Canada-based Standard Lithium said that the Phase 1A lithium project located in Southern Arkansas, US will require total capital costs (capex) of $365m, based on the findings of a definitive feasibility study (DFS).

The capex represents direct project costs of $259m, indirect project costs of $56m as well as a contingency of $50m.

According to the DFS, the Phase 1A project will have an average annual production of 5,400 tonnes of lithium carbonate over a 25-year operating life.

The peak annual production at the American lithium project is estimated to be 5,700 tonnes of battery-quality lithium carbonate.

To be located at speciality chemicals company  LANXESS’ site in El Dorado, the Phase 1A project is said to be the first commercial direct lithium extraction facility in North America.

The lithium project includes the construction and operation of the Canadian company’s first commercial lithium extraction plant through the processing of tail brine from the LANXESS South Plant.

Standard Lithium aims to make a final investment decision (FID) in the first half of 2024, subject to continuing project definition, finalisation of commercial agreements with LANXESS, and project financing initiatives.

Upon reaching a positive FID, the construction at the Phase 1A lithium project is scheduled to begin in 2024 with commercial production expected in 2026.

The DFS estimates an after-tax net present value (NPV) of $550m for the American lithium production project.

It also projects a post-tax internal rate of return (IRR) of 24% for the Phase 1A lithium project.

Last month, Sandard Lithium purchased a 118 acres land package to advance the development of its South-West Arkansas (SWA) project.