The Lithium Series, Part 5 – Grounded Lithium Is Moving Fast
Despite being a relatively new company, Calgary-based Grounded Lithium has quickly established itself as a major prospective lithium producer in Western Canada.
To learn more about the company, including its genesis, strategy to quickly achieve commercial lithium production, and the environmental benefits of using direct lithium extraction (DLE) technology to produce lithium, the Bulletin interviewed Gregg Smith, Grounded Lithium’s president and CEO.
“We incorporated Grounded Lithium in October of 2020,” says Smith. “After spending some time studying the sourcing, migration, trapping and physical evidence of lithium-rich brines in the subsurface, we deliberately chose an area in Saskatchewan [Kindersley] that we expected to provide the lowest development cost structure. At that time, our founders funded our startup and we acquired 35 sections of land. That led us to look for additional financing to expand and explore our resource position.”
“We are proud of how far we have come in just under two and a half years,” says Smith. “Since inception we’ve raised about $10 million, and we used that investment to expand and define our resource. Our land position has increased from the original 35 sections of land to 333 sections.”
“In the summer of 2022, we drilled the second lithium exploration well in Saskatchewan to support our understanding of lithium concentration and brine deliverability in our Kindersley project area. With this knowledge we upgraded our NI 43-101 resource report to our current inferred resource of 4.2 million tonnes of lithium carbonate equivalent (LCE) based on our 3D model of the reservoir utilizing existing well control in the Leduc/Duperow formation.“
And to allow Grounded Lithium to move as fast as possible to commercialize this resource, the company has chosen to license a DLE technology rather than develop its own — a key difference from E3 Lithium, as well as its focus on lithium resource in Saskatchewan rather than Alberta.
“We prefer to ‘Stand on the shoulders of giants’,” says Smith. “Our history informs us that we serve our shareholders best by focusing their investment on developing the resource and licensing the best technology rather than competing with the numerous companies seeking to provide the best solution. In this manner, we simplify our capital allocation decisions to focus on developing the resource and not developing the technology.”
“Our team worked through all of the DLE providers globally and selected six for more rigorous analysis. From these six technology companies, we narrowed them down to just two companies that we believed would provide the best solution to extracting lithium from our brines. We shipped a large amount of brine from our first well to them to conduct pilot extractions in their laboratories and we anticipate hearing results from them in the very near future, allowing us to make a final decision.”
The Saskatchewan advantage
Most of Grounded Lithium’s substantial lithium resource is in Saskatchewan, especially in the Kindersley area, but “we did not deliberately choose the province,” says Smith. “We followed our geological criteria and Saskatchewan chose us. We chose areas near Kindersley for being significantly shallower than most other areas to access the reservoir, to control drilling costs to produce lithium-rich brines at the least expensive cost.”
This is an especially important factor for Grounded Lithium because it is targeting lithium-rich brines in non-oil and gas areas, requiring exploratory drilling, unlike other prospective producers in Western Canada, including E3 Lithium.
“The presence of hydrocarbons is both a blessing and a curse,” says Smith. “If this area contained hydrocarbons, we would benefit from all the additional wells drilled allowing us easier access to the brines for testing. On the other hand, trace volumes of oil in the brine degrades the active resin beads in the process that extracts the lithium. Trace oil and/or hydrogen sulfide adds to prefiltering costs as these contaminants must be removed prior to brine processing.”
“Despite our differences, there is much that is the same, and we will share our successes and knowledge with peers like E3 as we progress. Canada needs all these projects to demonstrate success, and all lithium-from-brine companies benefit from each other’s successes.”
Other important advantages of operating in Saskatchewan, according to Smith, include high brine volume deliverability, due to thick, porous reservoir in the Kindersley area, and a supportive regulatory environment. “We find Saskatchewan an encouraging environment to develop resources within, and the regulator is willing to find time for discussing how to improve the process supporting our industry,” he says.
Grounded Lithium is targeting a commercial-scale plant to produce 10,000 tonnes per year at Kindersley by 2026 — the same year as E3 Lithium, but only half the size — but according to Smith several major building blocks remain.
“The mining industry operates differently than the oil and gas industry and we must deliver a few technical studies as we proceed with our analysis and commercial production,” he says. “Each study provides increasing confidence to the investor of the level of certainty and potential outcomes. We plan to issue a Preliminary Economic Assessment (PEA) in Q2 of this year. The increasing levels of certainty come from the issuance of our Preliminary Feasibility Study (PFS) and then finally the Definitive Feasibility Study (DFS).”
To provide the necessary information for these studies, Smith says his company needs to: better define the Kindersley resource with more drilling; select its DLE technology and determine anticipated outcomes and costs; and achieve tighter cost estimates for the overall project.
“Our analysis suggests that for our brine and depth at Kindersley, we can achieve appropriate economies of scale with a 10,000 tonnes per year LCE facility,” says Smith. “For this reason, our strategy is smaller modular facilities of this size repeatable multiple times across our land position. Cash flow from each prior project is to fund development of our future projects. This strategy also allows us to de-risk our first project on many fronts such as construction timing, capital costs and financing while deploying less capital to get there.”
The environmental benefits of producing lithium from lithium-rich brine using DLE technology are huge compared to conventional hardrock mining or solar evaporation pools, according to Smith.
“We significantly reduce the environmental footprint relative to large evaporation ponds which impact the available surface fresh water available for people and wildlife,” he says. “These ponds typically require a series of ponds over an area of 5 kilometres by 10 kilometres and will take 18 months to produce battery-grade lithium. Whereas we will ultimately produce a final product in a matter of days without significant impact on any freshwater.”
“Hardrock mining requires large open-pit mines, rock grinders and tailings ponds to produce what is called spodumene concentrate. Our footprint will appear as a series of well bores and pipelines connected to a facility about the same size as a typical oil battery with gas conservation. The spodumene concentrate represents approximately 20 per cent of the original rock volume and must be shipped to a facility for processing where the rock is dissolved in hot acid and then chemically processed to battery-grade lithium.”
“Today the only location for processing the spodumene concentrate into a final product is China, although countries like Australia are looking to build their own spodumene concentrate processing facilities in the future,” says Smith. “Extracting battery-grade lithium from hard-rock sources is currently estimated to require three times the energy consumption relative to a lithium-from-brine operation.”
- New Energy