While we are waiting, a nice read: Importance of flow rate.When...

While we are waiting, a nice read: Importance of flow rate.

When it comes to DLE projects, grade is not king. In the mining world, investors tend to favour grade — highergrade means less material is required to be moved in order to extract a given amount of metal, which shouldtheoretically lead to better margins, all else equal. For DLE projects, we believe investors should focus ondeliverability. This is often measured by the potential flow rates per well (which is largely a function of the aquifer;pressure, porosity, permeability, reservoir thickness, etc.). We tend to look for projects with potential for at least~1,000 mg/day per well. The general target for emerging developers is at least ~20,000 tpa of Li-chemical, and it ismuch harder to reach that target if deliverability is poor. To illustrate our point, we compare two hypothetical brineprojects: project A has a grade of 75 mg/L Li and flow rates of 3,000 mg/day per well, while project B has a grade of150 mg/L Li and flow rates of 500 m*/day per well. To reach 20,000 tpa LCE, project A would require ~46 productionwells, while project B would require ~137 production wells. Despite being double the grade, project B would require~3x the number of wells. Wells (drilling and completion) tend to be the biggest CapEx item for DLE projects; inCanada, it costs ~$3M to drill and complete a new well, and so a CapEx of >$400M for just the well drilling aspectalone for project B could greatly hamper its economics.