E3 Lithium Limited (ETL.V) Earnings Call Transcript & Summary

I am Jeff Slack, a marketing and digital communications specialist at E3 Lithium. I'm excited to have you all here as we discuss our annual report and provide you with a corporate update. Joining us on this call today is our President and CEO, Chris Doornbos; and our Chief Financial Officer, Raymond Chow. We have set aside an hour today with time set aside for questions at the end. [Operator Instructions]. And I'll pass it over to Chris, who will take us through the presentation.

Excellent. Thank you, everybody, for joining, and thanks, Jeff, for kicking this off. So we want to have an opportunity to take you through today our annual report to raise on the call. He's going to take you through a bit of a summary of the financials that were released, and there will also be an opportunity to ask any questions at the end of Ray, and the information you might want from him. And we're also going to give a broad corporate update, talk about some of the recent news that we've had out, talk about our progress and plans for the pre-feasibility study, and the broader goals after that for the remainder of the year. So without further ado, we'll kick it off. I'm going to start off with a broad level or E3, just in case for those new shareholders and investors joining E3 today to talk about what the company is all about. So we at E3, have developed one of the largest resources in Canada. 16 million tons measured indicated that was outlined about a year ago. If you look at the Canadian resource base through Natural Resources Canada, the total measured indicated resources combined in Canada, other than E3 is 3.2 million tons of LCE, lithium carbon equivalent. E3 holds 16 million tonnes. So we are 5x larger than the entire rest of Canada's resource base. I think what it really does is it highlights the size potential and significant opportunity that E3 has here in Alberta to bring lithium into this growing market. When you look at what that means, and I'm going to talk to you a bit more about this today in terms of the permitting and regulatory and just the jurisdictional side of being in Alberta developing this project is very substantial, and it sets us apart from pretty much all of our peers in the lithium development space. Looking at the development of the technology. This was a big part of E3's past. We grew a team, we developed our technology. We piloted that technology last year. We also piloted for other technologies, and we've talked about that in recent announcements and our last webinar talking about the work that has gone into developing a process to extract the lithium from these geothermal brines here in Alberta. That technology has been significantly derisked last year, and we continue to work on it. We continue to operate it. We continue to look at ways to optimize as we design the facility. So all of the work that we're doing now and going forward is design work for the facility itself, verification testing. And I'll talk about what the labs up to as well as part of an announcement we put out the last couple of weeks. E3's goal ultimately is to build a lithium processing facility in Alberta. So we're going to start somewhere between 20,000 and 30,000 tonnes at our first facility in that size and that information will all be part of the pre-feasibility study that's coming out imminently. But we have the ability with the amount of brown and the amount of brine in the active that we hold to grow that to about 150,000 tons, which puts us as one of the largest lithium producers on the planet at that scale if we're there today. So that's a very significant opportunity for E3 to become a major component, a major player in the lithium industry. And what does that look like from a ground perspective? This map should be somewhat familiar to everybody. This outlines our measured and indicated resource in orange and blue and inferred in green over in the Rocky trend. If you look at the Bassat district, this is where the 16 million tonnes comes from. This is the orange-blue. Our pilot and our look -- where we're looking to develop our first commercial facility is sitting in and around where the Clearwater line ends. Our pilot operated east of account called OTCQX. That facility is still there, and we may actually look to utilize it later this year. And the first project that we will look to develop is in that area as well. But in just that one area, just the orange-blue, that's really 150,000 tonnes per year with a mine life of about 25 to 35 years, that's the focus there. We still have the Rocky area and the subsequent we called the Garigon trend, which is the western side. And we also on the right side of this slide, have land in Saskatchewan. And what that does is it puts us in a very secure position in terms of our land, in terms of our project pipelines, to build this project and build this company and create value for our shareholders over not just the short amount of time but in the long term. And an overview on the process. So very much like an oil and gas operation in Alberta today, we will drill a series of wells to collect the brine from the subsurface. We will pump that brine out of the well under an underground pipeline to a central processing facility where we will remove the lithium using direct extraction processing, which is an absorption technology, and then we will put the lithium void brine back into the same aquifer. We do that in development areas and in the pre-feasibility study, we're going to outline these development areas where we'll produce the lithium for somewhere between 12 and 15 years per development area. Once we've produced lithium from that area, we'll move on to another area. And each commercial facility will be a series of these little development areas. And when you look at the size potential of the project, we have 160 kilometers long by 45 kilometers wide by 200 meters thick on average aquifer at our disposal. It's 60 cubic kilometers of brine. So the opportunity to continually develop and continually expand our operations and increase our mine life throughout that project. to be able to deliver lithium is significant. Once we make the lithium concentrate at the back of the DLE plant, the rest of the processing is very straightforward and used pretty broadly across the industry. It's a further concentration of the water space using processes similar to reverse osmosis to squeeze out the remaining water to concentrate the lithium in liquid form. Then you add a soda ash or sodium carbonate to create lithium carbonate. And then you take that lithium carbonate slurry if you want, and you want to make a hydroxide and you add a calcium hydroxide and you can precipitate lithium hydroxide. That chemical conversion process is tried and true. We're using it for our first plant. There are newer technologies advancing that we really like, that we've tested by looking at a risk profile looking at just being able to get this project, the first one up and running, the chemical conversion process is optimal for the project and enables us to move much more quickly to a commercial facility, using proven technologies using vendors who have built these pieces of equipment before. I mean ultimately, and we've talked about this in the past that the ultimate goal for E3 right now is to get a facility operating as soon as we can. And one of the big hurdles to that will be project financing, where we're going to get the capital for this plant. And when you look at it from the perspective of a financing package, which would be, for example, a bank providing new leverage and debt to build a facility, the amount of risk they take on is directly proportional to the amount of money that they're willing to provide. And so it is up to a company like us to derisk the project. That's why you do feasibility studies, previews, and fees. That's why you do engineering design, that's why you do a bunch of testing is to ultimately de-risk the project so that you can finance it and build it. And it's derisking for our internal needs. We want to derisk it from an engineering perspective. From a company perspective, we want to present an opportunity for the Board to say that they verify and ratify this to go into commercial operations. But from a company such as E3, more importantly, is that the financing institution also verifies that. And so #1 goal for us, therefore, is the derisking of this project. A significant derisking happened when we decided to go to a third-party vendor for our DLE technology, which we talked about again in February, that decision wasn't made lightly. We did a lot of testing and continually do a lot of work on the technology that we have chosen as we develop it and as we engineer it so we can use it in this first commercial plant that we're looking at building. And that process by selecting that vendor by looking at chemical conversion by developing a project that has a streamlined permitting process, which I'll talk to you about in a little bit, and operating this project like oil and gas. And I think that's fundamentally one of the biggest derisking items in this project is that we operate this facility very, very similarly to how oil and gas operate in Alberta every day, which means we have the know-how to do this and the risk profile to get the resource out of the ground is very, very low, especially relative to some of the other options that are out there in the world for lithium production. So I think that, that, again, jurisdictional advantage that E3 has. So that's the high-level summary. We'll get into some more details here after I'm going to invite Ray onto the call again to take us through a bit of a summary of the financials and the MD&A that we published earlier this last couple of weeks. Ray, over to you.

Thanks, Chris. If you could just move to the next slide. So E3 was able to end our year with our best balance sheet since inception. We ended the year with $32 million of working capital able to be deployed for 2024. Our share count still remains very tight with 75 million shares outstanding. The warrants 3.8 million shares or warrants are outstanding. Approximately $3.4 million of those warrants are related to the Imperial warrants, which were prepaid warrants for USD 5 million at $1.86. Options outstanding, $4.8 million all issued to staff to keep them aligned with our company's objectives, providing us with a fully diluted share outstanding capital structure of 83.7 million shares outstanding. Today, we sit at a market cap of approximately $126 million as of last Monday. Next slide, please. So I chose a couple of financial highlights out of our annual report to highlight to our stakeholders and shareholders and potential new investors. Our business development expenses, marketing, and stakeholder engagements were approximately $2.7 million. Approximately half of that was for BD work and the other half was more towards marketing and state world or engagements, raising awareness with local stakeholders in our project area and furthering our domestic and overseas relationships with potential off-takers and strategic partners. For our corporate overhead in general and admin costs, about half of that relates to salaries, but the other half related to our corporate overhead. The best part about our capital expenditures for 2023 was that almost half of that was funded through grants financing through with the grants that we had available. We had 3 grants available in 2023 that we utilized Alberta Innovates. As of today, we've been able to claim the full $1.8 million from it. Natural Resources Canada provided us a grant of $3.5 million for our field pilot, and we've already been able to claim 90% of that with the last 10% being claimed this year. And SIF, from the SIF balance, we still have approximately $19 million outstanding to be claimed out of the $27 million that we were initially awarded in 2022. For the capital expenditures of $13.1 million, approximately $7 million of that was for our field pilot, $1 million of that was to kick off our pre-feasibility at the end of 2023, with the remaining balance going to our resource development. The best part about that, we were able to claim about $4.8 million from that in the form of grants, meaning that we only really spent $8.3 million of cash out of pocket. On our own DLE development, the majority of the capital expenditures of $2.5 million were fully funded through our grants through Alberta Innovates and ran and SIF, meaning that we only spent approximately $200,000 out of pocket to continue our developments on our TAC. In 2023, we were also able to tap the market for approximately $28.6 million of gross proceeds, raising at 2 different share prices, 2.25 and 3.55% with a weighted average share price of raising at approximately $3.30. I would like to also remind our shareholders that we've sent out our AGM notice for July 16, so marketing your calendars. If you'd like to attend our virtual AGM, I would reach out to our investor at e3lithium.ca for a link. And then I will hand it back to Chris.

Excellent. Thanks, Ray. And on the AGM, just to note that all the documents are coming digitally this year for the first time. So just try to save some paper, we'll be sending everything out digitally. So keep an eye out for that as well. I just want to go and touch a little bit on -- before we go through some of the news. I want to talk a little bit about who E3 is and where we are located. Before -- earlier in the presentation, I walked you through what E3 is trying to do. But I think it's important to understand sort of the DNA of the company. And starting off with the jurisdictional side of things. We've been in Alberta, I moved to Alberta back. I lived here working for Petro Canada and Suncor back in early part of my career. I moved back to Calgary for this project in 2016 because of the opportunity because of what it offered. Having a strong history of operating in the province, I understood the advantages. And when we're looking for a project at the time and you rank sort of how projects can come together, the biggest risk factors that projects normally face are those when you get to either expiration, so in the early stages, so finding a resource, to begin with, and then the last stages, so permitting, social license and financing. And so looking at the Alberta landscape, because this aquifer was already highly drilled, very well understood, have been producing for 60 to 70 years, we understood the resource. So there is very little exploration risk. And then understanding how Alberta operated at the time, the risk associated with getting permits in social license was the fact that lithium did not yet have a home for regulatory. But if you looked at it from the Alberta lens, you said, well, there should be a home for it under the Alberta Energy Regulator. And so we spent a lot of time working on that in 2018, 2019, a new government was elected in 2019, bringing Sonya Savage in as our Energy Minister, and there's YouTube, you can find a herd talking about kicking off a critical minerals assessment of how curcumin should be governed in Alberta in 2019. The result of that, you did that from our office. The result of that in 2021 was a bill called Bill 82 that was passed in Alberta that gave regulatory authority for brine-hosted minerals, which is lithium in Alberta to the Alberta Edge regulator who regulates oil and gas. With a home for lithium and brine-hosted minerals that the AAR rewrote the directive, specifically for -- to include language for brine-hosted minerals. And now those directors are published. So we have a full permitting regime set up in Alberta to develop this project. And because therefore, we drill wells and we put pipelines and just like the oil and gas industry does, the social license of how we operate, which is consultation first which is fundamental to the collaboration between the local farmers who own the surface rights to this land and a company like us who are trying to develop the subsurface rights, there's a symbiotic relationship between the 2. And that has been well established, and there are government-mandated procedures that you follow that have been developed in consultation with the lands over decades that are well traded in terms of how they get implemented. And so we use those same processes, those same agreements to license our facilities, well licenses, for example, or a pipeline right of way. The biggest benefit to this project from that broader perspective and from the ESG side of things, and this is just inherently to how you operate in Alberta is 100% reclamation when you're complete and 97% reclamation as soon as you're done putting the wells in. So you would clear an area. You can look at our pictures of our pilot site. You'll see that there's an area cleared where farmers' fields used to be. We've cleared the tops, the subsoil. We do our activities, and when we complete those activities, the subsea goes back, the top so it goes back. The well is left with the pipeline underneath the ground, but the farmer immediately has the ability to refarm that land about 97% of it because all that's left is a 5 by 5-meter location where the well exists. And so that inherently reduces the total land use, plus the fact that there's an open pit or Solar, this gives us the opportunity to be much more highly weighted from an ESG perspective. We're also designing the system, and I'm very excited about this to not have to use water from the environment for the process. And a lot of concerns on direct extraction have demonstrated water use as being one of the big impacts, and we are designing the system to not have to use any water outside our brine stream or the process-affected water, basically recycling water back to the process. We're going to outline all of that in the pre-fees when it gets out. Very excited about that. And that really sets us apart from a UC perspective as well. And so in terms of our regulatory process, there are people in Alberta who we are talking to right now. So the regulatory process has effectively begun. We are in the consultation phase, which is the start of any regulatory process in Alberta. And so we are on the ground talking to our stakeholders about where we would like to operate and what we'd like to do. And that will expand as we go and eventually, that will lead us to a broad but local information sharing and information session. And so we plan to do that as we go here, and that will be open to the general public in the area that we look to operate in. And so if anyone is in the sort of Red Dear to Calgary area, I'm sure in the next while, you'll be seeing some notices on that. And we do invite everybody to come shareholder or not to those information sessions if you're in the area. Moving past what Ray was chatting about. The other part of this is our team. So E3 has been systematically building a team of professionals, most of us based and have experience working in Alberta's industry that are able and have the experience to build this project. Last year, we brought on Kevin Carroll, who manages the process and projects team as our Chief Development Officer. He is working with Lee and Peter on very separate aspects of either regulatory, which is where he spent the majority of his career as a lawyer in the regulatory world and has done most of his work in government and stakeholder relations. And then Peter as well from a production side. And then our team of our process engineering lead Caroline as well as Paul and Jody on the project side. And then Brian running our commercial department. We are still staffing. We continually add people to the team and will as we grow towards feasibility and then obviously towards the construction of this plant. Our office at the point of operations will be somewhere between 100 to 150 people. Right now, we're at about 30. We'll probably be in the next year, doubling that in the next 12 months. As we go, most of the people will be engineers, either project or process engineers that have specifically hired to help us design and manage the build of this facility as we go. And our project schedule will also be included shortly after the prefeasibility study that will be basically developed from that information that will on in more detail the exact time frames of all the different pieces that we need to get this project up and running. We're still aiming to be in construction of it by 2026. And so a lot of work, obviously, over the next 2 years to make that happen. The pre-feas, obviously being the first big milestone towards that. We've also expanded the Board as of late. The goal here, and I've talked about this publicly as well, the Board has a mandate amongst itself to grow and expand its diversity of thought, it's diversity of people and experience as well. And so from that, we were able to bring on Alexandra Catalan, who was a former engineer at General Motors working on the Volt. And then more recently, Sonya Savage who was, as I mentioned, the previous energy minister, who left Politics a little over a year ago, has joined E3's board as well. Obviously, very important these 2 ladies to help E3 grow and become the company that it wishes to be, which is an operating lithium facility. Just a little bit on the market, and then we'll sort of wrap this up so we can get into the Q&A. Obviously, the demand for lithium and the demand for lithium-ion batteries is mostly weighted against the automotive industry, but you're seeing larger and larger use cases for energy storage systems. There are articles coming out recently even this week talking about the shift in the power grid as people implement large stationary storage facilities. Tesla is one of the first to do it. Actually when I visited back in 2018 when I was in California, these are becoming more and more prevalent, but really, the industry is governed by the automobile -- sorry, the demand for the thing is really governed by the automobile industry. And so these are just some recent announcements in 2024 that we've seen across the globe. Obviously, I'm sure everyone has heard of the Honda deal, a $15 billion investment to build 4 different plants in Canada, Hyundai and Ford in the States, Selantis in South America, and Renault in Korea. So very exciting to see these. But when you look at it from the North American context as more of a gross total we've had the slide of this not ours by long margin, but this is about 9 months old. So it does not include those other more recent announcements, but you can see the amount of battery manufacturing capacity being built across North America. There are a lot of initiatives right now, and we spend time and Elias down in Washington right now. We spent a lot of time with our U.S. counterparts because there is a North American supply chain for critical minerals initiative to bring the local supply on in North America. And that is to feed this. That is to feed these plants and IRE is one of the big drivers. But I think that when you look at the initiatives here, they are very much from a United States perspective, bipartisan in terms of getting a local supply of lithium off the ground, at least to supply some of, if not all of the battery production. And so E3 is obviously a critical piece. In that story, we have a lot of lithium to be able to bring to market in a very sustainable way. And sustainability is one of the key criteria next to price that we're being asked about from potential offtakers, some of which are on this map, obviously. So just to summarize on the market, the robustness of the market is only growing. We saw price decline. I think that we have to be cognizant of the fact that lithium is still extremely volatile. So over the next 3 to 4 years, I think we're going to see volatility in the price. It's going to go back up to a high number. It's going to come back down. I think we have to understand that. But the rationale and looking at why that happens is the fundamentals of the market. A good example is almost all of the battery greed lithium, which E3 will be producing is sold on our long-term supply contract. And once that supply contract is side, it usually has pricing provisions in it. And therefore, a company like E3 is agnostic to the price that you might see posted somewhere because we will get paid based on the contract. And those futures and lithium prices are still expected to be quite a bit higher than they are today, and we're starting to see examples of that recent auctions of spodumen concentrated of Australia are seeing an increase in demand for those products and an increase in price. So instead of just selling that spot, there are a couple of companies including [indiscernible] decided to sell their product at an auction and are receiving higher prices than spot on those, which is a good indication that the supply is still needed and that the prices are starting to come back up. But again, right now, today, E3 is agnostic to the price. We don't sell a product today, so we don't really -- we're not really worried about what the price is in real numbers. But in the long term as well, we'll likely be selling most really, if not all of it, under supply agreements that will govern the prices. So it's an interesting market to follow, but the fundamentals have been want to understand as well. I'm sure lots of people are looking to get an update on the pre-feas, we wanted to talk about where we're at. As I mentioned, the decision -- and I talked about this back in February at the webinar then, the decision to bring in 4 DLE technology providers and the timing it took to Tesla, those delayed getting the results into January. We had to analyze all those results against what it would take to produce a battery-grade lithium product from the back of those, and that took time. And to the end of February, we had made the decision on which DLE technology we were planning to use. And then we started the engineering for that in detail for the pre-feasibility study. And so that engineering is now almost wrapped up, and we're very excited to see that come in. So in the next 3 to 4 weeks, we will have probably 100% of our engineering deliverables in hand. And the majority of the cost, which is associated with that, which is actually, as you would -- I'm sure well guess, is a very important piece of the pre-feas, which is the cost. We have actually most of the cost already in hand. So it's just a matter of getting some of those final engineering deliverables as well. And then some of the final cost, a few that we don't quite have yet. But all of that is wrapping up. We're getting more and more information every day coming at us that the team is putting together to the point where a lot of the first half of the pre-feas is pretty much written at this point in time because we have a lot of that information already in hand and have for a while. So we're just finalizing the last couple of chapters in the economic chapter. And if you're familiar 43-101, you'll understand what I'm referring to. And so all of that will be published here as soon as we possibly can. The team is working adamantly to get this out. We understand how important it is to our shareholders, to our stakeholders to see the value of this project. We're very excited to get it out. We've been doing a lot of work on it. The results are very good. We're very excited to get this too. But we also are not skipping steps. We're also making sure that we have taken the appropriate methodical approach to the engineering because we want to use what we've developed to continue to design the project, we don't want to go back and have to take a step back and redesign something. But we're still aiming to have this out at the end of the quarter and more information on that will be once we get it out. So hang tight, it's coming imminently, and we're very excited to get it to everybody and get it out to the market. We also talked about expanding our laboratory. So one of the big things that sets out your part as well is that we have developed our own DLE technology. And while we've selected a third party for the first plant, we still are developing our technology. We still do move it along. It's not the main focus today simply because we're working on the third-party tech. But we do plan to continue to develop it. We have some work going on, and that will ramp up as we go through the rest of this year as well to get it ready, hopefully, for plant #2. But one of the benefits of having this team of experts at E3 is that it enables us to be able to verify -- test and verify everything to the point where we are verifying all of the results that we're getting from a third-party vendor in our own lab by doing the same level of testing that they do to understand it. So we have our own testing apparatus, and it's a follow-on from the pilot as well. A lot of the process design is somewhat similar across all of these. And so our process team and our laboratory team can take what they know, take their knowledge and deploy it, and test and verify the results. This is incredibly important because, again, with the derisking, we are able to verify and demonstrate that verification of all of the test results that we do against our vendors to outline the success. And that has been really important for DLE obviously, and that work is pretty much wrapped up now in terms of the verification testing. So we have all that data, and it's all going to the QPs or 411. But looking at the broader scale, because we have the expertise and we decided it would be worthwhile to expand our capabilities in the labs. We've already made within carbonate, and we've even actually made hydroxide in our past. So we have done this. But looking at the size and scale that we've done in it, we wanted to buy bigger equipment, and we wanted to do it at a larger scale. We have a lot of concentrate that we generated from the pilot that's still on hand that we can do a bunch of development work. So this is going to be basically a pilot size, but in the lab pieces of equipment to demonstrate the production of battery-grade lithium carbonate. We won't likely immediately go to hydroxide. The conversion from carbonate to hydroxide especially if your carbonate is already getting to that specification is a very simple process that's well understood and it's not something that we initially plan to look at in the lab. In fact, even making the lithium carbonate, the last piece of the process isn't all of that challenging. It's really the concentration in cleanup pieces that need to be optimized. And that's what this is all about is as the vendors optimize in their facility, we also optimize alongside them. And all of that work is being led by Caroline at the team and the importance of that can't be understated because a good process design will ensure that the plant operates successfully. And so we do all of our own process optimization work alongside the vendor to ensure that we're getting the same results. They do brand a lot of times, they're actually supporting their designs. We're providing them with our data to help them design their systems. That way we take ownership of that design, and we're able to deploy it more effectively into the field when it comes to building this facility because ultimately, our goal is to make lithium hydroxide. A vendor's goal is to sell this equipment. So we want to ensure that we're getting the right answers to the questions as well. And so I think that wraps us up. I'll just take you through the path forward. So right now, pre-feas is pretty much, I would say, 100% of the projects team, and therefore, like 90% of the energy effort going in. E3 is finalizing this prefeasibility study. So everyone is working really hard to work with the QPs to write the chapters and get the last piece of information in with our vendors so we have this ready to publish as soon as we possibly can. That will launch feasibility shortly after. So you start to take a 2- or 3-month break to review everything and make sure you're happy with all the pieces and get all your plans in place and then you kick off feasibility. Brian and I have been doing a lot of work on commercial development. We were in Asia. We've been all over the world talking to all of these companies that are looking for lithium, a catalyst for a lot of those conversations to mature into real negotiations happens at the pre-feasibility study. So that document is also very important to kick as a catalyst to Kiala. So working through that as well, but building those relationships in-house. So we have -- we manage that relationship again, which is a bit of a theme here at E3, and I probably notice that we like to ensure that we have a bit of control in what we're -- what all of the pieces that we're operating around because that allows us to control the outcome and being able to control the outcome is fundamental to success. And so a lot of the pieces that we work on, we develop our own in-house relationships and have our own team to do that. Obviously, the permitting system, as I mentioned, has already started. So the environmental surveys have begun. We've identified a location for our facility, and we're working through that right now. Eventually, that will be something we'll talk to the market about as well, once that all solidified. And the biggest piece of permitting, obviously, consultation is ongoing right now. We've been working on that for probably about 8 months, and we will continue the consultation in a larger and larger radius outside from where we look to operate. And again, as I mentioned, eventually, we'll have some information sessions in the local area, but much more broadly to that area. In 2025, we'll be continuing the feasibility study and also be looking to kick off some of the detailed engineering. We start talking in earnestly late this year, early next year about project financing. As capital becomes available, we can start purchasing some of the long-lead equipment or putting deposits on it, and that starts to really solidify the schedule because the schedule that we'll outline will assume that we can get the financing in place by certain times to be able to start buying things like the control systems and the pumps to be able to get all the equipment in hand when we're ready for it. And so that process is fundamental to being able to meet the schedule. So we plan to start that in 2025, and that allows us to start construction in 2026 and then however long it takes. We're still talking publicly about a 20,000-tonne plant because that's what the PEA aligned, but the prefeasibility to say will not be 20,000. The exact size we haven't announced yet, but we are going to change the first plant size for the pre-fees Obviously, once the first one is validated and ready to go and operating, that enables us to expand. Obviously, slightly easier to expand when you have revenue and put those plans in place. What we will be doing is once the feasibility really is fully engaged, a piece of our projects team that was fundamental to the pre-feasibility study, will start working on the design of the plant. So we will be doing the design in tandem while we look at plant: 1, simply because the cost to that is not very high to get some of these engineering started for plant #2. Some of that was already when the finances and we have an operating plant 1, we can start looking at keeping the plant the second plant not too far behind, and then growing, obviously, over time to we estimate about 150,000 tonnes per year. So we're going to bring Jeff back on. Ray is going to come back on, and we're going to jump into some Q&A. I know there's a couple here, and we've got a whole pile that came in from our investor at E3lithium.ca, e-mail address. So Jeff's got a bunch of them. So I'll hand it over to you, Jeff.

Thank you, Chris, and thank you, Raymond, for that presentation.[Operator Instructions] Just to start off Q&A. I noticed that we received quite a lot of questions just about the recent E3 and Imperial agreement update. And Chris, I was just hoping that you wouldn't mind providing more color to this announcement.

Yes. As Ray mentioned, we have a 3.4 million warrants that were issued to Imperial. Basically, as an investment in E3, they took warrants. The ratio for the taking warrants that we've talked about in the past is simply that it's for a company like them, it's easy to hold. What they've asked of us and what we've agreed to do is to extend those warrants by 12 months to give them more time to evaluate. Obviously, the pre-feas is a bit delayed, and the 2 are sort of tied together. So they've asked for another year on the warrants. We asked them for an additional bit of land as part of the option agreement, so they've kicked in about 30% more land. So that was the trade-off to give them the year extension. I think it's a really positive thing. They're still very engaged. They're obviously fundamental in helping us develop the resource that we came out of last year, and they still we still keep in regular contact with the team over at Imperial. But obviously, with the pre-feas delayed by about 6 months, it will land on their lap about the same time the warrants were about to expire. So we'll give them another 12 months. So that's the fundamentals of that. Nothing else changes. The shares are still issued to Imperial, so the same number, the same option price value of them was assessed. So nothing has fundamentally changed with those warrants.

Okay. And you had mentioned before in the presentation that you were in Asia, and some people are just asking if you could provide some highlights on the events there.

Yes. We went for 2 specific events. And then obviously, we set up a bunch of meetings with the companies that we're working with out there. So Fastmarkets had a conference that ran at the same time as a Canada trade mission hosted by Minister Inc. I was posting a bit of it on social media. There'll be some more stuff coming on some of the stuff we had at that event. So the Canadian trade mission was really to bring companies together in Korea. So that was hosted by Minister Inc. So Canadian companies and Korean companies looking to do business together. We have already established significant relationships. So we participated in the event, but most of the companies that we wanted to see, we already have a relationship with. So we go to be part of the event to be there as a representative of Canadian critical minerals industry. But a lot of the conversations we had at the offices of the companies that we're talking to. And we were also at the Fast Markets Conference, and I was speaking on a panel talking about the trade barriers to lithium. That presentation is public through Fastmarkets website, so you can go find it. It was a press it was a panel discussion. You can find that panel discussion with a couple of other industry experts from across the world, talking about the trade restrictions and trade barriers and what we think is going to happen. And I think a big theme of that was the battery passport that's coming. It's basically a European Union initiative, but I think a lot of companies in there for the world will look to adopt it and basically is traceability of the battery components back to sources. So for example, E3 would report its fundamentals of its product to an agency. That agency would collect the data and compile it and then if that lithium was used in that battery, you'd be able to, for example, scan the bar code on the battery, and it would tell you but it's criteria to tell you the source location was Alberta. We would tell you broadly that not necessarily with the lithium, CO2 footprint would be, but the broad store footprint for all of the materials that are made up and added together. So you'd be able to look at where that better came from and what the components are and all of the fundamentals about it. The European Union is pushing us very hard traceability of these batteries. So that was a pretty interesting conversation as well.

Okay. And a big announcement in Canada was the Honda and Canada announcement. Lots of questions came in just about your overall thoughts about that and the potential for possibly offtake agreements.

Yes. I mean Honda, obviously making a big investment in Canada 2 -- if I read it correctly, and I'm not an expert on the Honda deal necessarily, but 2 EV plants, a battery plant, cell manufacturing plant, and a cathode plant with the joint venture with POSCO. All of those, I think, are very positive. When you look at what the Canadian federal government is trying to do to bring in the investment into Canada, the onshoring of manufacturing of the whole ecosystem. So you have raw material providers like E3 to the car manufacturers like Honda, and then all of the components in between trying to bring that onshore into North America, and then obviously, Canada builds the industry here. And I think the real positive to all of these announcements not just the Honda announcement, is that we're building a skill set. So all of these factories that make the batteries and the cathodes and the lithium, all are going to have to be staffed with local Canadians who are going to build the skill set to be able to manufacture our lithium products from end to end. They're already talking about university programs specific for battery chemistry, battery and manufacturing, battery engineering, EV engineering in Canada. So you're going to start to see programs tailored to these because we're going to have to scale a workforce. So I think like when you look at the Canadian economy right now, one of the big challenges is productivity. And there's going to be -- it takes a bit of inertia and therefore some capital to get the productivity up. But if you look at the potential productivity from all of these facilities, bringing the manufacturing into Canada and therefore, Canadians being employed by this industry, I think it has a pretty big impact in the long term to the Canadian economy. So we're very excited. Obviously, it supports E3's goal of producing battery grid lithium to provide it to these types of automakers and battery companies. So I think for us, it's a very positive, I think, for the Canadian economy in the long term is very positive.

And just staying on off-takers. We've had questions just with the upcoming PFS. And we're just wondering how conversations have been going with off-takers and when to expect announcements.

Yes. I mean I can't predict the timing of those things, unfortunately. But what I can say is, as I mentioned, the catalyst for a lot of the detailed negotiations is around the prefeasibility study. And that's pretty broad across the industry. And it's not just E3, it's any project. The pre-feas is really a pretty massive catalyst for the development of a project. So it outlines reserves, so E3 will book Canada's first lithium from brine reserve with this report of any significance, which we're very excited about that getting out to the market. And that level of engineering that goes into pre-feas and of course, if you're a potential strategic partner and you're under nondisclosure, you're not just going to read the 43-101, you're going to read all the supporting engineering documents that have built around the 4211, which is really just a summarizing document. And so you get to see an insight of how we're going to build this thing and the value of it. And so it really does enable someone to truly evaluate E3. We're very excited to start that process because we've been talking to these companies for a long time this being a milestone and it's imminent. A lot of the information is already available but the finalized documents are still coming in, but they are here shortly. So yes, it's pretty exciting. I mean, just being able to step past the pre-feas as a company and move on to the next stage. I think everybody at the company is very excited for that. Because what the pre-feas does is it solidifies how you're going to do it. It certifies your process. What process they're going to use for each of the steps. And that's what I mean like we've taken a lot of methodical approaches to making sure that we don't have to change those because we want to change those, then you can start designing the commercial plant to more specificity on that were not in terms of like where the valves go rather than like this is the process design, now you're getting into like valve locations and programming logic for your control systems and the really detailed pieces of how this plant is going to actually operate happening feasibility. And that's what the team does. That's what they love to do. They love to solve these problems. And this is a big problem. This is a big plant we want to build in Alberta to produce lithium, and we want to continue to expand that and expand the production. So everyone is keen to get going on it. But again, we need to make sure that this is done right, and that's why it's taking a bit of extra time, but it's fairly tracked up at this point. So that's pretty exciting.

Thank you for that. Some people have pointed out that there's been some insider trading activity, and they're just wondering if you can give some insight into that.

Yes. I mean, I think the biggest thing to look at is the growth in the share position. So for example, his, myself, my share information is all public. When I started E3 as the founder of the company, I ended up with about a little under 1 million shares in the founding company. I now hold about 1.4-something million shares. So I've grown my share position by over 40%, almost 50% since I founded the company. And I think that trend is the same with all of the Board and senior management, everyone is growing positions in E3. And that's, I think, the long-term trend. Sometimes you have to sell, like we had to sell some last fall for tax purposes, tax is now collected at the exercise, not the sale. So if you exercise options, you get tax on that exercise price. And so even if you didn't sell the share, you still have to pay the tax. None of us are billionaires here that can just pay taxes at win. So we have to sell some shares sometimes to pay the tax bill. So that's caused a lot of the selling. In fact, I think I would venture to say 100% of the selling for any of the insiders is related to just simply paying the tax bill on those option exercises. Auctions are incredibly important for motivating and incentivizing staff. We can't pay a giant oil and gas company salary at E3, but we had to compete with those companies for talent. And so how we compete with them for talent is that we give some equity incentives as a total compensation. And so the equity, which is in the form of options, is incorrectly important to motivate and attract more so the skill set that we need in Calgary or bring the skill set into Calgary. So I think the options are important. I think that the shareholders looking at that, it's very, very minor dilution to have those options granted to the employees, but the return on that investment is huge because of building and designing a plant that's going to make this company successful. So I think it's important.

A question came in just about how does E3 plan to ensure sustainability and environmentally responsible lithium production?

Yes. I mean, I think it's a good question. Inherently, to direct extraction your surface footprint is extremely small, right? You don't have an open pit mine. You don't have a SLR. And again, as I mentioned, you're reclaiming the majority of your impact immediately. And then the last little bit of impact is 100% claim. So when you leave this, there's no tailings pile you leave behind. There's no impacted mine pit that you filled with water, 100% reclamation of the land when you're completed. And not just -- it goes so far when you're talking to customers. Also, the use of water is another critical piece of this. And I'm not going to get too much in the details because it's all going to be aligned in the prefeas. But we are looking at not using any water for our process other than our internal system, which means that we don't withdraw from the local environment, which I think is incredibly important. I mean we're talking about the potential drought here in Alberta from a low snowpack season. And so having a project that doesn't require to have to use any water from the environment is very important. And then obviously, carbon is another metric, and there's a lot of ways that E3 is going to be looking to reduce its carbon and that's a more complicated project to embark on, but we're going to publish it publicly. After the pre-feas, we'll be working through a life cycle assessment and LCA, and that will come out -- we don't have a time frame for it, but it is something we'll be working on immediately after the prefeas. Basically assesses the pre-feas, looks at the carbon, and then looks at ways to reduce it, and then you publish that publicly. And that really is not so much for the investment crowd. It's more for financial institutions or for equity finance or sort of debt finance or for potential off features. They really need that report. So we're pushing that publicly.

Thank you. This next question is for Raymond. People are asking what's the company's long-term goal for financing.

It's a good question. The company has outlined a strategy on both how to fund its company on the corporate entity and the projects. And we have outlined it to our Board of Directors. And it looks towards moving through the different stages of going through pre-feas, the feasibility study, all the way up until commercial production. If I were to reveal some pieces of it, like the main points of it would be focusing mainly on nondilutive sources of financing. You'll see the Canadian government has available $18 billion available, not even including what's available in the U.S. in terms of potential financing. You were able to see $2 billion loaned out to Lithium Americas for their project. And then from there, you move in towards strategic partnerships, joint ventures for financing the project level, and then you would always look towards equity markets to fund the corporate entity itself.

Awesome. So yes, I think there's a well-developed strategy that Ray and I have put together that really outlines how this company is going to keep itself financed and how we're going to finance a facility. And it's fundamental to the success, obviously, is keeping the financing in Czech, but there are opportunities like never before, I think, right now. And I think those -- I've said this before, I think those have a window of time. And so it's an impetus for E3 to make sure that we are developing this project in lockstep so that we can get the lithium operational window that meets the demand crunch that we're going to see here in the next 3 to 5 years. And that timing is, I think, pretty important to be able to find some of the more larger sources of capital you point to GM Becker pass or some of the other companies that have been buying their lithium directly from the developer. And there are more and more deals of Standard Lithium and Equinor just last week. So there are lots of examples of M&A in the space right now as companies look around to either get in the lithium space or acquire lithium or a combination of the 2. So I'm just going to quickly run through some of the questions in the thing in the last. I think we have about 3 minutes left. So there's a question about how long it will take for hydrogen to impact the lithium EV market. And I don't see a big overlap in the use case of hydrogen and lithium-ion batteries from an industrial perspective. where hydrogen is going to be very impactful is if it's even in the transportation industry, you're going to see it much more prevalently in long-haul transport, for example, trains and hall trucks. In the light vehicle market, I don't see hydrogen coming in as a meaningful participant. And the reason I don't think that is because the infrastructure required to move from petroleum to hydrogen is significant. And people are talking about how hard it is to get a charger and the charging infrastructure up to speed. The level of energy and capital to build the hydrogen infrastructure is significantly larger than the charging infrastructure. And then you still have to make the hydrogen on top of that. And I think that there's been a lot more information in this space to show the actual impact of making hydrogen unless you have things like power from -- unless you're using hydropower, or something like that to make it. So from my perspective, and this is from what I see going to all of the conferences and all the electrified transport and the transportation industry that the light vehicle transport and grid storage and all of those things, the market for lithium is still -- and the lithium-ion battery is still very substantial, and it's not really being impacted by hydrogen or hydrogen transport vehicles. A couple of other quick questions here to wrap up. Are we going to require a sour gas processing site? The technical answer to that is no, but it's obviously more nuanced than that because there is a bit of H2S in the brine commute. So the details of that will be in the prefeas for sure and how we plan to manage that. And that's -- we generally refer to that as the pretreatment step. So there'll be lots of detail in the previews about how that will be managed. And so I'll leave it for that when that comes out, that's a while. And our question about the size of the plant is our plant can be larger or smaller. Right now, it's most likely that the PFS in a plant larger than the PEA. But we also are contemplating, and this will be a decision that we'll be making for the feasibilities is do build in stages. And all of that will be contemplated as well in the pre-feas and then more detail, obviously, as we go through feasibility. So I think that wraps us up the last minute. Just want to say thank you to everyone who attended. We had about 150 people on the line. Thank you to Jeff for managing this and for Ray for participating and taking us through the financials. So keep in touch. Obviously, investor at e3lithium.ca is the best way to keep in touch, and we will keep the market updated as we go and keep it off for this prefeas. Thank you very much, everybody.