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

Good morning, everybody. My name is Rob Knowles. I'm the Vice President, Investor Relations, and I'll be moderating today's session. So welcome to today's E3 fourth quarter webinar. We're joined today by CEO, Chris Doornbos; and CFO, Brian Newmarch, and we'll be providing an update on the company's progress, recent announcements and an outlook for the months ahead. Before we begin, I'd like to remind everyone that today's presentation will include forward-looking statements within the meaning of applicable securities laws. These statements reflect current expectations regarding future events, performance, business strategy and other factors, but they are not guarantees of future performance. For a detailed discussion of these risks and assumptions, please refer to the E3 Lithium public filings, including the most recent MD&A, annual information report and technical reports, all of which are available on SEDAR at SEDAR+.ca. In today's session, we will be going over a summary of the Phase 1 demonstration facility achievements and an update on Phase 2 of the demonstration facility, a review of the recently closed equity financing and recent federal and provincial government initiatives supporting the lithium industry. [Operator Instructions] With that, I'd like to turn it over to Chris Doornbos, President and CEO of E3 Lithium.

Excellent. Welcome, everybody. Today, we're just going to give you an update on to the project and what we're looking at from 2026 as well as our -- some of our successes from 2025. Before we get started, though, obviously, there probably are some new people to the story joining today. So I just want to go through a quick overview of who E3 is and a bit of a summary of where we're at. So E3 is a lithium development company based in Alberta. We're developing one of the first direct lithium extraction projects, potentially one of the first lithium carbonate projects to be operational in Canada. Our project is fully integrated. So we go from the brine source all the way through to battery-grade products. Our first phase of the plant is going to look at about 12,000 tonnes a year, and then we'll look to be expanding that to a total of 36,000 tonnes. That's the Clearwater Project. Of course, we have significantly more ground that we can expand over time as well. In that area, we have 21 million tonnes of measured and indicated resource. It's about 45% of all of Canada's M&I for lithium. So a pretty significant tenure for lithium here in the province of Alberta. Looking at our goal here to produce battery-grade lithium, so 99.7% purity is what we've been able to demonstrate at our demonstration facility that just finished operating Phase 1, and we're moving into Phase 2, which I'll talk to you a little bit more about today. Also, one of the big advantages to E3 is the scale of this project. So Phase 1, 36,000 tonnes. We have enough brine in the aquifer to expand that operation to about 150,000 tonnes a year with about a 50-year mine life. This is based on 70 years of production history from this aquifer from the historical oil and gas developments that used to be here. So we're basically repurposing -- this very historic for Alberta, very historic effort really started the oil rush into the province in 1947. It's been producing oil for a long time. It's out of oil, but the majority of the fluid in this effort is the lithium-enriched brine. So we're chasing that. What that means is that we have a very strong advantage for operating and developing this in Alberta. We already moved this volume of water around today from the Leduc. In the past, more water was moving out of Leduc to produce oil than we will move in our Phase 1. So we understand how to operate this. We have the skills in Alberta to do this. This is not a fly-in fly-out operation. This is local. This is just 45 minutes north of Calgary, located in the heartland of Alberta's farming industry. So -- and the historic oil and gas region of the province as well. Looking at just some of the fundamentals of E3 right now. So trading about $1.05. We just finished a fundraise, bringing us up to 86 million shares on issue and $101 million fully diluted. Market cap of about $90 million. We've got no debt, about $18 million in working capital, which is a combination of the raise that we completed and our previous cash balance, also supported by about $25 million in federal and provincial government support, and we'll take you through that a little bit later in the presentation. Our key project metrics, 50-year mine life, the pre-feasibility outlined a 32,000 tonne lithium hydroxide plant. As I mentioned, our goal right now is to redesign that for feasibility. And so we've taken a step at what that might look like. And as we work through the engineering for fees, which is ramping up right now, we'll see that design for a 12,000 tonne first phase of carbonate. Operating cost of $6,200 per tonne and capital efficiency of about $76,000 per tonne LHM. Obviously, since 2023, the market has been in a bit of a rough bear patch, but I think that we're starting to see life across the industry. You're seeing it in a couple of companies in the United States, one of them, our direct competitor or peer in the space. And so we're starting to see a bit of froth in the lithium market. You can see that in our stock as well. We started to have a bit of life in the stock. And I think that's really good. I think we're on the edge of it. The exact timing is obviously hard to tell. Over the last 5 years, though, E3 has been consistently developing our project and showing consistent success as we've taken a technology from a prototype in a lab, brought it through pilot, designed it through a pre-feas, brought it through demonstration. And the fact that we are able to -- from equipment turning on, commission and have it operating to spec and make battery-grade carbonate in 3 weeks is a huge marker of the design, how well that designs. And we'll talk about that a little bit as we go as well. So this -- we are building this. There's 2 big sort of fundamentals from E3. One is the resource. This is a world-class resource for lithium. As we mentioned, it is 45% of Canada's M&I, 60 cubic kilometers of brine at 75 milligrams per liter. We've got lots of operational history. We know how to move this water. In 2021, our now Director, who is at the time, the Energy Minister, brought regulatory authority for brine-hosted minerals into the Alberta Energy, which regulates oil and gas. So we have all of the permitting regime setup for this project. We've tested it. We're going to talk a little bit later, but we have the Alberta's first brine-hosted minerals or lithium facility operation license that was granted. So that's very exciting. That's for our demonstration. We've got the workforce here. We're drilling a well right now. We didn't have to upskill those drillers. They're oil and gas crews coming off a hole for oil and gas. They're going to drill our lithium well and they'll go back to oil and gas drilling after. So all the skill set we need here. And I think it really will shine as we get through the next year of development and how fast we can accelerate that based on the market and our ability to have the skill set we need here in the province. For those a little bit new to DLE, what DLE effectively is, it's a bit of a garbage can term for a lot of different processes. How we refer to it is it's the mechanism that extracts primary lithium from brine. And we -- for our first phase of our first plant, we are going to use an illuminate absorption system to do that extraction. That's the process we're going to deploy. We have been developing that for some time, and I'll take you through that in the next slide. And one of the big advantages to it is it's very, very streamlined. There's no big evaporation ponds that you have in the Atacama. This is not an open pit mine. We're simply pumping the brine out like you would oil and gas. We're taking the commodity of interest out of that brine, which for us is lithium using our absorption system with the DLE. That makes the lithium chloride. And then we just basically remove the water and any of the minor contaminants until we get to a highly concentrated chloride where we convert to lithium carbonate. So we -- and in our design, we also do not use freshwater. And I think that's really important for us because it's part of our overall goal to develop a lithium product that is top tier. And so we do not draw water from the environment. We do not put water back into the environment. It's entirely closed loop. And we have a very small footprint. And we will -- at the end of our project life, we do 100% reclamation. So once you drill the well, you reclaim the majority of that site. So a lot of the reclamation happens immediately. And our total footprint is about 3% of the total for a lithium project because it's just wells and a small facility. And I'll show you what that small facility looks like because we have some really cool graphics for you. The other big pillar that E3 stands on is the fact that we have -- we're experts in the DLE industry. We've been developing this system since 2017. It's gone through iterations, but our team and our know-how in this company is very strong. And there's not that many companies out there that have their own DLE experts, and there's not that many DLE experts in the world because this is still fairly new. Having said that, it is still just basically a water treatment facility. And so the skill sets that we've brought in to become experts in DLE are from the water treatment industry, all of them sourced in Alberta. So strong skill sets here. The big differentiator for E3 is that we are not going to a third-party technology company. We are developing this in-house with vendors and with support from technology companies that make the sorbents, but we're not -- the design that we are creating is ours, and we own it and we can deploy it. And that is where our intellectual property lies. In 2022, we made the decision to step away from developing a sorbents, we still have it, it's patented. But the prevalence of sorbents on the market is growing every day. And every month or so, we find out another chemical company is making anuminate lithium extraction sorbent. And so that thesis has proved that we decided to chase in 2022 has proven to be quite accurate. We tested that in 2023. Our tech as well as other technology companies in 2023 are a pilot. And then we have now brought that entirely in-house. So we have 4 different sorbents in-house. We have a couple more that are on route. And we do all of our own validation testing. This is me in the lab. The people in this photo are mainly Alberta government representatives. We've got the AER in here. We've got the Alberta Energy and our local rev, the drilling contractors. We've got the whole Alberta group in their lab showing them how Alberta will make lithium carbonate. And as I mentioned, the skill sets that we have in the team are all from Alberta. And I really love this slide because it shows we have a very wide variety of skill set from a very wide variety of companies, but everybody came from the industry. Everybody has come from Alberta's industry because we know how to build this already. It just takes a little bit of tweaking, but not very much upskilling, so we can deploy that out to the industry. One of the big things I'm proud of is that we've been very thoughtful as companies mature, the Board matures. And we took that very seriously. And in 2021, we started to look -- supported by the current directors at the time start to look to mature the Board and bring in industry experts for specific to lithium. And that's why we ended up being lucky enough to bring Alexander Catalan and Tina Craft on Alexander from the electric propulsion industry and Tina from Albemarle, one of the world's largest lithium companies. We also were lucky enough to bring Sonya Savage on the Board, who is the previous Energy Minister in Alberta and one of the key fundamental people that have been supportive in government to bring lithium regulations to bear. And then Kevin Stashin as well from the oil and gas side, so bringing in the executive expertise in the oil and gas industry. Looking at the market, this is obviously something that is a bit challenging for people in the lithium industry because what's happened in the market right now. And I think there's been a bit of uncertainty created by forces beyond our control, obviously, in terms of where the market is going to go, but we're starting to see this solidify. And I think that's why you're starting to see also the market solidify around lithium because we're starting to see a path forward of how the lithium market is going to proceed. And what we're really meaning by that is that there's a bit of a deglobalization trend happening, and we'll talk a little bit more about that in our sort of government update section. But when you're looking at this from the perspective of the market, the North American deficit is very real. We still do not make lithium of any quantity in North America from North American sources. The big companies now Rio Tinto previously, Livent and Albemarle do convert lithium into battery products in North America in the United States, but most of that is not coming from North America today. So there's still a huge deficit base case upside case is what we're showing here on the bottom left, deficit in lithium for the North American demand. This year is about 200,000 tonnes, and we're going to get by 2040 to about 1 million tonnes of deficit. So that's where we're looking at the market right now. The European market is something similar to that. And so right now, all of that supply is being met by the Chinese production. And there's a big push, obviously, to get local North American and Western supply into the market. And we'll talk a little bit about the budget that dropped yesterday and some of the stuff that's in there. But prior to that, a lot of movement towards this. You saw Section 232 from the U.S. We committed $550 million to Critical Minerals in 2025. The G7 action plan, the first thing on the list is Critical Minerals. The government has still been -- like one of the first things they talk about our Critical Minerals. You saw the major projects office get formed. One of their mandates is Critical Minerals. And there was a very strong reason for this. And it is because right now, right or wrong, there's one market for the Critical Minerals. And lithium is one of the ones that's on the top of list. There's other that are even more constrained, but it is definitely something that we're -- as the sort of Western world is looking to build that supply. When you look at where the growth of the market is coming from, we've obviously -- the early projections from some of the pundits in the space that predict supply-demand fundamentals were maybe overzealous in the early days of how big the market is going to grow. But I think that regardless of that, the market is still growing. So maybe not as growing as fast as they predicted. So the expectation wasn't met. But I think the reality here is that we are continually building and buying more electric cars across this world. And a lot of that is back on the fact that we're just now starting to build and turn on local battery factories to get the cost down. We had 10 gigafactories in the United States turn on and 1 in Canada last year for a total of, I think, 400 gigawatts of power capacity per year in batteries. So we're really just building the supply now of batteries. And so as those costs come down, the cost of cars comes down and all of that stuff leads to more growth. An interesting stat that's not on here is that in 2018, we hit peak ICE or peak internal combustion engine cars. And every year since, we've sold less and less internal combustion cars as a total number and as a total percent. So we are moving in this direction. The pace of which -- and we've talked about this in webinars before, the pace of which is what really has changed, but the movement isn't. One of the other big things that's been supporting the market more significantly and where we're seeing a lot of growth is in the battery storage systems. A lot of this is driven by the energy security narrative, and we'll talk a little bit about that later. But because the thing gets pulled into this and so is E3, this is why we end up spending a lot of time with government right now is because of this national energy security conversation and Critical Minerals are in that fold because they relate to batteries and battery relates to energy in our modern world. And when you're looking at this, a lot of this demand is being built out of data centers for AI. So when you look at AI, a lot of people think of it as like the LLMs as being the sort of constrainer and the new advancement. But where this is actually really going to come from is the increase in energy because it's all about compute. It's all about number of processing power units. And that's just directly equivalent to energy in. So you need energy to build compute. And the world knows that that's why you're seeing energy -- or sorry, tech companies like Microsoft get into power like nuclear. All right. So we've got Brian on the call, and I'm going to bring him on this slide. I'm just going to start with 2025 and then hand it over to him. We had a really big year. And I like saying that because every year, we seem to have really big years. And that's because every year, we're building on top of the last year, and we're continually seeing positive success. And so a couple of the big highlights from 2025. We got the Phase 1 of the demonstration complete, and that was the big lift because that was the design of a fully integrated DLE all the way to lithium carbonate process unit, the design of that, then the fabrication of that and then getting that to site and turning it on and commissioning it and getting it to the point where we're making battery-grade carbonate. And we announced in September that we're able to make 99.7% battery grade from the demonstration facility. So huge, huge success, I think, for the company and a big pound back to all of the team who worked very, very hard to deliver that. And that design leads directly into our FEED for our commercial facility. So we're working on that, now that it's validated. We've started Phase 2 of the demonstration facility, which is drilling of wells is the first piece of that, which we're currently doing right now. We're at TD today, and I think we'll probably be coring for our geologists and our reservoir development here this evening. So that's ongoing, and then we're going to drill a second well. And another big thing is our permitting. So we received under the [indiscernible] minerals scheme, again, it's the same facility license that the oil and gas industry gets, but now it's under the new scheme. So it's the first ever lithium facility license to be able to operate. And that's what we're -- the wells are drilling right now on that facility license under the well license that we've gotten. We've also got the first scheme license for lithium. So that's pretty big that we got those in about 4-ish months, 4.5 months. And that really like the first one in is always the hardest because it is somewhat new still. They're taking their time evaluating it. It still happened in 4 months. So the AR has been very productive. And they came out to the site. We've been very happy to host them mainly for them to understand what this looks like. We're able to show them the demonstration equipment so they could see what -- when they're giving us a license, what that actually machine looks like because that's what's new, the drilling of wells and all that sort of stuff is the same. So that's been very good. They've been very supportive. That says Alberta Energy. We raised $14 million to keep the pace going, which I think is really important for us right now. And we did a bit of a rework on our sort of phasing of how we're going to build the plant. We outlined that in February last year that we're going to build in phases, starting with 12,000 tonnes. And that's where I'll hand off to Brian and Brian, you can jump in sort of take us through some of the capital stuff and our rationale around that.

Yes. You bet. Thanks, Chris. So maybe just coming back to the capital raise, I think we're happy with how it went. It was a successful raise. We had a fair bit of support from our institutional advisers between T. ROTH, ATB and Stifel. And I think kind of having that sort of horsepower behind this raise really kind of facilitated a successful raise, as I mentioned here. Chris will get this stuff -- flip back to the previous slide, if you don't mind. Now as we think about kind of where the balance sheet sits right now, at the outset here, we talked about our current working capital situation. We're sitting on about $18 million of working capital. That gives us a high degree of comfort in deploying the investments that we're employing right now. So to catalyze the investments in demo Phase 2. And then as we think about the engineering required to kind of take us towards our shovel readiness targets at the end of the year, that sets us up quite well financially. And I think one of the things that we're very mindful of is that we've got steel on the ground here as we progress the demo. And then as we think about the engineering spend, that's really the area that we can either accelerate or decelerate depending on how the commercial discussions are going to spending out depending on how the macro is going. And as I said, that will allow us to kind of 0 in on the time line to being shovel-ready and ultimately driving an FID here. I talked about the working capital position. That gives a great amount of comfort. And I think the other important area to just raise here is just the grant support that we've had for the government. The way things are set right up right now or setup right now is when we think about deploying capital in the ground here, we're getting about $0.50 on the dollar for each dollar that we invest in the ground here. So that when we think about kind of capital plans over the next year, we have, as I said, $18 million of working capital. There's been a disposition announced publicly earlier in September here. And you take that with the grant money available to us, we've access to capital in excess of $30 million, which situates us quite well here. Maybe I'll leave it there, Chris, and then pass it back to you.

Yes. And I think it's a really important point from how we see proceeding towards getting this thing ready to build. So we sort of think about shovel-ready as all of these pieces good to go and then obviously, the project financing piece, which generally is a debt package supported by offtake agreements, which is the commercial initiatives. And then the balance is sort of sought other places. And there have been some good proxies, Thacker Pass, Lithium Americas Corp. And how they've funded that. They got the DOE loan program. And that was a catalyst for them. You recently saw the U.S. administration get into investment with Lithium Americas Corp., which is still a Canadian company, the Canadian Exchange, but taking basically the debt and converting that to equity, which is a clever model. And I think obviously, the shareholders really appreciate that because we saw them and standard really move in terms of their valuation on that, that happened in September. And we'll take you through a little bit about how the Canadian government thinks about it. But -- and obviously, we don't know exactly because the budget just dropped and hasn't been passed, but there's looking like mechanisms of similar sort of force to support Critical Minerals. And in sort of the market failure that we have right now, as I think everybody knows, you don't really normally go after that type of source of capital. But it's why building North American domestic supply is so important to the government, and it's sort of all into the fold. It's why for us, when we look at why E3 has been so successful in the grants, we open up a whole industry. We're at the tip of the spear in Alberta, we're not the only ones, and we won't be the only ones in the future. And so our success builds an industry. And that's why we've been able to be successful on the government support side because it's all towards getting this first project out of the ground. And the first one is the riskiest. It's the hardest to fund. And as Brian mentioned, we're about 50-50 in terms of our cash spend between grants and our own capital. And we will throttle the design, we'll throttle basically the feasibility study, the FEED engineering because FEED is just one piece of engineering. Once you get FEED done, you move on to detailed design and then you can sort of start construction once you have the capital raise, but your design still continues until you're pretty much built. And we can throttle that based on our commercial initiatives. And because they will dictate some of the timing for us, obviously, because the offtake will want it by a certain date, and then we use that to throttle our engineering to get it to done when we're ready to start building. Looking at the regulatory landscape, again, touting this pretty heavily right now because we do have this facility license, which is the first of its kind, the resource license D65 first of its kind. The wells, again, they're very standard oil and gas industry wells. So there's nothing really special with the way that we're drilling this. Looking at our permits right now that we need for the commercial facility. The big one is our D56 for the plant, which is out for consultation today. So if we have any locals in the area, you'll be receiving the D56 package, sorry, for the commercial plant. Canada Post has made it more difficult. So we're hand delivering everything. So we'll be out doing that. And then the [indiscernible], which is our basically EIA light. So it's a provincial Environmental Protection enhancement application. We only need one for the central processing facility, and that's imminent as well. That will be submitted here very shortly. So those 2 really start the clock for us our ability to permit. We will go out and permit the wells and the pipelines. We'll have to do the D65 for the commercial facility, the production of the commercial facility. And then after you drill the wells, you apply for the D51. So both for our demonstration and for our commercial plan. But that's just sort of standard course how we operate in Alberta. And this brings us to where we're located. This is a map that we've shown a lot. We're outside Olds. We are about a kilometer and a bit off of 791, which is a pave 2-lane highway. We're about 15 kilometers off Highway 2, which is the 4-lane highway in Calgary and Edmonton. We're about 18 kilometers from Olds, where there's rail for our load, unload for product. We also will have power accessible about 100 meters from the project site in a 240 kV power line that sits directly adjacent. And when we look at this from a mineral project in Canada, this is where we really stand out because this is not normal normally. If you talk to mineral companies, they're talking about things like the ring of fire, which is an extreme example, but even a less extreme example, some of the other lithium projects. We're talking over 100 kilometers of road that needs to be built to get access to the project, bridges across rivers, that sort of thing. We are going to pave a gravel road and that's our total infrastructure external to the site, put in a transformer that's at the power line. So our infrastructure is just upgrades. We're not having to go out and build new things. So that's really important. This is really hot off the press. This is going to be public through the P application. This is our plot plan for the site. It is a little bit different than the one we had in the slide deck because it's been -- we've been working on this as part of our feed. So it's been sort of shuffled around a little bit. This is 2 phases of the plant. So this is basically a 24,000 tonne plant equivalent. You can see space up here for expansion or down to the right for expansion of Phase 3. So basically, just walking through this, the brine comes in effectively over here on the bottom left. I don't know if you can see my cursor, but the brine inlet -- outlet. So the brine comes in. It goes to gas handling where we remove the gas. That's our pretreatment step. And then it moves over to brine storage where it's just basically surge for us putting it into the DLE. So we go direct extraction, then we go through a membrane system and further cleanup to get rid of water and get rid of the last of calcium magnesium. And then it goes into carbonation where we make the lithium carbonate and also bagging. So that's where it gets bagged into basically 1 cubic meter bulk of bag, sealed up, put into C cans and then it goes by truck, either to the customer to rail to the customer. We'll have a small office. We'll have a small lab, obviously, because we'll be continually testing that. But that -- all of that expertise we already have, which is really great for us. You can see the power line here on the bottom left. So directly adjacent to the site is our 240,000 power line. We do plan to put in our own Cogen power that will feed on to the grid as well as feed off. The timing of that may not be the day 1 the plant starts, but that is still the plan. And then you can see the transformer in the background as well where the power from the grid will be converted to be able to use on the plant. And on the left here is that site. So this is the picture, aerial photo of the facility site that we have under option from the county. This is an old gravel pit, and this is where we'll be building that. So you can see the majority of the plant is going to be built on already predisturbed ground. And when we get out there, we'll be leveling that, and that will be sort of the first work of site prep to get this thing built. And we've been out there in the community talking to the community since for the last 2 years. We had an open house in May, very well attended. And now we're going out for consultation right now for the D56 facility license. On the right is our new demonstration facility location. So it's a different location. It's not far away. It's about a kilometer or so from the commercial site. And the goal here is to keep this thing operating effectively off and on until the commercial site is running because it's a great place to test our equipment, train our operators, all the different things that we're going to do. There will be a well pair here, to be able to produce and inject, so be able to run this real time. And that's very exciting. So this is a fresh picture a couple -- basically last week, and this is us drilling the first well. And as I said, we're coring and then we'll be moving on to the second well. You can see very standard in the industry, we talk about reclamation. These piles on the top and bottom of the picture are this top soil and subsoil that we strip off, we save it. We do all the operations when we're done, we put all of that back. We might leave what they call a [tiered] up a little access road to the wells. But eventually, when we're done, all of that top fill gets put back and the farmer gets the land back and they continue to farm it. And we protect that, and it's all certified through stock standard oil and gas industry best practices. Okay. Looking at the demonstration facility. I'm not going to talk too much about this wordy slide, but because we have some good pictures. Phase 1 is complete. So that was commissioning the equipment. We did that because it came and we wanted to get it operating, we wanted to get it tested. It was new to us. It was just fabricated and getting that operating. So we pushed that really fast, and we wanted to see that thing operate. We're now drilling the wells in Phase 2. And then we're going to move that equipment over to that site very shortly, and we'll be operating that as we need to. So basically how that's going to work. And the big test that we're going to do likely now in the new year is going to be producing brine for a full rate as fast as we can to do some reservoir testing, and then we'll be also running it to test the gas water ratio to do the design for the commercial facility as well as then producing brine for the DLE. And those 3 factors really inform the feasibility study, the engineering design for feed. And that -- so that data collection is the last piece we need, then we can just finish up sort of the engineering. So we need to collect that data. So that's going to happen in early new year, and then we'll be incorporating that into our design during 2026. At some point later, we will do this Single Column. We don't need it for our engineering. We need it because we think that the banks and our strategic partners might want it. So we'll do that as we need to in the future. And that's going to be basically a full-sized Single Column that we'll operate. We'll have the wells obviously operating at the time, so we'll be able to tie in directly to that and run about equivalent of 100 tonnes a year is what 1 column does. We obviously won't be making 100 tonnes a year of carbonate, but we'll be producing enough chloride to do that just to do the demonstration of that, mainly to derisk the DLE as a final phase for our banks. So this is what the equipment looks like. We've shown these pictures before. It's a series of valves, pipes, columns, tanks. And all of this equipment basically just moves fluids around. So it looks very complicated, but it is just very simple valves and piping and pumps. And we're just moving fluid through the DLE columns and we move it through the [RO] membranes and we move it through the Ion-exchange system, and then we do a final evaporation stage before carbonation. And so this is basically 440-foot skids that we arrived plus a control center. So just some more pictures of that. So this is just some examples of some of the equipment that's out there. We ran it at the pilot plant site. So this site has now been put to bed and we will be -- we've moved all equipment over. So all of this will be eventually reclaimed at this site, and we'll be moving operations to the second site. And this is what that looks like, a bit more picture. So these are very recent. We began drilling October 28, and we'll continue this operation, as I said, probably for the next couple of years as we go through. But this will change. Obviously, the drill rig off and we'll bring in the equipment, and there'll be a lot less stuff here when we get into operations because this is all just the drilling coming. Switching gears now a little bit to sort of some of the government support and what we're seeing in the industry today, and we're going to talk a little bit about the budget that came out yesterday. So from the provincial perspective, this creates a new industry in Alberta, without having the upskill and without having to bring in new talent. So basically, we're putting our burns back to work. And we've received a lot of intrinsic support from the [prem] government, including ERA dollars. They're very communicative with us. They've been working through it. Obviously, Sonya Savage with Bill 82 as well as this is Minister Jean, and MLA, Sawyer who's the local MLA for the area where we're operating, came out to cut the ribbon for the demonstration facility in September. So very exciting for us to have that interaction. They're very excited to see us go. We had the premier in our lab over the summer to see how we make carbonate. We just -- it was a one-on-one visit, just to see how we're operating in the lab. And I think that helped government understand that this is actually not that complicated from -- how we operate oil and gas. Last week, I was at the B7 talking about what was to come hosted by Canada Chamber of Commerce ahead of the G7. So it is like the side event to the G7. And I put an article out on buildcanada.com, so you guys can check that out, talking about where the system is broken and what we needed to do. I didn't have any information on the budget when I was doing that because obviously, very few people actually know what's in it in the details until yesterday. I would say that I was pleasantly surprised to see a lot of what we've been advocating for in the budget. And really one of the thesis is that -- there's a lot of programs out there, and they're fairly decentralized. And we've been able to navigate it, but we've been doing this for years now, and we spend a lot of -- Lee and myself in communication with the federal and provincial government, but in this case, the federal government talking about what the industry needs because we are one of the first lithium projects that can get operating. And so we're trying to push hard to get our product out the door. And in sort of this market failure environment that we're in right now in a shifting geopolitical environment, that uncertainty and that shift between what was to what will be creates uncertainty. And so that's where the government is looking to step in. And they've been very loud about the fact that they want to build this industry and that they're going to step in. And looking at the deficit, no one likes to spend that capital, but I think that -- what the right move here -- and where I'm supportive of that is simply that the world is changing. And if we don't change with it, we're going to be left behind. So Canada really does need to step up a little bit right now to bring industry to find new trade partners to grow internal energy security for Canada, for Canadians for kids future, we really need to change a little bit because we all know the reliance that we've had and how that is now changing. And so I'm really supportive of making big moves right now. I don't think we should be able to sustain the size of deficit for the long time, but for a short period. And so when we look at what that means for the Critical Minerals industry and more specifically, the major projects office has been setup to support critical minerals projects. A project like E3 is not a project that will end up in the MPO. We don't need that help. We don't -- we're going to permit within probably-ish 12-ish months. We're not -- we don't need big government push to get this thing permitted or out the door. But the financial support like a alone would be very advantageous for E3 because it would be competitive to the United States, which is where the capital is flowing. If you see the markets, you've seen Standard Lithium and you've seen Lithium Americas Corp, rocket in their share value or the share price and their value because of U.S. government support. And so basically a little bit of like a loan is an investment from the government that gets paid back, it brings the free market capital into the story. And that's one of the things that we've been talking about. And I think that's here now. So look at these slides, Canada Infrastructure Bank, they added $10 million to go to $45 million, and that's now been brought under the major projects office as well as Canada Growth Fund. And this hasn't been approved, but this is the proposal in the budget. They're creating a critical mineral sovereign wealth fund to invest directly in critical minerals projects and then the first and last mile fund, which is more to support critical minerals projects. So a lot of sort of backing of and really getting behind the industry here is how we see this. So I'm very well -- very encouraged. I had a brief chat with Minister Hodgson last week at the B7 and really just showed some appreciation because I think that they're doing the right moves because we are in a changing environment, and we need to look at what that means for us. And then back on that, obviously, previous to this new government coming in, we've been very well supported through CMF which is now being absorbed into the first and last mile fund. But the capital still is there and the grant is still obviously still ours. So the Strategic Innovation Fund has been our biggest through [ISED]. And that's been, I think, for us, a very fundamental support as well as the ERA grant that's supporting the demo and in the market where raising capital is a bit tough, and the markets aren't performing as well as they have in the past, but probably will, again, in the future, maybe even in the near future having that access grant as Brian has mentioned about 50-50 has been very advantageous for us to continue pushing the project forward at pace because we can always slow down. But one of our key advantages, one of the things that really sets us apart is the pace at which we can get this thing going and being one of the first to produce lithium in North America, and battery salt in North America is very advantageous for us, and it's been noticed by all governments and potential strategics. And so I can bring Brian back on as well to talk about this and where we're at. So I'll just go through maybe where the status and our engineering and Brian can jump in on some of the more -- where we're going with the financing side of things. So demonstration facilities ongoing, Phase 1 complete. Phase 2, we're working on. Phase 3 will happen as needed in the future later in '26. We've made the lithium carbonate. We've got a bunch -- we're currently continually producing more carbonate. So we move the equipment into our lab and all the chloride we produce, we're just converting into carbonate ongoing. We're sending that off to strategics. And we've got a whole list that are waiting for it. So that's very encouraging to see. So that's -- the derisking is -- we're collecting that data. That will be wrapped up with the demonstration facility. So we're very excited to see that phase of the project wrap up, probably Q2-ish, early Q2, we'll be sort of wrapping up the derisking. That doesn't mean the demo stops. It just means that we've got the data we need. Project development is ongoing. We're in FEED now, which is effectively will result in a feasibility study and then ongoing engineering. And so the P application that's going in shortly was sort of the first big piece of FEED and then now we're going to focus on the engineering side, and that's supported with the data from the demo as well as some we don't need data for, we're already working on. We're also working through our permitting, and that is ongoing as well. And every several months, we'll be submitting a new permit or a new group of permits into the government to have those all in hand, hopefully by the end of next year as well. And we obviously can't control the time frame. But when you look at the AER, they have published time frames of when licenses and how long they take. We recognize that this is the first commercial facility for lithium. So we're being a bit cautious on exactly how long the government may take. But generally, we'll be faster than probably most other projects because we are completely provincially regulated, which helps. So maybe over to Brian, and we can talk about some of the commercial stuff and our FID.

Yes, you bet. So as we've kind of spelled out throughout the presentation, I think we've been very mindful with milestones, with phase development and achieving those milestones. So we've got steel on the ground. We put our capital to work to derisk the project, and we'll continue on that path for the remainder of '25 and '26 here to reach that ultimate FID. I think as we continue to progress here, derisking the project just means that project finance lenders, potential equity investors, potential project partners understand the project, understand the resource, understand the technology, understand the facilities design and can deploy meaningful capital here. As we reach that FID, obviously, project finance is a big component of that capital that we will raise here. We think we can raise 60% to 80% of the capital needs through project finance. That's pretty standard midstream capital structure for projects like this. And that's how we think about it, right? We will have offtake to ensure that we've got a guaranteed revenue stream. We'll have our cost in hand. We'll have our OpEx in hand and then it becomes a return on capital calculation to support both the debt and the capital raise to reach FID here. I think we were quite pleased with the progress that we've made on the commercial front. That's predominantly around the offtake. We mentioned the Axens MOU that we signed earlier. We think that's a pretty innovative agreement here. We're excited to work with them, both on the offtake and sorbent discussion here. And then Chris, Brian Ceelen, our Director of Commercial, are spending a lot of time on the road, having very constructive discussions on offtake because offtake and commercial is going to catalyze the FID. It kind of goes hand-in-hand with one another. But I think given the macro that's at play here and the tailwinds behind us, we're getting the right direction and the right market signal to continue to progress this and reach our FID.

Awesome. Thanks, Brian. So that sort of ends the presentation, and we can jump into some Q&A. I'm just going to start off with a couple that we received over the past week since we announced this that Rob has prepared for me, and then we can jump into the Q&A in the chat as well. I see a couple up.

So difference in lithium concentration, brine quality and impurities, I think it's a very important factor. And what I can do to sort of bring this home is do a comparison to standard. I'm not an expert in center Lithium's project, and I won't claim to be, but I just -- I want to provide a bit of sort of differential analysis on it really quick. So when you look at direct extraction, the process of extracting the lithium from the brine itself, we're all using something similar. Standard does use an aluminate-based process as we do. They're using, I think, a different source of their absorbent. And I don't know exactly who they're using, but I'm pretty sure it's not the one of them that we're looking at. But they all work about the same. And so it doesn't really matter as long as there's a good robust orbit that doesn't break down, they are extracting to the same level. And -- so when you look at that, one of the big advantages that we have, we have a lower-grade brine, but the orbit has a theoretical maximum carrying capacity. So when you extract lithium, you fill it up and then you strip it off. The concentration of the strip, what you get off, the lithium chloride doesn't change much regardless of the input grade. So you could be 75 like us or 400 like standard and your end result in concentration roughly between 600 and 800. So one of the big advantages and where we really see how we're able to tackle the low grade is that we get that 600 even though we're at 75. Now it does mean we have to flow more brine, and we have to have more sorbent extracting, more units of sorbent to get the lithium onto it. But that is a small increase in capital. We have a few more wells. We have a little bit bigger of a DLE system. But what's in between the wells and the DLE is getting your brine in a form and function that can be used in direct extraction. And I'm actually meant to give a presentation of this at a conference in Las Vegas at the ALTA conference, which is a battery and critical minerals conference in the States in a month. And the sort of thesis of that is that pretreatment step varies from [brine-brine] because the input into the sorbent has to stay within ranges. And if your brine isn't within that range, you need to treat it. We have a pretreatment step. Ours is gas. We take the gas out. Most subsurface, deep subsurface brines that are in confined aquifers have trained gas. So most projects have to take the gas out of the brine because you have to depressurize it. So as it comes out of the well, you bring it to the facility, you depressurize it, which is right now our [indiscernible] about 16x more pressure than atmosphere pressure. So as we depressurize it to atmospheric, the gas comes out. And we collect that gas before we put it in the DLE system. We do this in Alberta every day. This is called the 2-phase separator. If you have oil in your brine, you use a 3-phase separator oil, gas, water. In the oil industry, the gas is the value. So what they build is this little water treatment plant beside a big gas plant because they're trying to get the gas out, right? They get water with the gas, but the gas is methane and there's large quantities of it and they're trying -- they extract it and then they treat that gas and then they sell it as natural gas into the market. We are the opposite. So we are not chasing gas. We still have some in it, but we're not going after the gas. So we have very, very little relatively to a gas operation. So we have a small little gas plant and a big water treatment facility. And that's what why our facility is making lithium. If you look at other projects that have other nasties in it, that has to be cleaned out and that capital and that operating cost can be very extensive, especially when you get very high temperature brines, like some of the stuff in Germany near Berlin or some of the stuff in the Salton Sea or in Germany in the Rhine Valley when you have enough heat in the brine to generate power, you also have a lot of other stuff in it. Usually, iron and silica are your big problems that you have to clear out. And silica's a real challenge because it can form glass in your pipes and you're cutting your pipes out and replace them. You can't redissolve that silicon. So when you look at the cost comparison, E3's project remains extremely cost competitive. We're a little bit more expensive than standard, but it's marginal. It's in the 10% to 20% more per unit of lithium produced. So that's the downside. The upside for us is our permitting system and the size of our resource. And we are still most importantly, cost competitive against the global market because we're still significantly less expensive than making a battery grade salt from a hard rock project. And I think that, that really does frame sort of how you look at brine quality, why it's so important and how E3 is brine -- because it's the other part of our brine is it's consistent. It's the same chemistry through the whole area. Other areas like the Smackover are variable in brine, which means that you have issues getting your recovery numbers to the theoretical maximum, whereas for us, we have a brine feed that doesn't really change. So that's on that. Another question on Axens and sorbent. So a couple of comments about why did we announce an MOU. And I've said in the past, we don't announce MOUs. The reason we talked about this is not so much because Axens is looking for carbonate, but more because Axens has a potential sorbent we can use. And we are out there looking for sorbent, and sources that we can use in our facility. And so the Axens announcement was really just to highlight that there are opportunities for us to get good quality materials from reputable companies that are manufacturing this. And they manufacture a lot for another project already. So they're already making a commercial sorbent. So we really like that. We built a good relationship with them, and we're working through both validation of the carbonate for them and the validation of the lithium extraction sorbent on our end. And both of those will happen in parallel. And then obviously, it leads towards hopefully some definitive agreements on supply, both getting the sorbent and also getting them getting carbonate. There's a question that came through the chat, which I'll answer as part of this which is, who's technology we're using? Is it third party? It is not third-party technology, although the sorbent is not ours. And I think we've been pretty clear on that. But the design of the system. We worked with an engineering shop, obviously, to get it done and was fabricated. We don't have a fabrication division. So obviously, we're using engineer consultants and fabrication shops to do it. So -- but the design, we own. The process optimization we own for the deal equipment, which is because we are developing that in-house for the commercial system as well. But the sorbents that will be in it, will be third-party sorbents 100%. We will not be putting our sorbent into the system, and we don't intend to use our sorbent in the first phase. We are going to look at it as we continue on. But right now, just from a purely risk perspective on the project, having a reputable sorbent that's provided to us is a huge derisker for the project. So that's why we're looking at it. Okay. So another question on Pure Lithium. So we still work with Pure Lithium I was talking to Emilie last week. They recently have gone through a bit of a restructuring. They moved their lab from Boston to Chicago. They had a ribbon cutting, one of our engineers who's been the lead on the project went down for that. And so we still communicate with them. But right now, while they're going through this transition, there hasn't been a lot of work done between the 2 companies. We are looking at refreshing the joint development agreement because it did expire. But the collaboration is still ongoing, so that they've been very busy in their transition, in their move. I think it's a very positive move. I think Emilie is going in the right direction right now, and it was necessary. But a move like that, it comes with staff changes and it comes with a lot of complications and equipment moving. And so we're just letting them get themselves -- they're feet under them again in Chicago and then obviously, we'll be looking to pick that back up. So that's where that's at.

I got one to bring up here.

Yes. I think that's the list now.

Yes, there were some messages came in early on with some people having trouble connecting. So I might hand this back to Brian. Maybe on Slide 12, Brian, could you sort of quickly go back over the capital sources slide because I know that's something we haven't sort of laid out before, but to make sure everybody hears that.

Yes, for sure. So this will be a repeat for some of you that we were on from the outset here. But when we think about where we sit from a balance sheet perspective, Obviously, there was -- as disclosed in the prospectus, there was $5.5 million of working capital as of September 30. And then you think about kind of the net proceeds from the capital raise, that plus is about $18 million of cash/working capital on the balance sheet right now. And then when we think about the additional disposition and the access to government grants that we've spoken about multiple times here, that puts access to capital and access to $30 million. That leaves us well funded to facilitate, continuing the demonstration facility, get that behind us, but the steel in the ground and the engineering work that we've talked about being able to kind of throttle that up or down depending on where we sit on the commercial front that kind of will lead us to our shovel readiness.

Yes. And I think another important part to that is the throttle spend is sort of determined by our commercial developments on the commercial side. And when they come in and what timing they're looking for pushes us faster on the engineering side to get to shovel ready and then obviously through FID. So is there a daily competitive with Ion exchange process proposed by Lilac? We use a different sorbent. Lilac, I mean, I've known David Snydacker since 2017. We went down to their lab in Oakland to look and evaluate their extraction technology, the sorbent that they use is similar to the patented sorbent that we have that we're not using. There's pros and cons to that sorbent. It's not made as commercially available. In fact, I think -- as far as I know, and this is just as far as I know, this isn't a fact necessarily, Lilac is the only one that's making that particular kind sorbent. The world though outside of that is focused more on the illuminate, and that's where you're seeing them developed by the major chemical companies like in Axens, which is IPN and other companies like that, that are major chemical companies that make aluminate products that can lithiate the aluminate that they're already making for something else and provide a sorbent for lithium processing facility. So I would say the process is similar. It's sort of an absorption exchange, stall liquid separation using column, so kind of process similar. The sorbent is completely different chemistry. And therefore, some of the other processes around it are completely different. In terms of its competitiveness, we have our own sorbent that's similar to theirs. We chose to go to illuminates for lots of very good reasons. But for us, we're not a technology company either. So keep that in mind, our goal is to get fastest path to make a lithium carbonate and not to sell the technology. So different goals for sure. In comparison to Lithium Bank, I know probably the Lithium Bank guys are on the call and they're good friends of mine, I've been in university with John and Kevin. So they're trying to do what we're doing. We've been at this a lot longer than they have. That's probably the key differentiator. They're looking at this the same way we are. They're trying to build an industry. Their project is up North or Grand Prairie. There's pros and cons to the location like ours because we're sort of centrally located and we have access to a lot of infrastructure. There is probably a bit simpler to develop, just not as populated. But I think that our path forward here and where we're at in terms of commercial readiness, like our design is -- and process is nailed, our technology is nailed. We've demonstrated it through multiple phases shown to be robust. And I don't think that, that's a slide on Lithium Bank. I think it's just a matter of timing and development cycle. So they're just early in the stage of development in that sense. So that's all the questions I have. Rob, do you have any?

No, that was all that came in and the other ones that came in over the past week or so, I think you've addressed during the call. So if there's nothing else, we can end the formal part of it, and I will get the recording posted on the website as soon as it's downloaded from the portal here. And then for those of you that had trouble getting on at the beginning that I got back on e-mail, I will get to that recording directly to make sure you catch up from the first part that you missed.

Excellent. Thank you, everybody, for joining today. We appreciate it. We appreciate your support. And keep in touch. We're working hard right now to get this thing built. So thank you, everybody.

Thanks.