On Thursday, BMO Capital updated its outlook on Standard Lithium Ltd. (SLI:CN) (NYSE: SLI), raising the price target to Cdn$3.00 from the previous Cdn$2.50 while maintaining an Outperform rating on the stock. The adjustment follows the announcement that Standard Lithium's South West Arkansas (SWA) project has been selected for award negotiations of up to US$225 million by the US Department of Energy.
The SWA project is currently progressing through its feasibility study and front-end engineering design, with completion expected in the first half of 2025. The project's scope has been expanded from an initial 30ktpa lithium carbonate equivalent (LCE) production capacity in the pre-feasibility study (PFS) to a larger 45ktpa LCE capacity, which is planned to be developed in two stages.
The potential award from the US Department of Energy is seen as a significant step for Standard Lithium, as it is anticipated to help minimize future equity dilution for the company. BMO Capital has revised its model assumptions to reflect the larger-scale project and updated funding assumptions, leading to the increased price target.
The financial support earmarked for the SWA project by the US Department of Energy is still subject to final negotiations. If secured, it will mark a pivotal development for Standard Lithium as the company works to expand its lithium production capacity in Arkansas, which is strategically positioned to meet the growing demand for lithium, a critical component in battery technology and renewable energy sectors.
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