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

[Audio Gap] our President and CEO, Chris Doornbos. Chris, over to you.

Excellent. Thank you very much and thank you, everybody, for joining the call today. I am just going to get the presentation loaded up and get us underway. So I appreciate everyone taking the time this morning to join the conversation. We'll also have this posted, available for general shareholders probably tomorrow for those who couldn't make it today. And so I just wanted to take some opportunity to address the prefeasibility study. We announced it a couple of weeks ago. There's been a really good cooling off period. People could digest the information. We have received a lot of positive feedback on it. Obviously, it's a pretty significant opportunity for E3 to be the leader and book Canada's first brine reserve, 1.1 million LCE or -- almost 1.4 million LHM and that is a very significant addition to Canada's lithium reserves. We've also seen a bit of volatility in the stock price and we were getting a couple of questions that revolve around the CapEx. And so we wanted to take an opportunity as well to address some of those concerns and take you through a broad understanding of the prefeasibility study and what we've ended up producing here. First, I just want to give a big shout out to the E3 team. Doing a study like this, really a prefeasibility study is answering all of the questions of how you're going to do it. The next stage when you do a feasibility is the design of that. So how are you actually going to -- where the valves are going, how it's all going to actually look from a detailed engineering perspective. But the big lift is answering that main question. How are we going to do this? What are the pieces that are coming together to get lithium out of the ground and into a salt that can be sold to the battery market? And so the team has done all of the heavy lifting and so a big appreciation to that team and for all of their hard work in getting us over the line. Obviously, forward-looking statements. Very important, please have a read of these. They are on the website as well. So E3's strategy here is to build a portfolio of lithium assets to strengthen our global demand -- global supply for demand of lithium ion batteries. We're doing it in a jurisdiction that is favorable for this type of operation, being in Alberta. And I think that is something very important to point out, is how important the location of where this project is. And we want to do it in a way that promotes sustainability so that we're supporting this global electrification revolution that we're seeing happen across the world. So with that, obviously, it's a pretty broad strategy. So our focus has to be very much clearly defined and that is on developing the first-of-a-kind lithium processing facility in Alberta. That's not all we're going to do but that is certainly going to be the focus. We have the opportunity to grow this company and grow that production and grow our resources. We have a very significant asset here located in Leduc Aquifer. It is yet untapped and it is significant. It is globally significant in terms of its size and opportunity as well as in terms of its ability to produce in a commercial scenario. So there's lots of opportunity for E3 to grow based on what we have here. And we're also looking at expanding in the vertical and information on that obviously will be coming. And then on the other side of this is that we are in the battery industry. We will produce a product for lithium-ion batteries directly. We will not make precursors. We will make a lithium hydroxide. That's how the prefeas was geared. We can also make a carbonate and we can also potentially make [indiscernible]. So we are a company that is gearing itself towards that industry. And we believe that the best way to go about this is to bring partners in and to partner with them on various different pieces throughout the process in the project, as we grow to become a producing company. And our goal here is to deliver value to our shareholders. So we have a strategic asset in North America that is required for the electrical revolution that is going on globally. We are the leader for in-brine resources. And we are on the path -- this is on the path to energy independence with a local supply. And there is very little lithium hydroxide, lithium carbonate for the battery industry produced in North America and in Europe today, very, very little. And the majority of it that is produced is coming from molecules of lithium that are not produced in North America. And I think that the importance of that cannot be understated because we need a local supply. And E3 offers that and we offer expansion opportunity to grow that supply. I'll just leave this here and we'll just -- instead of going through the highlights, we'll just jump right into the details. So looking at the fundamentals of this project, the size. So 32,250 tonnes is the initial capacity and average capacity over 50 years of 25,000 tonnes. And the difference between the 2 is simply just as you produce you decline and that's a very normal mining scenario where you sort of decline your production over time, so this produces a lot of lithium for a very long amount of time. And that is where the reserve comes from. So on an LHM basis, is 1.3 million tonne reserve. And that's the 50-year mine life. So we have a very significant opportunity. I'm going to show you what that looks like from a size perspective in the following slide. But that size is, from an industry perspective, it's about the average size of a project that is being developed today. And why us, 32,000, why did that number come to be? Really, when you look at the optimization of this asset, the number of wells and pipes required to move the fluid, the brine to a facility, the size of that facility this size made a lot of sense. But it is something that the company can build in stages. And that is what we will be evaluating through the feasibility study, is what that looks like. And also, it has to do with where we get the capital and how we're going to build this, plays a lot into the size of the initial capacity. But that full capacity of this particular plant in its full scale will be designed for 32,000. And then looking at the economics of this. So an NPV of USD 3.7 billion with an initial operating cost of $6,200. And what that means is that there's an IRR of this project of just under 25%. And that means it's industry competitive. It's an economic project that stands on its own in terms of its ability to make revenue. And while it's strategic and while it's in a very solid jurisdiction, it still needs to have the fundamental economics. And for the pricing that we used, the average selling price was provided to us by Benchmark Mineral Intelligence. And so they -- it is their strip price, which means that the price isn't $31,000 on across the whole time. It moves up and down based on supply/demand fundamentals. So the first couple of years, the price is in the teens and then it raises up through where they believe the supply/demand crunch comes in, in the later part of this decade and the first part of the 2030s to about $40,000 at peak and then it drops back down after that as well. And so that gives you an average over a 50-year life at $31,000 but that is not necessarily the price that we're getting paid every year. And it's an important metric in citing how this gets costed because one of the big things we've talked about continuously is the timing, when we get this project into operations because there is a wave of demand coming because all of the battery factories that are being predicted to be built, suggested that they're going to be in operation, when you look at their time frames, they're 2025 to 2027, 2028, that is where Canada is building, North America is building and Europe is building most of their battery capacity. Which means when you look at when the demand for lithium really turns on from that western side of things -- Western world side of things, it's in the later part of this decade. And we want to have product ready and available to meet that supply -- to meet that demand so that we can capture that price because that does help obviously as we move through paying back the economics. We also produce the most lithium at the very beginning. And the combination of the 2 make -- the first 3 to 4 years of this project make a significant amount -- more revenue relative to the average, which allows us to pay the capital back much quicker. And that has a big derisking scenario for people like the banks who might be looking at financing of this. And then I think one of the important things and one of the questions, pretty much the only real question that we've gotten about this is the CapEx and how E3 plans to fund that CapEx. And so Ray is here to talk about that as well. And I'll just sort of lead him into this. And that is, one opportunity for us is, obviously, we can build this in stages. And I'll take you through some of the details of the CapEx in a second here. So the other piece of this is that we've been looking at this, in the perspective of the cost of this for the last couple of months because, obviously, we've had the information, we've been compiling and we've seen the numbers come in as they've come in. And we need to be able to get them all together and get it signed off by QP to publish it. So obviously, we can't preannounce any sort of information about the 43-101 technical details of this project until the report is ready to file, which it now is and will be filed here shortly. So we can't really talk about the details of this. But we've known and we've been able to put a strategy together and the strategy is twofold. One is that there's a traditional project financing mechanism that you deploy to get the capital to build these projects. And Ray is going to take us through that, he's got a lot of experience in that. The other is that we believe that for the first project in E3 and we've talked about this publicly in the past, the first project, it makes the most sense to bring in a strategic partner. And we are also talking to a lot of different companies from across the value chain, whether it's energy companies, mining companies or automobile companies or battery companies. There's a significant amount of interest in this project because of the jurisdiction and some of the sustainable things we're going to talk about in a later slide. And so that is fundamental for us, obviously, as a starting point. And once we look to get that strategic involved, that could be offtake, that could be a joint venture and we are looking at the various different opportunities there. And then we move into the more standard project finance. So I'll hand it over to Ray and then I'll come back and I'll take you through some of the breakdown of the CapEx and how that sort of plays out for the project.

Chris, really appreciate that. I've been waiting for this day for quite some time in the sense of waiting for the economics, for the PFS to come out, both John, the Board Chair and myself, previously worked at ATB in the project finance group and we've been able to see and work on a lot of projects that have built renewable projects such as solar and wind and bring them all the way to commercial. And so finally being able to see these economics has been quite exciting in a sense of, typically, when you present project economics, it is unoptimized in the sense of it is all looking like no debt, no leverage layered into the project economics. But the beauty of, like most projects, so how they are built, typically requires leverage between 50% to 70%. Some projects at 70% are similar to those, the ones used in Lithium Americas, where they were able to secure some DoD financing to fund their lithium project down south. And so with layering in project financing debts, it's a cheaper cost of capital than just using 100% equity to which nobody really does -- do that. That interest that is tax deductible provides a lot of flexibility. It minimizes dilution to equity shareholders. It allows you to structure the project economics and provide higher equity returns to our shareholders by kind of optimizing that. When you start layering in things such as the critical -- the clean tech manufacturing ITC that was announced, that provides 30% CapEx back, it provides another kicker in terms of providing additional returns to equity shareholders, which then requires a lower lithium price to finance this project. So it's quite exciting in the sense of like, when you look at the project economics today, our OpEx is quite low at 6,200 tonnes per annum. But if you look at the rest of the funding landscape, you've seen additional strategic partners enter the lithium brine space. You have Standard Lithium partnering with Equinor, you've seen Frontier Lithium out East, getting in Mitsubishi. And so this is -- there's a lot of funding available to build a project like this, both with strategic partnerships. You've also seen the government definitely step in, the Canada Growth Fund with $15 billion. A lot of federal funding has funded a lot of projects out in Ontario such as the Honda battery plants, Stellantis, Volkswagen. And so a project like this, as Chris had mentioned before, it is a critical asset. It is a strategic asset and if anything that we've seen post-COVID is that the deglobalization and everyone trying to build out diverse supply chain is very critical. And if there was anywhere that could build it, it would be in a jurisdiction such as Alberta. So in terms of funding, 60%, 60% debt can be funded with a lot of the additional funding coming from both government and strategic partnership sources to fund this. So...

When you look at that, the sort of fundamentals of the capital stack that we're going to be putting together, as Ray has alluded to, the first and foremost, for any project debt financing is #1. That's how you normally pay for the majority of the project. Never before has been opportunities to get finance [indiscernible]. And when you're looking at that perspective, you're seeing examples of that across the world really where automobile companies from the very end of the value chain but even battery companies and mining companies are investing in projects like these, to get access to them or to get access to the material that we're producing. And that is what we mean when we say we're going out to find a strategic. And then there is government support. And that government support is not something that we necessarily want to rely on to build this project and won't be but it is available for us to help reduce the burden of the capital. And I think that's the fundamental piece here, is that very rarely in time has there been an opportunity for a small company like E3 to actually afford to build this project. And so I think that's a fundamental aspect of that $2.4 billion because it is a big number, especially relative to the size of E3. But there is opportunities to do that. And because we have multiple projects, it is advantageous for the company to give away a piece of this project to get it built and get it operating. And then be able to use that revenue that we generate to go build other projects that then are 100% E3. And that is our perspective and that's what we're looking for right now. And I think when you look at the how, that's going to be the how for E3. When you look at what the debt financing folks have asked us in conversations that Ray's had in a lot of detail with the big banks in Canada and the banks in the U.S. and even boutique mine financers, they're all saying generally the same thing. We want offtake agreements, which are standard course in the industry and we want the performance guarantee on the technology. And we've said this before, that is the main driver for us to have moved to a third-party technology because it allows us to get that performance guarantee that enables us to go with the debt performance, that enables us to build this project. And we've known that for the past 18 months. So we've been putting the pieces in place to be able to fund the capital for this project without making any missteps along the way and we will continue to do that going forward. When you look at the capital stack and I'll just -- I don't have it on the slide deck here but we can reference the news release, the majority of the capital comes into sort of 3 chunks. So chunk #1 is the brine production. So wells and pipelines to get the brine from the processing facility, from the ground sort of to the processing facility. There's a brine pretreatment step, which is the removal of the gases and get the brine into a form, which is mainly just the gas removal to get it to a place where we can then do the lithium extraction, which is the next big piece. And those 2 account for probably a little more than half of the capital. And then the rest of the pieces come into, now you're refining it, so you've got to purify it. And that's mixed in, in the capital for the lithium extraction but there's the purification step, which is a series of reverse osmosis systems and filtration to -- and then a final sort of what we call [indiscernible] ion-exchange sort of process to get the last little bit of nonlithium elements out, magnesium and calcium and then the conversion. And then there's obviously the sundry stuff like the buildings and then we add a contingency. And contingency is pretty standard because we have quotes for the wells and the pipelines, you can just see, on that is 10%. And for the rest of the equipment, we had -- it was standard industry 20%. And that's how the capital stack came together. And again, the details are in the news announcement and we can talk more fulsome about that or you can -- sorry, more fulsome information about that in the report when it comes out, hopefully, in the next week, 1.5 weeks that will be published for everybody. I think one of the those -- there's 2 other pieces of this project that I really want to focus on today before we get into the Q&A. And we can come back to any of the other details in the slide deck, again, is on the website, as is the news announcement and report shortly. So I'd just -- let's just hone in on 2 big pieces, one is the accessibility of the infrastructure. And we take this for granted in Alberta but it shouldn't be taken for granted in terms of the location of this project. And it is fundamental. So we are in the heartland of Alberta. We are between Calgary and Red Deer, east of a town called Olds, where we have a strong workforce of people who know how to operate this plant because this plant operates very similar to the types of process facilities that are already operating in that area. We are directly off of a main secondary road and 1.6 kilometers from a provincial paved highway. We have a -- we're 100 meters from high-voltage power 240 kVA. We are 15 kilometers from rail and 25 kilometers from the other natural gas we might need, which means all of the lithium we produce goes 15 kilometers by truck and then on rail and from there, can go anywhere in the world based on that east, west, south. So I think that and you look at the regular framework and I'm not going to get into the details of that but the regulatory framework in Alberta is very transparent. And #1 for us is consultation. That is the first piece you do in Alberta and that is what we're doing today. And so we are out today in our area, talking to all of the local stakeholders, talking to the community about this project, giving them the information they need. And that is the fundamental start to any permitting process, and that has started. We did get a question about power. Power interconnect in Alberta is probably the longest lead item. It's the lowest risk [indiscernible] but the longest lead and we have applied for that power interconnect already. So that process has started. Just really quick, how important booking this reserve is. This puts E3 and lithium and brine in Alberta on the map for reserves globally. So very significant that these reserves were booked here for this project. This is what the facility is. Look, this is just a schematic but it's representative of the pieces in terms of size and in terms of what they'll generally look like. This is something that will be refined and designed through the feasibility stage in its intimate detail. But effectively, the processes are all here. We bring the brine out of the ground, we degas it, we store it for a short amount of time, so we have some surge capacity while it goes through the direct extraction and then the brine goes right back into the wells and back into the ground. From there, we make lithium chloride. We produce that into refined lithium chloride by removing water and taking up the last bits of magnesium and calcium and a couple of other, the elements. And we want to get it to a better grade. And then we convert it to carbonate and then we convert it to hydroxide. We are talking about building a co-gen power plant and that would be built by someone else and we had signed a power purchase agreement. That's how the PFS was designed. And so we'll be paying somebody else for that power to be produced locally on site. That enables us to, either the day we start or in the future bolt-on carbon capture to reduce our carbon emissions, which is something that is fundamentally important to E3. The storm water pond is just to collect runoff off the site. And then we obviously have the lab and an office. When you look at the sustainability side of this and -- with [indiscernible] that just came out, we had to be very careful. So we've been very -- just factual on what this project will do in terms of sustainability. The #1, Zero Liquid Discharge philosophy. And this is different from any project out there that I know of today, meaning that we will not source water for our process or discharge water from our process either from the environment or back into the environment. So we recycle 100% of the streams where we can. We'll source any -- makeup part of what we need from the brine stream and we'll produce this lithium without using water or putting water back in the environment. And that, that is absolutely so important for the sustainability side of this project and be able to be ranked because one of the key aspects for any project, especially now that the Battery Passport is going to be out in 2026 in law especially in Europe and it's probably going to come into North America. And that Battery Passport basically is going to be a sustainability infrastructure. What is that -- what is the components of sustainability that battery has been built with? So all of the raw materials that have gone into it. And so you get ranked against that. And obviously, the companies are looking for the best product they can in that regard. Carbon emissions, again, if we deploy the carbon capture, we can get this down to 1.9 tonnes of CO2 per tonne lithium, which is on the very low end. The averages I've seen are between 5 and 15x of CO2 per tonne of lithium. So very, very much sustainable on the carbon side and then land use and this is inherent to all direct extraction projects. And I think, you combine all those together, we're building a modern project. We're building a project for the 21st century, building a project that enables us to produce a product that has all of the aspects of it that the world is now demanding to ensure that we're building a sustainable future. So just quickly on the path forward, again, all these slides are on the website. The prefeas is now done. The team is, obviously, summer is here. It's been a big lift. We're doing a bunch of review of how the process went and we will kick off feasibility in September. And feasibility, we estimate it will take about 12 months to complete, plus/minus. We'll have more details on that once we actually get it kicked off. Once feasibility study is done, we'll be able to start ordering the project and looking for -- ordering the pieces for the project and start the project financing. And so from a project perspective, that path, if we can get that done in time, the next is, we get the permits in, we're hoping by the end of 2025 or early 2026, that allows us to start earthworks and [ footing ] work for construction and then we can start assembling the equipment as it arrives. And then obviously we start the plant once we can into 2027. And there are risks to that, obviously, we have to be able to find the financing, that's probably risk #1. We have to get the permits in place, that's risk #2. The rest of the risks are pretty much -- have been reduced significantly. The design is pretty much nailed down now. And so I think we're pretty satisfied with how this is going to look. But obviously, derisking those things and being able to move this project as quick as we can to get this into operations to capture that market share. And really, we want to have it running by 2028, mid-2028 at the latest. Obviously, our goal here is 2027 but the real price tag is predicted in later part of 2028. So that's when we want to have full 100% operations humming along. And so to do that, we want to be commissioning this plant in 2027. Obviously, the share price has taken a bit of a hit. I think that the biggest thing that -- and the reason for this webinar, we're going to do this originally after the report was out to give some more feedback to that. But we wanted to do this bit early because I think there was just a bit of a misunderstanding on the capital side of this. And so we wanted to just get in front of that and help people understand that this project, how we're going to -- our strategy of how we're going to finance this project is fundamental to the success of E3, obviously and looking at where we're going to get the capital from and aiming right now for obviously non-dilutive sources. We don't necessarily want to go raise this money as equity to go build this. And it would be an impossible task today at the share price. Obviously, the price appreciation happens as you get closer and closer to the development, obviously, a positive lithium market that we expect to come back in the fall through winter, will help with that as well. But I want to really focus on the fact that E3 isn't going anywhere. We have, at the end of Q1, $28.8 million in the bank. We still have $19 million to deploy from SIF. We have the capital we need to get through the slump in the market, to do the things we need to do to create the value for E3. And so I think that's really important to understand that E3 is -- we'll survive this, E3, the long term vision for E3 has not changed and we will get this project build, that is our #1 goal. And everything we do is gearing towards that. And then just a little bit on the market and I think this is also important from a context. We put the slide together, this 250,000 tonnes is an estimate but it's based on all of the commitments to build batteries just in Canada. So Canada's current demand projected by the time all of these facilities get built is roughly 250,000 tonnes of lithium hydroxide year. And most of these batteries are going to be from the current announcements in high nickel cathode, high nickel cathode requires hydroxide and that was the impetus for us to go to the hydroxide side of things. And so what that means for Canada is that we currently produce zero lithium hydroxide and North America, very little, which means to be able to supply just our own supply chain is going to take a lot of projects to get off the ground. And the Benchmark Mineral folks estimate USD 60 billion to get these -- the lithium industry up and running. And so that capital is coming. And those projects that can get in the time frame that have the sustainability factor, that have the location, those are the projects, in my belief, that will get funded and that's what we're building here in E3. Excellent. So now maybe we can jump into some questions and I'll hand it over to Jeff, who's operating this webinar and Ray and I will be on to answer questions we have.

Thank you, Chris, and thank you, Ray, for your presentation. One question that did come up quite a bit that we saw was your confidence and how E3 will find strategic partners to help you get through the next phase?

I mean, it's a really good question and it's just difficult to give shareholders and more so the general public the details of what E3 is doing behind the scenes because we are working with and building relationships with these companies. And we don't necessarily -- we can't necessarily, because under nondisclosure, outline who they are. We can't necessarily say where the stage of those conversations are. And we respect these companies because they will be our partners, they will be companies that we will be married to, to build this project and to provide the lithium to them, if that's the type of company that we're partnering with. So just to give that perspective and we respect them and we can't provide the information. What I can say is that we have a large number of nonbinding MOUs signed with various different companies across the ecosystem that are relationship building agreements. They're noncombining, they don't mean anything in terms of us actually selling a lithium to somebody who we're partnering with somebody but they build the relationship. And we've been working on these with a couple of very critical partners that we believe will have the best value for E3 and we're proceeding with those negotiations to find a partner. And the number of partners that are potentially there for E3 then is quite large. Obviously, the list will get smaller and smaller as we get further and further into the negotiations. But we're only looking for 1 strategic partner and then obviously, depending on that partner potentially then offtake after that, depending what the partner is looking for. And so those relationships continue to evolve and grow. But I will say also that the prefeasibility study is the catalyst for those detailed negotiations. Without this document, it is impossible to bring in a partner that has -- that will actually come in for a binding agreement to give you the strategic side, the capital or the offtake or whatever you're looking for. And so the start of those detailed negotiations really can now happen because of this prefeasibility study, so fundamental to the success of those negotiations was this document. So the commercial team, which Ray and I lead with Brian on the shop and we're building -- we're adding to that team as well right now, some analysts and some other corporate development people to work with us. But Brian and I have been all over the world over the past year in Asia and in Europe, talking to all of these companies, preparing them for this, giving them the heads up that all of this is coming in our time frames. And fundamentally for them, obviously, time is that and obviously, about the structure of the deal. Those 2 things are the foremost important to the negotiations and then to the project, sustainability still is on the top of the list. And reporting this under things like IRMA becomes very important for E3 and we will be putting that together as well for our potential partners to be able to be ranked sustainability-wise against the peers in the space.

Thank you, Chris. And just a reminder for anybody who joined late, you can submit questions using the Q&A tab at the bottom of your screen. This next question is geared towards Raymond. People are asking just for additional information regarding critical minerals ITC, how it works and what capital costs qualify.

Right. So the Federal government announced in last year's budget, the clean tech mineral investment tax credit. It's 30% on capital. They are still finalizing what will be completely included in that. I think there is right now in the final review draft this summer for feedback from companies such as E3 and the rest of the industry. Right now, how it's broadly worded is anything which includes well sites, processing, manufacturing. And so that does encompass a lot of E3's project. And so until that documentation and the criteria are finally outlined, probably this fall, it's tough to say. I would definitely say it's -- it'd be very [indiscernible] to say 100% of the ITCs, we'll qualify for 100% of this project. So I would probably peg it to be somewhere in the middle, may be half, half the costs. But TBD, to be honestly -- let's be honest until that documentation comes out of...

Yes. And our understanding is that it's a payback. So there's a sort of a -- think of it like a check paid back to E3 at 30% of the capital. And what Ray is referring to is what percentage of the capital it would be eligible for. And there's some guidance there but there's no defined yet terms. Now some of the ITCs have come out, they were brought into law at the budget at the end of June. And so obviously, the permit takes the summer off. So we'll see the manufacturing investment tax credit, which is what this falls under show up in the fall with wording in a bill that will give all of the details for it. And then obviously, then the companies like us can go chase it. But it does have an impact. It is Canada's way of supporting projects like this. Right now, the United States has the Department of Energy. And we've had lots of really good conversations with Department of Energy in the United States. I've been in Washington 4 times this year talking to them on what they're doing and they funded Thacker Pass. And I think the Thacker Pass project is not a brine project, it's a mining clay project but it's a proxy because it's capital intensity is the same as E3's, relatively. And so -- and it got funded through GM at $650 million and it got funded through the Department of Energy, USD 2.26 billion loan. And so they are moving that project forward. And Jonathan and the team, they've been -- they're leading the charge in the United States. It will be one of the first major lithium producers of the new generation built in the United States. And so it's very exciting to see.

And I know you touched on this a little bit, Chris but seeing some more questions on it. People are just wondering about the time line for the feasibility study and what we've done so far to meet that goal?

Yes. So our goal right now for feas is, we have our own engineering team. They obviously won't do the whole feasibility study but we are planning to do to launch it and start the majority of the first part of the work in-house. And then bring in contractors and engineers to do specific things like process modeling and stuff like that, that we need. And then it gets to a point where it gets too big and you need to bring in an engineering firm. And then so we'll bring that engineering firm in. The cost estimate right now is somewhere between $5 million and $10 million and most of that money is paying the engineering firms that are working on this project for their time to do the design work. And so we don't have a finalized budget because we haven't gone to tender. And so our estimate, internal estimate is between $5 million and $10 million, it's pretty broad. But yes, without going to tender, we don't have an actual cost to do that. We are also talking about doing some more field work this fall. And obviously, those 2 things have a big burn, drawdown on your cash reserves. So we're being very cognizant of that. We've applied for funding to do some field work this fall. And so we're going to sort of stage the size of that field against -- ensuring that we have enough capital to last through next year and get feasibility done, which is our goal. And obviously, the field work adds data that's fundamental to getting feasibility done. So there's a bit of a priority ranking there. But definitely working through all of that. We've always been very prudent with our capital. We raised in the beginning of 2021 and we had raised in the middle of 2023, 2.5 years later. And so we're not out on the market on a regular basis trying to find capital for this project. And we've -- if you look at this relative to, I got this question the other day, like what is our cash burn to get to this point relative to peers? You have to keep in mind, like most mining companies that are developing a lithium resource have a $50 million to $100 million drill program to get a reserve booked, to get the drill spacing to do M&I. And we don't have to do that because we have all of the data that's here in Alberta. And we had to develop the technology and that has cost money. But the company has raised a total of about $60 million -- a little over $60 million to date. And received about $30 million in government grants, so about $90-some-million. Half of that has yet to be spent. So we have half of what we -- the entire company has raised, still available to us. And again, that just gives you perspective. We've been running this company since March of 2017. Obviously, the cash drag gets bigger as you go but we've always been very responsible with the cash we've had.

And we are running out of time here but one last question that has come up is just the relationship with Imperial Oil. We talked about this before but people are just -- keep wondering about what the relationship with E3 is with them.

Yes. I mean we continually have a strong relationship with the Imperial team and the Exxon team. We -- regardless of how and what happens in the future and I can't get into those details, we are effectively a partner with the Imperial Exxon group because of their freehold land and the agreement that we signed with them. So they -- part of the Clearwater project will include Imperial freehold land, which means that we pay 1 royalty, which is a 1% gross of royalty and then it converts to 11% net profit after capital payout and that's a stock standard, the mineral royalty, the [indiscernible] royalty. And Imperial is entitled to a portion of that royalty for the freehold land that they've provided to the project. So they are gunning for this project. As far as I know the whole company is excited to see us succeed building this because we -- obviously, we are a partner in this. We are a land partner in this project. So what happens after that, though, it's obviously stuff that we can't really get into. But they're [indiscernible] this along and have been since we signed -- have been since before we signed that deal actually, they've been big supporters of E3, fundamental to our resource development work, fundamental to that reserve booking. They've been very supportive. So very happy to have them along.

All right. And just a question for Ray here. People just want to get a comment on the discrepancy between the 32,000 price in the PFS from what Red Cloud has been saying, which is about 20,000.

Yes. So as I had mentioned before, when we were going through kind of the project financing strategy, like we've been working in the long term kind of working backwards from FID. Chris, can you go on mute? And so working backwards from that strategy. As I had mentioned before, as you layer on additional project financing leverage and adding on debt, the equity IRR goes up. And so as you increase the debt, the equity IRR goes up, which allows, when you're negotiating your offtake finance package, for the price to come down. And so for that discrepancy, for -- as we start layering on optimizing the project financing capital stock, it allows for the financeability to be within a lower price band because the IRR equity returns go up with the layering in on debt. And so I can't comment on, is that like price or not? But I definitely know for our shareholders and for our offtake agreements, we will be pushing for the highest price possible. But at the same time, our offtakers understand they need a demand. They need to be able to provide an offtake that can build this project. And we also know that we also need that offtake to build that project. And so what that exact price is, I couldn't tell you. But I definitely can tell you that once optimized, that the price does not have to be 32,000 tonnes per annum or $30,000 per tonne.

Yes. And maybe just to add to that. The best relationships between companies and I not giving any names but you can look around at the ecosystem of who has signed deals, between a mineral mining company and a OEM or a battery company, is that there's a give and take in these relationships. So it's a relationship. And that give and take generally happens around the terms of the agreement. And one of the big, obviously, fundamental terms is what price is being paid because the contract will outline that price. And so a lot of questions that revolve around the price of lithium today and what the price of this is going to be used in terms of our pricing model, I think it's very important to understand that the spot price is irrelevant to contract lithium and how it actually gets paid out. How we get paid out will be based on the contract that we signed with the offtaker. And generally, the best agreements and the happiest of customers on both sides of the fence, the producer side and the buyer side has been contracts that end up with a floor and a ceiling. And so you end up with giving something up on your upside but protecting your downside and both companies get protected in that way. And so what we anticipate -- obviously, I can't get into but what we anticipate is that our offtake contracts will have a floor. And that floor will obviously need to be financeable by a bank to be able to get the money. So we will now have a floor below what will be financeable by a bank. And that guides our conversation. And we have the robust fundamental economics that Ray has referred to now, to be able to assess what that minimum value of the lithium needs to be. And it is a complicated formula, as Ray was explaining, to actually get that number, what that number needs to be because it depends on the equity. It depends on the ITCs. But definitely, there was a [indiscernible] that said 20,000 is noneconomic. And I need to hit that on the head, 20,000 is still economic for this project, 100%. In fact, if you include the -- a very modest ITC and some leverage, 20,000 has the same IRR and because of the fact that, as Ray was mentioning. So I think it's really important to understand that pricing models are complex, project economic models are very complex. And when you look at that, there's a lot of factors that control it. But the project that we are developing has the legs to go forward. And I think, again, the partnerships that you bring into this are fundamental. And so building those relationships over the past 2 years that we have are going to be what leads to E3's ultimate success in the long term, either it's a strategic or it's offtake or a combination of the two, that is how we will get this project financed and that's how we'll get revenue generated that makes sense for the company, which will then make sense for the shareholders because the company will be profitable and we'll be able to provide long-term returns to our shareholders.

All right. Thank you, Chris and Ray. That is time for us today. I want to thank everybody who took the time out of their day to join this webinar today. If you do have additional questions, you can e-mail us at [email protected]. This webinar will also be made available online shortly after this. So thank you so much for attending today and we wish you a good rest of your day.

Happy [indiscernible], everyone.