 million share-based payment expense related to 1,991,004 DSUs granted to the Board and Management under its equity incentive plan - The company granted 1,991,004 DSUs to its Board and Management, which vest on April 11, 2024[20] - A share-based payment expense of $2,549 thousand was recorded in the three-month period related to this DSU grant[20] Note 9: Related Party Transactions Compensation to key management totaled $3.1 million for the quarter, largely non-cash share-based payments, with additional R&D costs incurred from a related party | Compensation to Key Management (in thousands CAD) | Sep 30, 2023 | Sep 30, 2022 | | :--- | :--- | :--- | | Management and director fees | $586 | $514 | | Share-based payments | $2,549 | — | | Total | $3,142 | $514 | - The company has a Master Services Agreement with Telescope Innovations Corp., a related party, for R&D services, incurring $583 thousand in costs during the period[23] Note 10: Financial Instruments and Financial Risk Management The company actively manages financial risks, including liquidity and foreign exchange, with working capital decreasing to $23.8 million and exposure to USD/CAD exchange rate fluctuations Liquidity Risk The company's working capital significantly decreased to $23.8 million at September 30, 2023, from $48.8 million at June 30, 2023, indicating reduced liquidity - At September 30, 2023, the Company has working capital of $23,845 thousand, a significant decrease from the June 30, 2023 balance of $48,800 thousand[29] Foreign Exchange Risk The company is exposed to foreign exchange risk from U.S. dollar-denominated assets and liabilities, with a 10% USD/CAD rate change impacting comprehensive loss by approximately $1.4 million | USD Denominated Items (in thousands CAD) | Sep 30, 2023 | June 30, 2023 | | :--- | :--- | :--- | | Cash | $23,472 | $42,745 | | Accounts payable | ($9,223) | ($5,926) | - A 10% fluctuation in the USD/CAD exchange rate would impact the comprehensive loss by approximately $1,425 thousand[30] Note 11: Contingencies Standard Lithium is defending a securities class action lawsuit alleging misrepresentations regarding its DLE technology and lithium recovery rates, with no provision recorded as the outcome is undeterminable - A securities class action lawsuit was filed against the Company in January 2022, alleging violations of the U.S. Securities Exchange Act[31] - The complaint alleges misrepresentation regarding the Company's LiSTR DLE technology and lithium recovery percentages at its Demonstration Plant[31] - The company has not recorded any provision for this lawsuit as the outcome is currently undeterminable[31] Note 12: Subsequent Event Subsequent to the reporting period, on October 31, 2023, the company exercised its option with TETRA Technologies, Inc. to secure brine production rights for the South West Arkansas Project - On October 31, 2023, the Company exercised its option agreement with TETRA Technologies, Inc. to acquire brine production rights for the South West Arkansas Project[32]