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

All right. Good morning, everybody. Thank you for joining the webinar today. First of all, I apologize for those who did try to enter yesterday, and we're having technical difficulties getting in. We had a [ book and link ] turns out. So I apologize. Thank you for coming back today for those who tried to get in and took another some time out of your day today to join us here and go through our conversation about E3. I'll try to do my best to do an exact repeat of yesterday. Obviously, second time is the charm, so well, hopefully, you guys will get a better pitch today than you would have gotten yesterday anyway. So but we did do the whole thing yesterday as well so that we're at the end about 50 people that we ended up getting in by the end, but still a significant number of people were [indiscernible]. So we'll just kick it off. Rob, we got a bunch of people joining, but Rob is getting them all in and so we can just get started. All right. So I'm just going to start today with a general overview of E3 for those who are new to the story and for those for the first time tuning in to an E3 webinar. Thank you very much for coming. For those who have heard the story before, or shareholders already, hopefully, we'll give you a bit more context to what we're working on, and then we're going to get into some more of the details. I'm going to let Rob start off with the forward-looking statements.

Yes. So again, my name is Rob Knowles, Vice President, Investor Relations. For today's session, obviously, we've got Chris Doornbos, CEO; and Brian Newmarch, the Chief Financial Officer. So let's remind everyone today that we are recording today. Today's presentation will include forward-looking statements within the meaning of applicable securities laws. These statements reflect the 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 E3 Lithium's public filings, including the most recent management discussion and analysis annual information form and the technical reports, which are all available on our website and at sedar.ca. If you have any questions during the presentation, please go to the Q&A link at the bottom, and we'll be compiling them as we go through, and we'll address them out after the formal statements. And we will repeat the questions from yesterday for those of you that didn't hear them. So with that, I will turn it back over to Chris Doornbos, President and CEO, E3 Lithium, to begin the presentation.

Excellent. Thanks, Rob. And glad to have Brian joining us today. We're going to take team a little bit of this, especially some of the -- our path forward, and we're looking at 2026. So just for the new joiners and just to give some context to E3. So we are a Canadian lithium development company. We are focused in Alberta, repurposing a historic asset called the Leduc Aquifer discovered in 1947. And we started to work this in 2016, and the company went public in '27 on the back of what is now our Clearwater project, and then we've expanded across the central part of Alberta. Our goal is to build what are the first batter gate lithium projects in North America and potentially one of the first in Canada. We're very excited about that because it's been 10 years of some very hard work by some very dedicated people to get us to this point. I'll take you through where we're at with all of that today as well. Our goal is to start with a 12,000 ton battery gate carbonate facility and then expand that to 36,000 tons and then expand from there. We're backed on a significant resource base. We've got 21 million tons of M&I that's measured and indicated resource in the ground, our primary resource is the Bashaw district, which spans between Calgary and [indiscernible]. We've been -- we've proven that we're able to go all the way to battery grade at scale. So our demonstration facility Phase 1 success outlined in September show that we can make 99.7%, which is battery grade lithium carbonate at our demonstration facility at scale. Some very exciting news there. We're continually making more carbonate as we go right now, and that's going to be shipped to our potential offtake partners. So that's very exciting as well, some true engagement on that front. But the other side of this is the scalability. We can really grow this resource -- sorry, the production across this resource. So 36,000 tonnes is facility [indiscernible], we could probably build 3 to 4 more facilities. We can get up to we think we have enough brine available, and we can recover a lithium from the brine to get to about 150,000 tonnes. That's on a 50-year mine life. So that's -- that's our blue sky. That's the big long-term potential for the company. And one of the big things that sets us apart and specifically working Alberta part is the location and the jurisdictional advantage. We are operating this project like an oil and gas project. And that really truly enables us to move this more quickly. We permit under the AER and I'll talk a little bit about our permitting status right now, but that is probably -- I would classify as a top-tier regulatory body as it relates to what we're trying to do. So some very exciting work that we've been working on with them. We had them out at our demonstration facility. They've been very engaged as well with us. get through our first permits, which is great. We have the skill set in Alberta to build this. We got infrastructure here. This project is primed to really get moving very quickly. A little bit on the corporate profile, trading about $1.05 today, 87 million shares after our last raise $100 million fully diluted, about a $90 million market cap and no debt. We've got about $18 million in working capital. Some of the project fundamentals from the pre-fees that we released a year ago now, a 50-year mine life, producing 32,000 tonnes of initial capacity with OpEx at $6,200 per ton and the capital efficiency of 76%. And what that really means for us is a cost competitive operating and capital cost. And I'll talk to you a little bit about that, too, as we go through a story how we sit amongst the lithium peers. In terms of our stock performance, we've had some very strong performance in the past based on success on our pilot plant and our PA originally. We've all rolled down sort of the bare cycle, but I think you're starting to see a bit of froth in the market. You look at some of our comparables, Lithium Americas Corp and Standard Lithium have moved significantly over the past little while. And we have as well, just not to say magnitude, I think there's some good value opportunity there for sure. A brief history for E3, and I think it's important to note, one of the things that I'm really proud of is that we commit to doing things and then we deliver, and we've been doing this through our entire history. The market really switched in 2021. We saw it coming -- in 2020, we put out our PA. In early 2021, we raised $14 million with a warrant that brought in another $16 million over the next 2 years. And that enables us to build our own lab. We developed our own pilot. We deployed that pilot into the field. We drilled the first lithium well in Alberta as well. And then in '24, we outlined the pre-feasibility study, in '25 demonstration. So we've been on a steady course of development over the past 4 to 5 years. So E3 has 2 major sort of pillars that create the value for this company. The first is obviously the resource. We are a resource development company. That is our goal is to turn this area of the Leduc Aquifer into a lithium producing asset. Significant brine resources between in our main area in the Bashaw district, which is the dark blue on the map between Calgary and [indiscernible]. That contains 16 million tonnes, which is about 45% of all of Canada's lithium M&I. Just to give you context. So this significant resource across this area. There's 70 years of production history because it operates cycle oil and gas, we've actually moved more water out of the Leduc for oil production than we will in our first phase. So we know how to do this in Alberta. We're regulated under the Sonya Savage, we brought that build the floor in 2021. And prior to that, there wasn't a home for lithium regulatory-wise. Now we've been working with the [ AAR], and I'll talk a little bit more about this as well, but we've received Alberta's first lithium production facility license, which is very exciting for us. That's for our demonstration facility. We've got the workforce here, and that really highlighted -- it's highlighted by the staff at E3. Everyone that is working here has come out of Alberta's workforce. And maybe just a little bit on direct extraction. Just to bring some context in this. So one of the -- if we look at the advantages to DLE, what direct attraction is, is a bit of a garbage can term for a lot of different extraction processes the way that we define it, is the primary extraction. So it is the thing that you put in front of all of your process to extract lithium from the brine. It's the primary extraction system. Most of the geothermal brines that you see out there in the world, have landed on one particular type, although there are others out there. And the primary extraction method is using absorption with [ Luminate sorbent ] and that is the same for us. There are other systems out there, and I'll talk a little bit about that. We got a good question yesterday, which I'll touch on again today on what some of the other options are out there. But I think the world has really moved towards [indiscernible] and when you look at what [ Dali ] does, it enables you to directly extract the lithium without having to go through any sort of pre operations like mining or putting it into evaporation pond. And therefore, you use a very small footprint in our design and somewhat unique to us because other daily projects aren't doing this is that we do not source water from the environment, and we do not put water back into the environment. We have a completely closed loop system. And the way that we manage that is that you're basically just taking water and extracting lithium into a salt form. And while you do that, you're removing water. We just recycle all of that water back into the system. We have a little cleanup and then we reuse it and that enables us to be completely closed loop. And I think that is incredibly important because it supports our permitting, it's enabled us to not have to be federally regulated, so we don't need a federal EIA. And there's some pretty big time and cost advantages upfront to being able to do that. And in the DLE field, this is a picture of us hosting the Alberta government in our lab. Behind me is our carbonation reactors that we use in the lab to make the carbonate and most of the people in this room are upper government represents from the AER, from [ over energy ] from various different drilling organizations and other people like that here to learn in the lab, how we do this, how we make carbonate, how we get the lithium out of the brine. And there are truly very few and you can't -- you probably say maybe 100 in the whole world that we could truly call themselves experts, technical experts and direct extraction. It's a very fairly new field. And we're very proud of the team because we've been developing this since 2017. We started developing [ sorbent]. And with that, we also started developing a process around that sorbent. In and around 2021, 2022, we started to see the world develop the Illuminate orbits. And it wasn't just technology development companies -- it was also big major chemical companies that were developing sorbents. And for us, we wanted to derisk the project, and we made a very strategic decision to -- for -- just for the sake of derisking, at least that was the start, to start testing some of these available absorbents on the market. Because at the end of the day, if you can buy it from a major chemical company, it's just a reagent in your plant and it derisks the flow sheet. Since then, we are able -- we've been able to get 4 very solid absorbents in the lab, and we've got 2 more coming. So there are 6 that we know of that we think could suffice for our commercial operations. And what that has done is significantly derisked DLE for us because now what we own, what our intellectual property is, is the design. It's how we get the lithium out. And when you look at this compared to other resources, One of the benefits of E3 and our ability to extract lithium from these brines is that we go from a 75-milligram per liter brine through the first step through the DLE, the extraction, and we make a 600-milligram per liter or so 700-per liter lithium concentrate in chloride form. If you look at other resources like standard lithium is a good example and their DFS came out a couple of months ago. They take something that's around 400 milligrams per liter, and they end up with something that's around 600 to 800 milligrams per liter. Because there's a theoretical maximum loading capacity. So your end product looks somewhat the same no matter what your input grade is. And that enables us to operate this much more efficiently because we're able to get that concentration factor. So I'm going to take you through a little bit of a comparison later on some of the other DLE projects. But I think that -- this is one of the advantages that really sets for us the DLE apart. It enables us to make a 75-milligram per liter, one of the factors that makes the 75-milligram per liter brine economic. As I mentioned, our workforce comes out of Alberta, something that I'm very proud of that we're able to bring all of these great people from all different streams operations from EPCs to producers in the oil and gas industry into E3 to help us build this project. The Board as well, if you've been following along for many years, you would have seen us make some moves on the Board, I think, very positive. In 2020, we made a decision at the Board to start to bring in some new people that we're looking forward and helping us grow this into an operating company. It started with [ Kevin Sachin ]who is an oil and gas industry executive in Calgary, and then we brought on [ Alex Callan], who's an electric propulsion specialist. She's worked at GM. And then Sonya Savage, when she let politics in '23, we brought her on the Board, and she's been instrumental in the lithium industry for Alberta. And then also, most recently, [ Tina Craft], who's ex commercial at [indiscernible], which is one of the largest lithium companies. And I think right now, we have a very strong Board. They're very proactive. They work with me very closely. I've recently taken on the chair position and [ Alex Catalan ] is the Lead Director for good corporate governance. And that is really sort of as we mature the company, and we bring in some of the expertise that we're going to need to build and operate this facility. That we're going to bring some people in and particularly one person in the President role to sort of take that part of the business forward and focus on getting that plant built while I focus on some of the more important things that I -- my skill set leads to working with Brian Newmarch on the call, to go get the financing and build the commercial development of this project. So and I think that's a very strong move for E3 and the Board obviously very supportive of that as we go. A little bit on the market. This is why we're here. We're trying to build a lithium in North America and the Western world, trying to bring supply chain on. There's been lots of moves in government including the G7 and the U.S. Section 232 that is trying to bolster domestic supply chain in North America, specifically, but also in the Western world. The Prime Minister has been all over Europe and to bolster selling our materials and develop trade routes into Europe as well. And I think that all of that, what that's leading towards is shoring up the domestic source of lithium. And we put this graph on the bottom left here to show the deficit. So this is the deficit of lithium in North America over years, base case and upside case. And you can see by 2040, the deficit based on the current production trend is still 1 million tons is what we're still missing by 2040. So there's lots of room to bring supply into the market. And you look at why that is, -- some of the big things that we have to look at in the market is -- and there's lots of news that sort of paint a slightly different picture of this, but I think it's important to look at the facts. One of the things that I really find interesting is that 2018 was peak internal combustion engine. So we have -- the last year of max sales of [ Intercos Engine ] was 2018. We've only sold last every year as the electric vehicles taken the gap. And it doesn't look as pin Alberta, but in some places, it's very obvious that that's the case. And one of the big challenges is a lot of those EVs are being manufactured in China. And so it's caused a lot of strife in sort of the domestic market, we're [indiscernible] them 100% because they're inexpensive. And so from that perspective, the rest of the world outside, say, North America, even in Europe, they're bringing the Chinese EVs into the market, and you're seeing that market share grow because of that. So -- and then -- so there's a lot -- every month, we're still seeing an increase in sales for EVs year-over-year. The growth maybe isn't as high as originally projected by some of the market [ patents ] in the space that we're counting massive growth. So maybe a bit of a high expectation on the level of growth, but the growth is still there. The curve is still up for sure. So the demand for lithium in the car market is still there, but then we see this dark horse come out, which, I guess, us in the space saw coming, but I think it surprised a lot of the market in some ways is the battery storage systems and a huge amount of growth in battery storage systems. And I think this really sort of focused around the new sort of matter around where a lot of what we're seeing out in the geopolitical space is this energy security around national security around energy security. And when you look at the amount of power we need and AI, like AI is really just about compute power at this point and compute power is all about electrons, about how much power you can push into your compute. So chips are one thing, but you need the energy beside it. So to grow AI as much as the [indiscernible] say and other areas, I mean, maybe the whole world wants to grow AI, you need to have power matching that and battery source systems are part of that mix definitively part of that mix. So we're seeing this -- the battery market, if you think of it that way, still in significant growth. The United States built 10 -- or turned on 10 giga factories last year, producing in 2025, sorry, this year, producing about 400 gigawatts per year battery power. So we are still we're still growing. And I think for us, looking at the timing of all that is what shifted -- so a lot of the adoption was going to happen in and around '25, '26, and you're seeing that sort of push out a couple of years. But in the time frame that we're going to build a project, that demand is still there. And I think that's bolstering what we're up to right now and also being one of the first out of the gate supports us in that endeavor. I'm just going to go through a quick highlights. I'm going to hand it over to Brian to take us through some of the other pieces of this. So 2025, just to sort of highlight where we're seeing and some of our success demonstration facility. We designed it starting at the end of last year. We fabricated in the spring. We got it on site. We turned it on. And within 3 weeks, we are producing at spec product and making [ battery grade ] carbonate in 3 weeks from turning on. I think that really shows how solid our design is right now. on the direct attraction and the post-processing and we're able to make battery grade. Phase 2 is in progress. We've announced where we've started the drilling and I've got some cool pictures of that. Well, number 1 is they're corn right now and then they'll be moving on to well 2. We also received the first ever facility license in the first ever well scheme for lithium or for brine-hosted minerals in Alberta. We raised $14 million just this past month and we've kicked off the Clearwater design. I've got some really cool pictures to show you. We're submitting our application which requires you to have a bunch of engineering done, which we've done. So feed is underway. And then Phase 1 engineering really ramps up now that we're submitting that applications. We'll talk about that as well. Over to you, Brian.

Yes. Thanks, Chris. So I'll talk a bit about the raise, the balance sheet, how we think about allocating capital here. So first of all, I know there's a number of participants that support us to [indiscernible] rates. We appreciate the support. We are committed to investing those dollars prudently and make sure that every dollar that we invest moves the business along and accomplish our goals here. I think we had strong institutional support from our partners here, TD, ROTH, ATB and Stifel. So good to have some support on the capital raising side from those institutions specifically. They are good partners of ours. Now when we think about where we stand from a financial perspective, so post raise, we're sitting at about $18 million of working capital. That consists of about the $5.5 million of working capital that we saw as the prospectus that was at the end of Q3 and then the net proceeds coming in from the equity raise that we did here. Now I think what's important to consider is broader access to capital. There's a few other things that are really important to here. One is that we have a publicly announced disposition that is expected to close later this quarter here. And then perhaps even more importantly, when we think about the plans that we have been awarded, I mean that almost $0.50 on every dollar that we invest in our capital program come back to us in the form of grab in the forms and grants. So that really multiplies the bang for our buck on our capital investments here. When you total those numbers all up, that puts us with access to capital [indiscernible] in excess of $30 million, that's enough money to kind of see us through the demonstration phase start investing in our engineering on the feed side of things and really brings us to be shovel ready by the end of 2026. Now I don't want to get too far ahead of ourselves. I think one thing that we're very mindful of is that we need to make sure that we're prudent with our capital and then ultimately, commercial uptake is going to be what drives our time lines here. We need to make sure that we're on target for producing into our offtake agreements here. And then that catalyzes the bigger project finance piece here that's going to be key tenets project built here. So as I said, when we think about the kind of flexibility and spend that engineering or fee spend is what we can kind of toggle on and off, if we see the commercial conversations and agreements accelerating, we can accelerate that engineering spend to hit time lines. If they're dragging on, we can kind of delay or defer some of that engineering spend. And again, that gives us the flexibility of our commitment that we will be responsible with the capital that you trust us with your -- so that kind of where we stand from a kind of capital deployment perspective and where the balance sheet sits right now. As I said, we're -- we feel that we're in good financial standing, and that's another of our kind of key advantages here.

Excellent. Thanks, Brian. And so looking at our goals for 2026, the demonstration facility that we're now in Phase 2, and we're drilling these wells, the purpose of Phase 2 is really data collection for engineering. So there's a couple of pieces of information we need to collect. One of the big ones is the gas water ratio. It helps us design the gas step, that's our pretreatment for our -- in our system. It's the only pretreatment we do. And I'll talk a little bit more about that sort of in the comparison sense. But so we have to get that data collected. We're also going to look at some reservoir performance. We're going to have some tracer through the reservoir to see how that performs. That gives us some really good granularity and that's going to happen. And then obviously, we're continuing with the DLE production and getting that equipment producing more carbonate as we go. And so that feeds into our feed, which is we're looking to do a class or assessment that gets us our feasibility study. And then there's a bunch of commercial initiatives that are underway. And when you look at our throttle of capital and how we look at this, it's really our engineering speed is just a dollar spend. And so we can move that up and down as we move closer to commercial and we get some of our partners who are basically saying to us, we want offtake we wanted at this state that sort of drives the throttle on our engineering to be on stream and then permitting this year. And then the big job for us in 2026, for Brian and I is going to be the project financing, which are backed by the first 4 things, obviously. So we want to be shovel ready and then sort of project financing happens in conjunction and then continues on until you're at FID and then we can go build this project, which is very exciting. Looking at the permitting and regulatory in Alberta, again, just to highlight it, because we're very proud of it, our ability to get these licenses to run our demonstration facility. And for those not as familiar with the Alberta permitting system, [ direct to 56 ] facility license that we've applied for, it's the same [ direct to 56 ] that we'll be applying for the central processing facility. Obviously, the CPF application is going to be bigger because it's a bigger facility. And we also -- because of the size of it have to include it in [indiscernible] which is [ Environmental Protection Enhancement Act ] application. Both of those are going in very shortly. And I think that's very exciting for us because we've been working on them. We've been doing the baseline studies for the environmental stuff to feed into the application. So that's very exciting for us to be on the precipice of that. And for any stakeholders in the area, in our sort of consultation notification area, we will be out -- we're having to hand deliver everything because of Canada Post. So that will be coming [ the 56 ] will be coming out shortly. As we get into 2026, obviously, we get the wells and pipes as well licensed, we do the scheme application for the facility. There's a couple of other minor ones like the municipal development permit and the AC permit. So that sort of rounds out everything. Our goal is to have them all in hand by the end of next year or close to it. Obviously, consultation is the first step we do, and so we'll be out on the wells pipeline consultation in the new year. And what that looks like for us, again, in terms of what a commercial facility and infrastructure and why we think Alberta is a great place. This is our facility site in this little white box here at the bottom right, directly adjacent to 240 kV power line. We've got about a 1.6-kilometer gravel road to the site that we'll have to pay and we have to build a transformer. That is the entirety of the infrastructure that we need to put in place outside our process facility. And generally, when you talk about mines like there are other lithium projects in Eastern Canada, they acquire 100-or-so plus kilometers of road just to get access to the project. We just got to pave a road that's [ 1.6k ]. So just this is why for us, the permitting and work with the [ AR ] is not as complicated is because we don't have that same remoteness to the location. We're not on [indiscernible] land. And the other thing is just the infrastructure required to put in and that capital that's required upfront of even getting the project built, we don't have. So -- and then the other piece of this, obviously, rail is over an old -- and that will be loaded on load if we need it from the rail spur there to get the products in and out and this is what this looks like. This is hot off the press. So this is going to be in the [indiscernible] application. This is our plot plan for the facility -- it's changed a little bit from the one that you've seen in the deck. This is the one that we're putting into the applications. So this shows Phase 1 and 2. And when you look at this, just a high-level overview on the left, you see [ Brian ] inlet and outlet. So that's where the pipes from the wells enter the facility and leave the facility, go back to the disposal wells. Then we have the gas handling, that's our pretreatment. So we moved the gas from the brine. We do that simply by depressurizing. So the brine is about 14x more under pressure than atmosphere. So we just released that pressure the gas comes off, we suck it base by vacuum, and we diverted around and back into the wells -- into the brine after DLE using a compressor and then it goes back down the same line. So that's how we handle the gas. Basically, we're just diverting it around, so we can have it -- we don't have to have it in lease system, which enables us to run that at atmospheric. And there are projects out there that are proposing to run their DLE high pressure. That adds a whole pile of complication. So we'll take the gas out. We'll run it at atmospheric pressure, which allows us to handle it much more safely and easily. And then it circles back and into the pipeline. From there, we make a lithium chloride. That lithium chloride is about 60, 100 milligrams per liter. We then remove it's about 60% lithium at that point. So we removed that last 40% using ion exchange collation standard water treatment, like your water softener effectively. And we also use membranes to -- for the concentrate and clean and then we do a final evaporation stage where we get rid of the last bit of water. We get it super concentrated. Again, all of that water where we're moving. We just recycle back to the front end. We have a little water treatment plant and then we use it for the strip for the DLE again. And then we use -- we take that lithium chloride and we convert it to lithium carbonate in the carbonation -- sorry, carbonation area. And we'll also have a small office and a small lab on site to do some of the testing because you're always testing your quality. So we also are looking on the top far left to put in our own power. And we'll also have transformer from the power lines that sit, as you can see just off the plant site to the West. The timing of the power [indiscernible], we'll have it on stream day 1. So we will have in our application to -- for our power outlines that we will pull off the grid and be able to put back on the grid. So if we want to produce more power than we need, we can put it on the grid and sell it. And if we don't have the power running quite yet, we can also pull off the grid and run the system upgrade power. So that's our plan, and we're working through the power as part of the feasibility study. So all of that will be outlined in the feasibility study. On the left, this is what that looks like today. So we option to buy a gravel pit from the [indiscernible] County. I'm very excited about this because it's already disturbed, which means we don't have to go to new farmland and disturb it, we can use already existing disturbed ground. So our first job will hear when we get to construction will be to level this so we can work pilings in. But effectively, that whole plant site sits within the disturbed gravel area that you see there. On the right-hand side is our demonstration facility. This is a picture of the drill rig. This is fairly recent last week. I'm drilling the first well on that site. And so we will drill a second well and then the equipment will be reset up on this site very shortly. So that -- I mean -- and this site will likely operate until we're commercial. So we'll keep it going. One of the things we are lucky enough to be hosted by Lithium Americas Corp down to [indiscernible] demo to have a look at how they were doing things. And one of the big things that they highlighted to us is how important it was to train their operators on some of the nuances when you're doing it a little bit more manually than you would in a big commercial plant. And so we'll operate this, obviously, for our own uses, but then I think it's important to help train our operators as we get closer to commercial operations. And looking at our feasibility -- or sorry, our phases of our demonstration facility. Phase 1 is done. So we've commissioned the skids. We've made lithium carbonate. We're still producing this in carbonate today and we'll continue that probably through the rest of the year. In the new year, we'll move the skids over to the new site once the wells are complete. As I said, we've got some data to collect on the reservoir and the brine gas concentration and then we'll be also running the DLE and all of that supports our feasibility study, our feed engineering. Phase 3 of the demo is really, as we've outlined for our strategic partner banks to provide debt construction financing. So it's a derisking exercise. It's not required to design the plant. So we're going to turn that on and get it up and running at some point in 2026. We don't have a firm date yet it's more dependent on the commercial agreements and arrangements that we're working on and when that needs to go. So we're focused right now, just time-wise on getting the engineering done so we can get the [ feed ] study complete, so we can get on with that part of the business and we'll be looking at this single column as we go. That single column, just to give you context, it's one commercial size column. That's why we want to do it. That's why we think are important. There's a derisk it. It's basically when you do the 12,000-ton plant, -- it's 120 columns. So we're going to build on, which means that we're a 1-to-1 scale at the actual like when you talk about recovery and stuff like that from the DLE, but from a commercial perspective, you're 1/120 scale. And the equivalent carbonate rate production out of that column will be 100 tonnes a year. So that's the scale. So it's fairly large as a demonstration unit. For those who haven't seen some of the pictures. This is what the lot sites, it's really just valves, pumps and pipes moving fluids around. It's effectively a water treatment facility treating for lithium. The secret sauce, the intellectual property that we hold is how we move the brine, the flow rates, the interaction, how we sequence things, that's really how we see intellectual property on this. So it's the process designed to get 95% or 96% recovery from the DOE to be able to follow that recovery to get sort of a 92% to 93% recovery, which we outlined in the pre-fees. To be able to do that at a commercial scale requires some really good process optimization. And that's really truly a big strength for E3. We test all absorbents ourselves in our lab first. So we have a similar system to this, but obviously smaller to do all of the [ zorba ] validation and verification. And I'll talk later about actions and what that's about, but we're also looking at that validation in our lab as well. So just some pictures from the demonstration facility. We ran the first step at the old pilot site. So this is just pictures of the old pilot site. And this is -- this will all be eventually moved over to the new site where the wells are being dropped. That's this site here. So just some fun pictures of the drilling pictures of us tell a thousand words. So I'm pretty excited to have this thing operating -- we're getting all the geology data now occurring and logging, and then we'll move over to the second hole here later this week or early next. I'm going to switch into a little bit on the government. We had a budget drop earlier this week. We've been in regular communications with the federal and perimeter government that can provide some context to what we see happening. This is [ Brian Jean and MLA Sawyer], who's a local MLA for the area that we're operating in, cutting the ribbon of our demonstration facility. The Alberta government has been very proactive with us. We had the AER come out in force to see this demonstration facility so they understand what they're regulating because it is somewhat still new in terms of this equipment. So they've been very productive, very supportive. [ Brent's ] been very supportive. Obviously, regulations are still new and still working through some of those but very excited to have that support to have seen the government move towards lithium with a lot of ease. I think, considering it is a new commodity in a new industry. And I think the reason why that has happened is because of the similarities to oil and gas. And because we put the drill rig that we showed on the previous slide, this jury moved off a hole for drilling for oil and gas and efforts on our 2 holes, it's going to go up north to drill more gas wells. So we can put all of those same people to work to build our project. I just wanted to put a slide talk a little bit about what's happening in the [indiscernible] government. So last week, I was at which is the side event of the G7 Ministerio that was in town in Toronto. And the message that I was talking about here on stage was -- and we didn't know it at the time, but it's actually a lot of what we were talking about ended up happening in the budget. So regardless of how do you feel about the size of the deficit and I'm fiscally conservative. So I appreciate sort of saving capital where we can but the world is changing right now. And I think we've seen it fundamentally because we've been in this space, which is sort of this energy security and national security mix. for a couple of years, and we've seen this move. And what it really means is that there's a lot of -- even in the United States, state-sponsored development of resources because of the concentration of resources coming out of one single country and the energy and national security risk around that. And because the energy mix now -- and this is not an or, in my view. I think we need all forms of energy. So it's an and. We keep building on top of the energy. We're not trying to necessarily -- neither can we eliminate forms of energy right now especially with AI and the consumption that's going to happen there. But the electrification side of our energy mix is growing significantly. And it needs -- the critical minerals is a definitive part of that energy mix now because of the battery -- because all of the things the battery brings to the table. And that's what this budget is about. And I think that we need it may not be the time for fiscal conservativeness, it may be the time to actually go out and do big things because we're competing against rest of the world that is doing something very similar, and we risk being left behind in what's going to be the future of how the world operates. And so from that point of view, looking at where they -- what they've done is that -- they said the major projects office under [ Dawn Farrell ] and the budget proposes to put [ Canada Growth Fund and Canada Infrastructure Bank], which would be somewhere around $60 billion minus what they've invested into -- under the banner of NPL, which I think really is centralizing that. I think it hopefully will streamline that and put it to good use. And for us, where that good use would be is really around the project financing and investment in the project as we get to that stage in the future. They also have the [indiscernible] sovereign wealth fund, which is for investing in projects. So what it looks like here is taking actual investment in mineral projects, but we've also seen last week the Canadian government sign an offtake for stockpile with Nuvamon. So we're starting to see them actively in the supply side and taking offtake. So some of that may be deployed there. And then this first and last [indiscernible], which we've had about $4.4 million from [indiscernible] as well. So that's all now under the 1 banner of the first [indiscernible] fund. So that's the critical minerals highlight. I think at the end of the day, it's needed if we want to do what we need to do, but it's a short-term thing. And speaking to the folks of the MPO, I think they have a similar viewpoint. I won't speak to the direct speak on it directly, but I think it's shared with us is like this is a catalyst this gets things going and then it doesn't need to be there anymore. And I think we fully support that. And I put something out if you want to -- if you're interested, you want to dig into this more I would check out something I wrote on buildcanada.com. We put an article out prior to the budget dropping. So it's not necessarily definitive on this, but the message is very clear, and I think it aligns very closely with this. So you can have a read of that. That was supported by [ Build Canada], they support me writing that. So that's been very good. And then on the government support side, and as Brian mentioned, we've got total about $25 million of grants still remaining to deploy. As we ramp up spend here, especially with the demonstration facility, which is funded by from we really start to move through some of these graphs. So 2026, we're really going to draw down on a lot of this, as Brian mentioned, which is really going to support us. The markets are not as good as they have been in the past. We're starting to soon get better. And they are getting a bit frothy here and there. So we're anticipating an increased level of frothiness, but I think if you put money into the previous fund raise, looking at E3 deployment of capital, 50-50, your capital, investment capital versus the grand support is incredibly good use of dollars. And I think from the government side, we're putting this money to good use because we're using it to create and open up this new industry. So most of this money is being deployed right now on proving out -- the technology, which is nearly there now. We've got a lot of the yards done, and we've got a little bit more time in 2026. And then the rest of this can be deployed to designing -- in the detailed design of the first plant of its kind in Alberta. And I think that really is like that support then will unlock this industry. And again, it's sort of like we get it going, we prove it out, the hardest -- the highest risk is the tip of the spear, right? We are deploying a high-risk capital right now to do something new. And I think that's why it's appropriate for the level of financing from the government that we have. And then once it's operational, you said the proof is there and then we can move forward as an industry. Looking at where we're going as well with the project, the derisking is the big piece that we're working on here and then project development. And so the derisking is we're wrapping up. We're not completely done derisking yet, but we are looking to wrap it up here pretty quickly. So you can see a couple of checkmarks on that. And then the feasibility study is -- or feed engineering is underway right now as well as our permits. And I'll hand it over to Brian a little bit to just talk us through some of the bigger objectives because the team -- the majority of the team at E3, either within the lab or the engineers and geologists and the team are working through the first 2. And Brian I hand over to you to sort of talk us through how we think about the strategy of where we're going next.

Yes. Listen, I think we've been quite clear in how we're setting milestones and accomplishing this milestones to help derisk this project. I think that's critical. One, is to derisk the project, two [indiscernible] credibility and three, the path to FID here. So when we think about, again, some of the comments I made earlier around having the financial means to bring this to already. I think that's critical here. I think the investments that we're making right now provide us with additional core samples, additional resource samples and just kind of support the conviction we have on the quality of the resource here. And again, [indiscernible] lead the commercial discussions -- when we think about our off-takers, that's where we look at catalysts here. This is essentially a midstream project because you've got to find offtake to find volumes to define revenue. We understand our OpEx cost structure as well as our capital structure, our capital investment on the capital side. And really that's going to drive the returns here that attracts the market pools of capital that we're in discussions with. Now when we think about funding the ultimate project, it is a large slug in capital. But if we take a look at contracted projects here, the project finance market gives you access to 60% to 80% debt given the structure and the offtakes around it. That's achievable. We've got multiple examples within the Western Canada [indiscernible] that are contracted, financed through project finance means and creating significant equity value here. So the team is very focused on kind of moving the yard stick through 2026 here, so we can reach that objective at the end of the year here.

And a lot of what the engineers are working on is the derisking. And the reason that's so important is, as you slide the risk factor lower that access to capital switches from retail investment to institutional investment. We're seeing that right now in our register with our last fund raise and sort of some of the background buying. And then you get to the point where you've derisked enough with offtake agreements that you can go secure the debt that you required. And I think though -- so the performance of us Brian being able to achieve the goal of getting this finances back on our continuous success from the projects team. So -- and that -- we've been -- something I'm very proud of is that we continually demonstrate that we are on the right track that we have the right technology that we are engineering this thing to success. And I think the demonstration fails the most recent outline that we really truly on our track here to get this thing designed and built. So that wraps up the presentation. And we do have some questions. I know we've got some coming in. We've got about 10 minutes left. I'm going to just answer a couple of questions that we have over e-mail first, which I answered yesterday as well just to make sure that we've covered those off.

And Rob's kindly printed them out for me, so I have them in front. So one of the questions that we get from a consistency is the difference in lithium concentration and brine impurities and how that all shakes out. And this is where I think drawing a comparison is important. I'm actually going to be -- were supposed to be talking about this at a conference in the States in December, which some one of the team -- one of my team members is going to go do for me, which is really talking about the impact of pretreatment and what -- when brine chemistry actually means to DLE because a lot of people talk about DLE and the different technologies, but most [indiscernible] of the world has lend itself to absorbent. And if you just look at an absorption technology and you look at what the brine chemistry needs to be to go through that absorbent iron is a problem, silica is a problem in train gas, if you do it at atmospheric is a problem. And so you have to make -- you have to pretreat your brine, no matter who you are, and we have to as well, to get it to a form or you can put it through the direct extraction process. And the size and the amount of pretreatment can be very significant and can add significant cost. And so when you look at how we levelize our cost and you look at the standard lithium DFS that came out, you look at our pre-fees and slightly different metrics versus a carbonate, and we are moving towards carbonate at the PFS aligned hydroxide. And so it's hard to do the direct comparison publicly today because they're apples and oranges a little bit. But internally, when we actually run those numbers, it's in the single like 10% to 15% cost differential between us and standard on OpEx and capital efficiency. And while their grade is 4x higher, the reason that we're able to stay cost competitive. And I would say that while we are slightly more expensive than standard from an operating capital, we're still significantly cheaper than a hard rock project in the eastern side of North America that needs to be converted in North America to a better grade salt. We're still significantly cheaper than that from an operating capital. And there's lots of examples publicly that you can go and look at that on a levelized basis. And I think that, that -- so we're already cost competitive. We're slightly more expensive than our closest peer who has 4x more grade than us. And the reason that we can remain cost competitive is while our brine will cost more to move because we have more of it than we have to move. We make a very similar product at the back of that DLE, so it's a similar sort of concentration of lithium, similar impurities. So our post treatment and our carbonation circuit is nearly the same cost, all things being equal, so the real difference then is we are a bit more expensive on the wells, but we're significantly cheaper on the pre-treat. And I think that, that levelized cost helps us be competitive because our brand is extremely consistent. So we don't have to do complicated blending. We can maximize our recovery because our grade comes in at the same grade. The chemistry of the brine comes into the same level through the whole aquifer. And so we can design a facility that with very tight specifications that will operate at high efficiency. And that also is very important to us in terms of a cost perspective. So that's how we think about the brine chemistry and then looking at it from the sorbent perspective and how we derisk the project there, we announced an MOU. We don't normally announce MOUs and this was another question from yesterday on [indiscernible], but it ties into the same deal conversation. We don't normally announce MOUs. But the reason we did actions is more about absorbing because we wanted to demonstrate to [indiscernible] through their partner is being used commercially today. And I think that's really important because -- and we have a really good relationship with them, and we're looking at supplying them with some carbonate potentially. So there's a really nice bilateral relationship that's being built as we both go through qualification of our each of our own streams, them with our carbonate us with their absorbent but it demonstrates the prevalence of this material and our ability to do these types of collaborative deals and so for that reason, we wanted to show up to the market. It is nonbinding. It will have to be a definitive before it becomes meaningful in terms of that sense, actual carbonate supply actual buying of absorbent. and each are mutually exclusive. We don't necessarily have to do one to get the other. They could be separate. But I think it will hopefully move it towards the development of a longer relationship that would be more binding. So -- but there are, like I said, there are or out there that we are testing or going to test internally in our lab, derisking all of that, and then we can go to RFP because at the end of the day, we'll just go to RFP for the sorbent. So we'll send out a tender and we'll get quotes back and we'll -- we know the performance, so we know what we can afford to pay and so we can levelize everyone's individual cost against their performance in real time and then we can pick -- make a choice. So anyway, that's on that. We've got a question about the partnership with pure lithium as well. Here this, we still have regular conversations. One of our engineers went down to the ribbon cutting in Chicago, and we're still keeping close communication. But in August [ Emily ] made what I believe to be the right choice, but she decided to move for a facility from Boston to Chicago you can go on the various announcements and she's outlined why they're doing that. But it's come at a cost of workforce and she's had to not everybody moved and she just had to go through that churn, which is -- which happens. But I think she's doing it for the right reasons because he wants to get along with commercialization and she's got a good relationship with another lab there in Chicago as well. So while she is going through that transition, not a lot of work between the companies is happening, obviously, because she has reset up per lab and get everything up and running again. and our joint development agreement expired in August. So we are looking to refresh that and refocus it and then pick that back up once they're up and running again. So that's sort of where Pure Lithiums at. They're still doing great work, and we still like the idea of taking our chloride and converting it directly to lithium metal. So let me just go through -- maybe, Rob, if we have any questions up on the on the screen. There's one from yesterday.

I have 3 and I'll sort of allow the [indiscernible] molecule you can take the first 2, and I think the third one for Brian. One was a question that [indiscernible] of our patents and IP. Second one, you touched on this briefly, but with the government announcements, what sort of financing or support options to the governments have out there with equity investments or other? And then Brian, maybe the third one that's come in would be a discussion on our future financing plans to get through to shovel ready.

Okay. Do you want to just repeat the first one because I was just reading?

Sorry, it's a question about what value in our patents and [indiscernible] our IP.

Yes. Yes, yes. So we still hold patents for our sorbent that we've developed. And we really liked it. It's just that it -- and maybe I'll answer this with a question around [indiscernible] because yesterday, we got a question on a lot that I want to answer just so we're consistent across the 2 webinars. So we developed sorbent. It is chemically the same as [indiscernible]. Obviously, mean slightly differently and we've on pad on it. It's an exchange urban. And as far as I know, and I'm not an expert in all technologies out there. As far as I know, it's [ LiLAC's ] one of the few, if not the only company developing that particular chemistry [indiscernible]. And so we like it because it has extremely high affinity for lithium but it has longevity issues. And so to make it work, we actually developed a whole -- we can manufacture ourselves. We had our whole process to do that. We had a company out of the East to add commercial sized equipment to manufacture for us at scale. So like we were running down that path. The challenge is that you have to make as [ Zorb ] manufacturing facility, and that has to be bankable and your risk profile on that is very high. And that is the main reason why we put it down. It's simply that we needed to derisk the project for the first plan. We need to get project financing, and that was the wet 1 big lever that we could pull. We -- process patents are harder to enforce and harder to write, but we are writing one for the design, but it's not as important as the intellectual notes -- or sorry, the know-how. So when you look at -- and I've talked about this publicly before, when you talk about an intellectual property protection strategy, patents is one part of that strategy, but protecting the know-how and not necessarily putting a patent out sharing your know-how to the world is another. And we protect that know-how through our contracts with our employees. So we have very strict IP provisions and confidentiality around the technology in our contracts, which means that E3 owns and protects all of that information. So regardless of pattern of patent, we protect that knowhow. In terms of [ LiLAC ] and their process and their sorbent, there are similarities in the process. They have some sort of form of a solid, they interact the brine with that solid. Probably, I think through columns, and then they extract the lithium out onto that material and then they strip it off. So fundamentally, the process works very similarly. But in the chemistry of [ disorbment ] is different than the illuminates that we're going to use most of the world has moved towards [ Illuminate ] because of their -- and a lot of the advancement over the last 5 years in [ Illuminate ] has meant that they have a much higher affinity for lithium than they used to and you're able to design in your process the purity of the concentrate. And I think that, that's really been a shift from like the stuff that [indiscernible] was using in the 80s. And maybe Brian I can hand over to you because the other 2 questions, I can talk a little bit more about the government, but maybe we can hand over to the financing and tie it into government as well.

Yes. Thanks, -- so walk everybody through kind of the balance sheet where we sit right now that gives us a high conviction that we can execute on the plans that we have in front of us right now and derisking the project. I think it's very important to just be mindful of the fact that different stages of companies or projects have different risk levels and attract different forms of capital. So we think we can get ourselves to shovel ready. We have offtake in it's a very derisked project here and that opens you up to a very different pool of capital than we have access to right now. Those are -- there can be project finance as I discussed. They can be project level investments and be partnerships or it could be equity. I think what may just be mindful of is that we will need to raise more capital over time here. We think that as we return derisk the project, as I said, we have access to different pools of capital. And I think it's really important just to keep in mind that we're all shareholders here as well. The intent is to create shareholder value. That's what motivates us. That's our mandate to the people that have trusted us with their capital. And as we progress, we'll be mindful about how we raise and deploy capital to make sure that we're focused on, as I said, created shareholder value.

Yes. And I think that is important because like for myself and my goal is, we want to get this industry running, and we want to build this thing. But E3 is my sole investment, if I put it that way, right? And if you account for my options over time, I probably am the sole largest shareholder by total number of shares and or close to it anyway. So we're motivated by the same seen progress, as Brian mentioned, it's really about building this thing. And as we build it, we create value. And the markets are -- have been sort of on the slow side for the last 1.5 years, we're starting to see some response. So obviously, a part of it is at least a proxy to the market and how it's evaluating these types of projects. But I think when you see -- if we tie it into the government stuff and you see the funding programs that are available to support the building of critical minerals in Canada projects are going to get built. And one of the big things that with the message that we leave with government is that government should fund projects. But right now, Canada hasn't built a lot of mineral projects in the past. And what we need is a kick start. We need a catalyst to get that going because the markets for these projects have been a bit softer in Canada because we don't build as many. And so the return of capital to investors, people like yourselves, hasn't been as strong as it was in the past. And I remember working in the industry in 2005, '06, '07 and the venture exchange was very, very frothy in those years, lots of activity, lots of turnover and we need to get back to that. And it's not going to happen overnight. But the thing that these programs provide in our mind, is certainty. They provide certainty that there is capital should we need it at the end of the day to build this project because the programs are there and the dollars are big enough to build the projects that need to get built. And one of the big thesis that we operate at E3 and one of the things that drives our strategy and how we really move and progress this project forward and why we're spending money right now on the demonstration facility is that our ability to be first to market or potentially first to market is a huge value creator for E3 because we -- there -- the market will not have -- but right now we do now not, we produce 4,000 tons of lithium salts that are from North American sources in North America today. We produced more than that from [ live ] and [indiscernible] who are converting in from products that are coming from South America and elsewhere. But we don't -- the 2 lithium mines that are operating in Canada being most likely that ore is being shipped to China, but it's definitely going over out of the country and overseas, we don't have lithium operations in North America right now. And the first major mine will be most likely factor pass -- and then there'll be a couple of others and then us. And so we're bringing the first out of the gate really drives, I think, the value that E3 can create because these funds are available, and there's not that many other projects that are going to be out looking for the project financing when we will be. So we're going to be one of the first at the gate. And I think that's why we're in all these conversations as well. That's why we're sitting on the stage of the [ B7 ] is because -- we are in that position as well.

Well, Chris, we've gone a little bit over [indiscernible] extra wraps up all the questions that we have here. So if you must have a final statement or so, then we can -- we can close the conference down, and we will get the recording posted up on the website later this afternoon. And for any questions that came through the inbox that we didn't touch on here during this time. I will -- I'll reach out directly to any of those investors.

Okay. Yes. I know I appreciate everyone on our take 2 of the webinar. And obviously, we had a good participant finally at the end of yesterday, but we definitely got everybody in today. So thank you for taking the time, and we look forward to keeping in touch. Our next one of these will likely be in the new year as we see some of the demonstration stuff get completed. And in the meantime, [indiscernible] mailing list, if you haven't, and drop us a line on investor [indiscernible] if you have any questions. Thank you for coming out today.

Thank you, everyone.