Filed Pursuant to General
Instruction II.L of Form F-10
File No. 333-273462
PROSPECTUS
SUPPLEMENT
dated November 17, 2023
to the Short Form Base Shelf Prospectus
dated July 26, 2023
| New Issue |
 |
November 17, 2023 |
STANDARD LITHIUM LTD.
Up
to US$50,000,000 of Common Shares
This prospectus supplement (this
“Prospectus Supplement”) of Standard Lithium Ltd. (the “Company” or “SLI”), together
with the accompanying short form base shelf prospectus dated July 26, 2023, as may be amended or supplemented (the “Shelf
Prospectus” and together with the Prospectus Supplement, the “Prospectus”) qualifies for distribution common
shares in the capital of the Company (the “Offered Shares”) having an aggregate sale price of up to US$50,000,000 (or
the equivalent in Canadian dollars determined using the daily exchange rate posted by the Bank of Canada on the date the Offered Shares
are sold) (the “Offering”).
The Company has entered into
an “at-the-market” sales agreement dated November 17, 2023 (the “Sales Agreement”) with Canaccord Genuity
Corp. (the “Canadian Agent”), Canaccord Genuity LLC and Citigroup Global Markets Inc. (the “U.S. Agents”,
and together with the Canadian Agent, the “Agents”), pursuant to which the Company may distribute the Offered Shares,
in accordance with the terms of the Sales Agreement, and except as noted below, from time to time through the Agents, as agents for the
distribution of Offered Shares or as principals in accordance with the terms of the Sales Agreement, pursuant to the Offering. The Offering
is being made concurrently in Canada under the terms of this Prospectus Supplement and in the United States under the terms of the Company’s
registration statement on Form F-10 (File No. 333-273462) (the “Registration Statement”), filed with the United States
Securities and Exchange Commission (the “SEC”) of which this Prospectus Supplement forms a part. See “Plan
of Distribution”.
The issued and outstanding common shares
of the Company (the “Common Shares”) are listed and posted for trading on the TSX Venture Exchange (the “TSXV”)
and on the NYSE American LLC (the “NYSE American”) under the symbol “SLI”. On November 16, 2023,
the last trading day prior to the date of this Prospectus Supplement, the closing price per Common Share on the TSXV was C$3.44 and on
the NYSE American was US$2.51. The TSXV has conditionally approved the listing of the Offered Shares, subject to the Company fulfilling
all of the listing requirements. In addition, the Company has applied to list the Offered Shares on the NYSE American.
The Company is permitted, under the multi-jurisdictional
disclosure system adopted by the United States and Canada (the “MJDS”), to prepare this Prospectus Supplement and the accompanying
Shelf Prospectus in accordance with Canadian disclosure requirements. Prospective investors should be aware that such requirements are
different from those of the United States. Annual consolidated financial statements included or incorporated herein by reference have
been prepared in accordance with International Financial Reporting Standards, as issued by the International Accounting Standards Board
(“IFRS”) and interim financial statements included or incorporated herein by reference have been prepared in accordance with
IFRS as applicable to interim financial reporting, including IAS 34, Interim Financial Reporting (“IAS 34”), and thus
may not be comparable to financial statements of United States companies.
Investing in securities of the Company is speculative
and involves a high degree of risk and should only be made by persons who can afford the total loss of their investment. A prospective
purchaser should therefore review this Prospectus Supplement and the accompanying Shelf Prospectus, as amended or supplemented, and the
documents incorporated by reference herein and therein, as amended or supplemented, in their entirety and carefully consider the risk
factors described or referenced under “Risk Factors” herein, in the accompanying Shelf Prospectus and the documents incorporated
by reference herein and therein prior to investing in any Offered Shares offered hereby. See “Risk Factors” and “Cautionary
Note Regarding Forward-Looking Statements”.
Prospective
investors should be aware that the acquisition, holding or disposition of the Offered Shares may have tax consequences both in Canada
and the United States. Such consequences for investors who are resident in, or citizens of, the United States or who are resident
in Canada may not be described fully herein. Prospective investors should read the tax discussion contained in this Prospectus Supplement
and consult their own tax advisors with respect to their own particular circumstances. See “Certain Canadian Federal Income Tax
Considerations”, “Certain U.S. Federal Income Tax Considerations for U.S. Holders” and “Risk Factors”.
Sales
of the Offered Shares, if any, under the Prospectus will only be made in transactions that are deemed to be “at-the-market distributions”
as defined in National Instrument 44-102 — Shelf Distributions (“NI 44-102”) and an “at-the-market
offering” as defined in Rule 415 under the U.S. Securities Act, including sales made by the Agents directly on the TSXV, the
NYSE American or any other trading market for the Common Shares in Canada or the United States. The Offered Shares will be distributed
at market prices prevailing at the time of the sale of such Offered Shares. As a result, prices may vary as between purchasers
and during the period of distribution. The Agents are not required to sell any specific number or dollar amount of Offered Shares
but will use their commercially reasonable efforts to sell the Offered Shares pursuant to the terms and conditions of the Sales
Agreement. There is no minimum amount of funds that must be raised under the Offering. This means that the Offering
may terminate after only raising a small portion of the offering amount set out above, or none at all. An investor will not be entitled
to a return of its investment if only a portion of the disclosed maximum offering amount set out above is in fact raised. The Canadian
Agent will only sell Offered Shares on marketplaces in Canada and the U.S. Agents will only sell Offered Shares on marketplaces in the
United States. See “Plan of Distribution”.
The enforcement by investors of civil liabilities
under United States federal securities laws may be affected adversely by the fact that the Company is incorporated under the laws of Canada,
that all but one of our officers and all but one of our directors are not residents of the United States, that some of the Agents or experts
named in this Prospectus Supplement and in the accompanying Shelf Prospectus are not residents of the United States, and that certain
of the Company’s assets and all or a substantial portion of the assets of such persons are located outside of the United States.
See “Enforceability of Certain Civil Liabilities”.
NO CANADIAN SECURITIES REGULATOR HAS APPROVED
OR DISAPPROVED THE OFFERED SHARES NOR PASSED UPON THE ACCURACY OR ADEQUACY OF THE SHELF PROSPECTUS AND THIS PROSPECTUS SUPPLEMENT. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENCE.IS AN OFFENCE.
NEITHER THE SEC NOR ANY STATE SECURITIES REGULATOR
HAS APPROVED OR DISAPPROVED THE OFFERED SHARES NOR PASSED UPON THE ACCURACY OR ADEQUACY OF THE SHELF PROSPECTUS AND THIS PROSPECTUS SUPPLEMENT.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENCE.
Pursuant to the terms of the Sales Agreement,
the Company will compensate the Agents for their services in acting as agents in connection with the sale of the Offered Shares pursuant
to the Offering in an amount up to 3.0% of the gross proceeds from sales of the Offered Shares made pursuant to the Offering (the “Placement
Fee”). In addition, the Company has agreed to reimburse the Agents for certain expenses incurred in connection with the
Offering. The Company estimates that the total expenses that it will incur related to the commencement of the Offering, excluding
compensation payable to the Agents under the terms of the Sales Agreement, will be approximately C$750,000. See “Plan of Distribution”.
In connection with the sale of the Offered Shares
on the Company’s behalf, the Agents may be deemed to be an “underwriter” within the meaning of Section 2(a)(11)
of the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”), and the compensation of the Agents may
be deemed to be underwriting commissions or discounts. The Company has agreed to provide indemnification and contribution to the Agents
against certain liabilities, including liabilities under the U.S. Securities Act.
As sales agents, the Agents will not engage in
any transactions to stabilize or maintain the price of the Common Shares. No underwriter or dealer involved in the Offering, and no person
or company acting jointly or in concert with an underwriter or dealer, may, in connection with the distribution, enter into any transaction
that is intended to stabilize or maintain the market price of the Common Shares, including selling an aggregate number or principal amount
of securities that would result in the underwriter or dealer creating an over-allocation position in the securities. See “Plan
of Distribution”.
Salah
Gamoudi, the Chief Financial Officer, Dr. Volker Berl, a director of the Company, as well as three individuals, each considered a
“qualified person” under National Instrument 43-101 — Standards of Disclosure for Mineral Projects (“NI
43-101”), namely Marek Dworzanowski, Rodney Breuer and Trotter Hunt, who have prepared or supervised the preparation of certain
scientific and technical information contained or incorporated by reference in this Prospectus Supplement, reside outside of Canada. Dr. Volker
Berl and Salah Gamoudi have appointed Cassels Brock & Blackwell LLP, Suite 2200, 885 West Georgia Street, Vancouver, British
Columbia, V6C 3E8 as agent for service of process in Canada. Investors are advised that it may not be possible for investors to enforce
judgments obtained in Canada against any person that resides outside of Canada, even if the party has appointed an agent for service of
process. See “Enforceability of Certain Civil Liabilities”.
The Company’s registered office is located
at Suite 2200, 885 West Georgia Street, Vancouver, British Columbia, V6C 3E8. The Company’s head office is located at Suite 1625,
1075 West Georgia Street, Vancouver, British Columbia, V6E 3C9.
TABLE OF CONTENTS
PROSPECTUS SUPPLEMENT
Page
TABLE OF CONTENTS
SHORT FORM BASE SHELF PROSPECTUS
ABOUT
THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING SHELF PROSPECTUS
This document is in two parts. The first part
is this Prospectus Supplement, which describes the specific terms of the Offering and adds to and updates certain information contained
in the accompanying Shelf Prospectus and the documents incorporated by reference into the Shelf Prospectus. The second part is the Shelf
Prospectus, which provides more general information, some of which may not apply to the Offering. If the information differs or varies
between this Prospectus Supplement and the Shelf Prospectus, the information in this Prospectus Supplement supersedes the information
in the Shelf Prospectus. The Shelf Prospectus and this Prospectus Supplement together comprise the Prospectus for the purposes of qualifying
the securities offered pursuant to the Offering.
An investor should rely only on the information
contained in this Prospectus Supplement and the Shelf Prospectus and on the other information in the Registration Statement, of which
this Prospectus Supplement and the Prospectus form a part, (including the documents incorporated by reference herein and therein)
and is not entitled to rely on parts of the information contained in this Prospectus Supplement or the Shelf Prospectus (including the
documents incorporated by reference herein or therein) to the exclusion of others. The Company and the Agents have not authorized anyone
to provide investors with additional or different information. The Company and the Agents take no responsibility for, and can provide
no assurance as to the reliability of, any other information that others may give readers of this Prospectus Supplement. Information contained
on, or otherwise accessed through, the Company’s website shall not be deemed to be a part of this Prospectus Supplement or the accompanying
Shelf Prospectus and such information is not incorporated by reference herein or therein, and the Company disclaims any such incorporation
by reference.
The Company and the Agents are not offering to
sell the Offered Shares in any jurisdictions where the offer or sale of the Offered Shares is not permitted. The information contained
in this Prospectus Supplement and the Shelf Prospectus (including the documents incorporated by reference herein and therein) is accurate
only as of the date of this Prospectus Supplement or Shelf Prospectus or as of the date as otherwise set out herein (or as of the date
of the document incorporated by reference herein or as of the date as otherwise set out in the document incorporated by reference herein,
as applicable), regardless of the time of delivery of this Prospectus Supplement or any sale of the Offered Shares. The business, capital,
financial condition, results of operations and prospects of the Company may have changed since those dates. The Company does not undertake
to update the information contained or incorporated by reference herein, except as required by applicable Canadian and U.S. securities
laws.
This Prospectus Supplement shall not be used by
anyone for any purpose other than in connection with the Offering.
The documents incorporated or deemed to be incorporated
by reference herein or in the Prospectus contain meaningful and material information relating to the Company and readers of this Prospectus
Supplement should review all information contained in this Prospectus Supplement, the Shelf Prospectus and the documents incorporated
or deemed to be incorporated by reference herein and therein, as amended or supplemented.
FINANCIAL
INFORMATION AND CURRENCY
All
currency amounts in this Prospectus are expressed in Canadian dollars, unless otherwise indicated. References to dollars, “$”
or “C$” are to Canadian currency unless otherwise indicated. All references to “US$” refer to United States dollars.
The following table sets forth for each period
indicated (i) the high and low exchange rates for one Canadian dollar during such periods; (ii) the average exchange rates
for one Canadian dollar for such period; and (iii) the exchange rates in effect as at the end of the period, for one Canadian dollar,
each expressed in United States dollars as quoted by the Bank of Canada.
| | |
Three Months Ended September 30, | | |
Year Ended June 30, | |
| | |
2023 | | |
2022 | | |
2023 | | |
2022 | |
| | |
(US$) | | |
(US$) | | |
(US$) | | |
(US$) | |
| High | |
0.7617 | | |
0.7841 | | |
0.7841 | | |
0.8111 | |
| Low | |
0.7313 | | |
0.7285 | | |
0.7217 | | |
0.7669 | |
| Average | |
0.7457 | | |
0.7662 | | |
0.7467 | | |
0.7901 | |
| Period End | |
0.7396 | | |
0.7296 | | |
0.7553 | | |
0.7760 | |
On November 16, 2023, the daily exchange rate for the conversion
of Canadian dollars into United States dollars, expressed in United States dollars, as quoted by the Bank of Canada, was C$1.00 = US$0.727.
MARKET
AND INDUSTRY DATA
Unless
otherwise indicated, the market and industry data contained or incorporated by reference in this Prospectus Supplement and the accompanying
Shelf Prospectus is based upon information from independent industry publications, market research, analyst reports and surveys and other
publicly available sources. Although the Company believes these sources to be generally reliable, market and industry data is subject
to interpretation and cannot be verified with complete certainty due to limits on the availability and reliability of raw data, the voluntary
nature of the data gathering process and other limitations and uncertainties inherent in any survey. While the Company believes such third
party information to be generally reliable, the Company has not independently verified any of the data from third party sources referred
to or incorporated by reference herein and accordingly, the accuracy and completeness of such data is not guaranteed.
NON-IFRS
MEASURES
The annual consolidated financial statements of
the Company are prepared in accordance with IFRS. Additionally, the Company utilizes certain non-IFRS measures such as working capital
(calculated as current assets less current liabilities). The Company believes that these measures, together with measures determined in
accordance with IFRS, provide investors with an improved ability to evaluate the underlying performance of the Company. Non-IFRS measures
do not have any standardized meaning prescribed under IFRS, and therefore they may not be comparable to similar measures employed by other
companies. The data is intended to provide additional information and should not be considered in isolation or as a substitute for measures
of performance prepared in accordance with IFRS.
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Prospectus Supplement, the accompanying Shelf
Prospectus and the documents incorporated by reference herein and therein contain “forward-looking information” within the
meaning of applicable Canadian securities legislation and or “forward-looking statements” within the meaning of applicable
securities legislation, including the United States Private Securities Litigation Reform Act of 1995 (collectively referred to herein
as “forward-looking information” or “forward-looking statements”). Forward-looking statements are
included to provide information about management’s current expectations and plans that allows investors and others to get a better
understanding of the Company’s operating environment, the business operations and financial performance and condition.
Forward-looking
statements include, but are not limited to, statements relating to the business and future activities of, and developments related to,
the Company after the date of this Prospectus Supplement or the Shelf Prospectus, as applicable; statements regarding anticipated burn
rate and operations; expectations of the use by the Company of the net proceeds raised from the Offering, including as to achieving the
related business objectives described herein; expectations of the timing, size and completion of the Offering and the listing of
the Offered Shares on the TSXV and the NYSE American; planned exploration, research and development programs and expenditures (including,
but not limited to, plans and expectations regarding advancement, testing and operation of the lithium extraction Demonstration Plant
(as defined below)); commercial opportunities for lithium products; delivery of studies; filing of technical reports; expected results
of exploration; accuracy of mineral or resource exploration activity; accuracy of mineral reserves or mineral resources estimates, including
the ability to develop and realize on such estimates; whether mineral resources will ever be developed into mineral reserves, and information
and underlying assumptions related thereto; budget estimates and expected expenditures by the Company on its properties; regulatory or
government requirements or approvals; the reliability of third party information; continued access to mineral properties or infrastructure;
payments and share issuances pursuant to property agreements; fluctuations in the market for lithium and its derivatives; expected timing
of the expenditures; performance of the Company’s business and operations; changes in exploration costs and government regulation
in Canada and the United States; competition for, among other things, capital, acquisitions, undeveloped lands and skilled personnel;
changes in commodity prices and exchange rates; currency and interest rate fluctuations; inflation; the Company’s funding requirements
and ability to raise capital; geopolitical instability; war, and other factors or information. Any statements that express or involve
discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions or future events or performance
(often, but not always, identified by words or phrases such as “expects”, “is expected”, “anticipates”,
“seeks”, “believes”, “plans”, “projects”, “estimates”, “assumes”,
“intends”, “strategy”, “goals”, “objectives”, “potential”, “possible”
or variations thereof or stating that certain actions, events, conditions or results “may”, “could”, “would”,
“should”, “might” or “will” be taken, occur or be achieved, or the negative of any of these terms
and similar expressions) are not statements of fact and may be forward-looking statements.
Forward-looking
statements are necessarily based upon a number of factors and assumptions that, if untrue, could cause actual results, performance or
achievements to be materially different from future results, performance or achievements expressed or implied by such statements. Forward-looking
statements are based upon a number of estimates and assumptions that, while considered reasonable by the Company at this time, are inherently
subject to significant business, economic and competitive uncertainties and contingencies that may cause the Company’s actual financial
results, performance, or achievements to be materially different from those expressed or implied herein. With respect to forward-looking
information listed above and incorporated by reference herein, the Company has made assumptions regarding, among other things: current
technological trends; ability to fund, advance and develop the Company’s properties; the Company’s ability to operate in a
safe and effective manner; uncertainties with respect to receiving, and maintaining, mining, exploration, environmental and other permits;
pricing and demand for lithium, including that such demand is supported by growth in the electric vehicle market and the energy storage
market; impact of increasing competition; commodity prices, currency rates, interest rates and general economic conditions; the legislative,
regulatory and community environments in the jurisdictions where the Company operates; impact of unknown financial contingencies; market
prices for lithium products; budgets and estimates of capital and operating costs; estimates of mineral resources and mineral reserves;
reliability of technical data; the ability to negotiate access agreements on commercially reasonable terms; and the anticipated timing
and results of operation and development. Although the Company believes that the assumptions and expectations reflected in such forward-looking
statements are reasonable, the Company can give no assurance that these assumptions and expectations will prove to be correct. Since forward-looking
information inherently involves risks and uncertainties, undue reliance should not be placed on such information.
Forward-looking
statements are subject to a variety of known and unknown risks, uncertainties and other factors that could cause actual events, performance
or results to differ from those expressed or implied. There can be no assurance that such statements will prove to be accurate, as actual
results and future events could differ materially from those anticipated in such statements. Such factors include, but are not
limited to: general economic conditions in Canada, the United States and globally; industry conditions, including the state of the electric
vehicle market and the energy storage market; governmental regulation of the mining industry, including environmental regulation; geological,
technical and drilling problems; unanticipated operating events; negotiation of commercial access agreements; competition for and/or inability
to retain drilling rigs and other services and to obtain capital, undeveloped lands, skilled personnel, equipment and inputs; the availability
of capital on acceptable terms; the need to obtain required approvals from regulatory authorities; uncertainties associated with estimating
mineral resources and mineral reserves, including uncertainties relating to the assumptions underlying mineral resource and mineral reserve
estimates; whether mineral resources will ever be converted into mineral reserves; uncertainties in estimating capital and operating costs,
cash flows and other project economics; liabilities and risks, including environmental liabilities and risks inherent in mineral extraction
operations; health and safety risks; risks related to unknown financial contingencies, including litigation costs, on the Company’s
operations; unanticipated results of exploration activities; unpredictable weather conditions; unanticipated delays in preparing technical
studies; inability to generate profitable operations; restrictive covenants in debt instruments; lack of availability of additional financing
on terms acceptable to the Company; intellectual property risk; stock market volatility; volatility in market prices for commodities;
liabilities inherent in the mining industry; volatility in financial markets; risks related to war (including the ongoing conflicts between
Russia and Ukraine and Israel and Palestine); increased inflation; changes in tax laws and incentive programs relating to the mining industry;
other risks pertaining to the mining industry; conflicts of interest; dependency on key personnel; and fluctuations in currency and interest
rates, as well as those factors discussed in the section entitled “Risk Factors” in the Prospectus and in the Company’s
public filings available at www.sedarplus.ca and www.sec.gov. Although the Company has attempted to identify important factors that could
cause actual actions, events or results to differ materially from those described in forward-looking statements, there may be other factors
that cause actions, events or results to differ from those anticipated, estimated or intended.
This
list is not exhaustive of the factors that may affect any of the Company’s forward-looking statements. Although the Company believes
its expectations are based upon reasonable assumptions and have attempted to identify important factors that could cause actual actions,
events or results to differ materially from those described in forward-looking statements, there may be other factors that cause actions,
events or results not to be as anticipated, estimated or intended. See the section entitled “Risk Factors” below, the
section entitled “Risk Factors” in the Shelf Prospectus and in the section entitled “Risk Factors” in the Company’s
annual information form for the year ended June 30, 2023, dated September 21, 2023 (the “AIF”), and
incorporated by reference herein, for additional risk factors that could cause results to differ materially from forward-looking statements.
The forward-looking information and statements
contained in this Prospectus Supplement and the Shelf Prospectus represent the Company’s views and expectations respectively as
of the date of this Prospectus Supplement and the Shelf Prospectus, unless otherwise indicated in such documents, and forward-looking
information and statements contained in the documents incorporated by reference herein and therein represent the Company’s views
and expectations as of the date of such documents, unless otherwise indicated in such documents. The Company disclaims any intent or obligation
to update publicly or otherwise revise any forward-looking statements or the foregoing list of assumptions or factors, whether as a result
of new information, future events or otherwise, except in accordance with applicable securities laws. Investors are urged to read the
Company’s filings with Canadian securities regulatory agencies, which can be viewed online under the Company’s profile on
the Canadian System for Electronic Document Analysis and Retrieval + (“SEDAR+”) at www.sedarplus.ca and the SEC’s
Electronic Data Gathering, Analysis and Retrieval System (“EDGAR”) at www.sec.gov.
CAUTIONARY
NOTE TO UNITED STATES INVESTORS
The Company is subject to the reporting requirements
of the applicable Canadian securities laws, and as a result reports information regarding mineral properties, mineralization and estimates
of mineral reserves and mineral resources in accordance with Canadian reporting requirements, which are governed by NI 43-101. NI 43-101
differs significantly from the disclosure requirements of the SEC generally applicable to United States companies. As such, the information
included or incorporated herein concerning mineral properties, mineralization and estimates of mineral reserves and mineral resources
is not comparable to similar information made public by U.S. companies subject to the reporting and disclosure requirements of the SEC.
DOCUMENTS
INCORPORATED BY REFERENCE
Information
has been incorporated by reference in this Prospectus Supplement and the Shelf Prospectus from documents filed with the securities commissions
or similar regulatory authorities in Canada, which have been filed with, or furnished to, the SEC. Copies of the documents
incorporated by reference herein may be obtained on request without charge from the Corporate Secretary of the Company at Suite 1625,
1075 West Georgia Street, Vancouver, British Columbia, V6E 3C9, telephone (604) 409-8154, e-mail: info@standardlithium.com, and are also
available electronically under the SEDAR+ profile of the Company at www.sedarplus.ca or through EDGAR at the website of the SEC
at www.sec.gov. The filings of the Company available on SEDAR+ and EDGAR are not incorporated by reference in this Prospectus Supplement
except as specifically set out herein.
This
Prospectus Supplement is deemed to be incorporated by reference into the Shelf Prospectus as of the date hereof and only for the purposes
of the distribution of the Offered Shares. Other documents are also incorporated or deemed to be incorporated by reference into
the Shelf Prospectus and reference should be made to the Shelf Prospectus for full details.
As of the date hereof, the following documents,
filed by the Company with the securities commissions or similar authorities in each of the provinces and territories of Canada and filed
with, or furnished to, the SEC, are specifically incorporated by reference into, and form an integral part of, the Prospectus, provided
that such documents are not incorporated by reference to the extent that their contents are modified or superseded by a statement contained
in this Prospectus Supplement, the Shelf Prospectus or in any other subsequently filed document that is also incorporated by reference
in this Prospectus Supplement, as further described below:
| 1. | the AIF, except for the information contained under the headings “Mineral Properties – Lanxess Property Project” and “Description of the Business – Background – Flagship Projects – Lanxess Property Project Background” therein, which has been superseded by the current Lanxess Technical Report (as defined below) as incorporated by reference into this Prospectus Supplement; |
| 2. | the audited consolidated financial statements of the Company for the years ended June 30, 2023 and 2022, together with the notes thereto and the auditors’ reports thereon; |
| 3. | the management’s discussion and analysis of the results of operations and financial condition of the Company for the year ended June 30, 2023; |
| 4. | the unaudited condensed consolidated interim financial statements of the Company for the three months ended September 30, 2023 and 2022 (the “Interim Financial Statements”); |
| 5. | the management’s discussion and analysis of the results of operations and financial condition of the Company for the three months ended September 30, 2023; |
| 6. | the management information circular of the Company dated February 23, 2023 prepared in connection with the annual general meeting of shareholders held on April 4, 2023; |
| 7. | the technical report entitled “NI 43-101 Technical Report for the Definitive Feasibility Study for Commercial Lithium Extraction Plant at Lanxess South Plant” dated October 18, 2023 and with an effective date of August 18, 2023, (the “Lanxess Technical Report”); |
| 8. | the material change report of the Company dated September 13, 2023 with respect to the results of
a definitive feasibility study for the first commercial lithium extraction plant at the Lanxess Property Project (as defined below); and |
| 9. | the material change report of the Company dated August 15, 2023 with respect to the results of a
pre-feasibility study of the South West Arkansas Project (as defined below), as well as an upgraded indicated mineral resource for a portion
of the South West Arkansas Project. |
Any document (other than confidential material
change reports, if any) of the type referred to in section 11.1 of Form 44-101F1 of National Instrument 44-101 – Short Form Prospectus
Distributions filed by the Company with the securities commissions or similar regulatory authorities in Canada after the date of this
Prospectus Supplement and prior to the completion or withdrawal of the Offering shall be deemed to be incorporated by reference in this
Prospectus Supplement and the Shelf Prospectus for the purposes of the Offering. The documents incorporated or deemed to be incorporated
herein by reference contain meaningful and material information relating to the Company and readers should review all information contained
in this Prospectus Supplement, the Shelf Prospectus and the documents incorporated or deemed to be incorporated by reference herein and
therein.
If the Company disseminates a news release in
respect of previously undisclosed information that, in the Company’s determination, constitutes a “material fact” (as
such term is defined under applicable Canadian securities laws), the Company will identify such news release as a “designated news
release” for the purposes of this Prospectus Supplement and the accompanying Shelf Prospectus in writing on the face page of
the version of such news release that the Company files on SEDAR+ (each such news release, a “Designated News Release”),
and each such Designated News Release shall be deemed to be incorporated by reference into this Prospectus Supplement and the accompanying
Shelf Prospectus for the purposes of the Offering.
In addition, to the extent that any document or
information incorporated by reference into this Prospectus Supplement is filed with, or furnished to, the SEC pursuant to the U.S. Securities
Exchange Act of 1934, as amended (the “Exchange Act”) after the date of this Prospectus Supplement and prior to the
termination or completion of the Offering, such document or information will be deemed to be incorporated by reference as an exhibit to
the registration statement of which this Prospectus Supplement forms a part (in the case of a report on Form 6-K, other than in respect
of a Designated News Release, only if and to the extent expressly provided therein).
Any statement contained in this Prospectus
Supplement, the Shelf Prospectus or in a document incorporated or deemed to be incorporated by reference herein or in the Shelf Prospectus
shall be deemed to be modified or superseded, for purposes of this Prospectus Supplement and the Shelf Prospectus, to the extent that
a statement contained herein or in any other subsequently filed document that also is, or is deemed to be, incorporated by reference herein
modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus Supplement or the Shelf Prospectus. The modifying or superseding statement need not state that
it has modified or superseded a prior statement or include any other information set forth in the document that it modifies or supersedes.
The making of a modifying or superseding statement shall not be deemed an admission for any purposes that the modified or superseded statement,
when made, constituted a misrepresentation, an untrue statement of a material fact or an omission to state a material fact that is required
to be stated or that is necessary to make a statement not misleading in light of the circumstances in which it was made. Any statement
so modified or superseded shall thereafter neither constitute, nor be deemed to constitute, a part of this Prospectus Supplement or the
Shelf Prospectus, except as so modified or superseded.
When
the Company files a new annual information form, audited consolidated financial statements and related management’s discussion and
analysis and, where required, they are accepted by the applicable securities regulatory authorities during the time that this Prospectus
Supplement is valid, the previous annual information form, the previous audited consolidated financial statements and related management’s
discussion and analysis and all unaudited interim condensed consolidated financial statements and related management’s discussion
and analysis for such periods, all material change reports and any business acquisition report filed prior to the commencement of the
Company’s financial year in which the new annual information form is filed will be deemed no longer to be incorporated by reference
in this Prospectus Supplement for purposes of future offers and sales of Offered Shares offered under this Prospectus Supplement.
Upon new unaudited interim condensed consolidated financial statements and related management’s discussion and analysis being filed
by the Company with the applicable securities regulatory authorities during the term of this Prospectus Supplement, all unaudited interim
condensed consolidated financial statements and related management’s discussion and analysis filed prior to the filing of the new
unaudited interim condensed consolidated financial statements shall be deemed no longer to be incorporated by reference into this Prospectus
Supplement for purposes of future offers and sales of securities hereunder.
SUMMARY
OF THE OFFERING
The following is a summary of the principal features
of the Offering and should be read together with the more detailed information and financial data and statements contained or incorporated
by reference elsewhere in this Prospectus Supplement.
| Issuer |
|
Standard Lithium Ltd. |
| Offered Securities and Gross Proceeds |
|
Common Shares with a value up to US$50,000,000. |
| Placement Fee |
|
Up to 3.0% of the gross proceeds from the sale of the Offered Shares. |
| Description of the Offering |
|
Sales of the Offered Shares, if any, under the Prospectus are anticipated to be made in transactions that are deemed to be “at-the-market distributions” as defined in NI 44-102 and an “at-the-market offering” as defined in Rule 415 under the U.S. Securities Act, involving sales made directly on the TSXV, the NYSE American or any other trading market for the Common Shares in Canada or the United States. The Offered Shares will be distributed at market prices prevailing at the time of the sale of such Offered Shares. As a result, prices may vary as between purchasers and during the period of distribution. |
| Common Shares Outstanding |
|
As at November 17, 2023: 172,852,197
Common Shares.
See “Consolidated Capitalization”
and “Plan of Distribution”. |
| Business of the Company |
|
The Company is an innovative technology and lithium development company focused on the sustainable development of a portfolio of lithium-brine bearing properties in the United States utilizing scalable, fully integrated start to finish extraction and purification technologies. The Common Shares of the Company are listed on the TSXV and the NYSE American under the symbol “SLI”. SLI has two material properties, being the South West Arkansas Property and the Lanxess Property (as defined below). See “The Company”. |
| Use of Proceeds |
|
The Company intends to use the net proceeds from the Offering, if any, to fund ongoing work programs to advance the South West Arkansas Project, the Lanxess Property Project, the Demonstration Plant, the expansion in East Texas, for working capital and for general corporate purposes. |
| Risk Factors |
|
Prospective purchasers of the Offered Shares should carefully consider the information set forth under the heading “Risk Factors” and the other information included in this Prospectus Supplement and the accompanying Shelf Prospectus before deciding to invest. See “Risk Factors”. |
THE
COMPANY
The following description of the Company does not contain all of the
information about the Company and its assets and business that you should consider before investing in the Offered Shares. You
should carefully read this entire Prospectus Supplement and the Shelf Prospectus, including the sections entitled “Risk
Factors”, and the AIF, as well as the documents incorporated by reference herein and in this Prospectus Supplement
and the Shelf Prospectus before making an investment decision.
SLI
is an innovative technology and lithium development company focused on the sustainable development of a portfolio of lithium-brine bearing
properties in the United States utilizing scalable, fully-integrated Direct Lithium Extraction (“DLE”) and purification
technologies. The Common Shares are listed on the TSXV and the NYSE American under the symbol “SLI”. SLI has two material
properties, being the South West Arkansas property (the “South West Arkansas Property”) and the Lanxess property (the
“Lanxess Property”).
The Company’s most advanced project is the
Lanxess Property Project (as defined below), a brownfield project engaged in the testing and proving of commercial viability of lithium
extraction from over 150,000 acres and being developed in partnership with specialty chemicals company, LANXESS Corporation (“LANXESS”).
LANXESS operates the largest brine extraction and processing operations in southern Arkansas, that includes three operating brine processing
facilities – the South, West and Central plants. Each plant has its own brine supply, disposal and pipeline network and bromine
processing (separation) infrastructure. The Company operates its first-of-a-kind industrial-scale DLE demonstration plant (the “Demonstration
Plant”) at LANXESS’ South plant in southern Arkansas (the “Lanxess Property Project”).
The
Company is also pursuing the resource development of over 27,000 acres of separate brine leases located in southwest Arkansas (the “South
West Arkansas Project” (formerly known as the “TETRA Project”)). The Company has identified a number
of highly prospective lithium brine project areas in the Smackover Formation in East Texas and began an extensive brine leasing program
in the key project areas.
In addition, the Company also has an interest in certain mineral leases located in the Mojave Desert in San Bernardino County, California.
For further information regarding SLI, the Lanxess
Property Project, the South West Arkansas Project and the Demonstration Plant, see the AIF and other documents incorporated by reference
in this Prospectus available at www.sedarplus.ca and at www.sec.gov under the Company’s profile. See “Documents
Incorporated by Reference”.
Recent Developments
Option Exercise
On October 31, 2023,
the Company announced the exercise of its option pursuant to the property license and option agreement (the “Option Agreement”)
with TETRA Technologies, Inc. (“TETRA”) for the South West Arkansas Project. The Company has acquired the exclusive
option to the brine production rights on approximately 27,000 net acres of brine leases located in Columbia and Lafayette Counties, Arkansas.
Exploration and Development
On
September 13, 2023, the Company announced its acquisition of 118 acres of land intended to advance development of its South
West Arkansas Project, for which the Company anticipates completing a front-end engineering design and definitive feasibility study in
2024.
Technical Reports
On
September 18, 2023, the Company filed a preliminary feasibility study and updated inferred mineral resource for its South West Arkansas
Project. On October 18, 2023, the Company filed the Lanxess Technical Report, which comprised a mineral reserve estimate on
a portion of the Lanxess Property.
Personnel Changes
On September 25, 2023, the Company announced
the appointment of Salah Gamoudi as Chief Financial Officer, and Kara Norman’s transition to the role of Chief Accounting Officer.
On October 5, 2023, the Company also announced the appointment of Michael Barman as its Chief Development Officer.
DESCRIPTION
OF SECURITIES BEING DISTRIBUTED
The Offering consists of up
to US$50,000,000 of Offered Shares.
Common Shares
The Company is authorized to
issue an unlimited number of the Common Shares. As of November 17, 2023, there were 172,852,197 Common Shares issued and outstanding.
The Offered Shares have all of the rights, privileges,
restrictions and conditions of other Common Shares of the Company. Holders of Common Shares are entitled to receive notice of any meeting
of shareholders of the Company and to attend and to cast one vote per share at such meetings. Holders of Common Shares are also entitled
to receive on a pro-rata basis such dividends, if any, as and when declared by the board of directors of the Company at its discretion
from funds legally available therefor and upon the liquidation, dissolution or winding up of the Company are entitled to receive on a
pro-rata basis, the net assets of the Company after payment of debts and other liabilities, in each case subject to the rights,
privileges, restrictions and conditions attaching to any other series or class of shares ranking senior in priority. The Common Shares
do not carry any pre-emptive, subscription, redemption or conversion rights.
The TSXV has conditionally approved the listing of the Offered Shares,
subject to the Company fulfilling all of the listing requirements. In addition, the Company has applied to list the Offered Shares on
the NYSE American.
CONSOLIDATED
CAPITALIZATION
There
have not been any material changes in the share and loan capital of the Company, on a consolidated basis, since the date of the Interim
Financial Statements. As a result of the Offering, the shareholder’s equity of the Company will increase by the amount of
the net proceeds, less expenses, of the Offering and the number of Common Shares issued and outstanding at the time of the Offering will
increase by the number of Offered Shares distributed under the Offering.
USE
OF PROCEEDS
The Company intends to use the net proceeds from the Offering, if any,
to fund ongoing work programs to advance the South West Arkansas Project, the Lanxess Property Project, the Demonstration Plant, the expansion
in East Texas, for working capital and for general corporate purposes. The Company may, from time to time, issue securities (including
equity and debt securities) other than pursuant to this Prospectus Supplement.
The
net proceeds from the Offering, if any, are not determinable in light of the nature of the distribution. Sales of Offered Shares, if any,
will be made in transactions that are deemed to be “at-the-market distributions” as defined in NI 44-102 and an “at-the-market
offering” as defined in Rule 415 under the U.S. Securities Act, including sales made by the Agents directly on the TSXV, the
NYSE American or any other trading market for the Common Shares in Canada or the United States. Any proceeds that the Company receives
will depend on the number of Offered Shares actually sold and the offering price of such Offered Shares. The net proceeds to the
Company of any given distribution of Offered Shares through the Agents under the Sales Agreement will represent the gross proceeds of
the Offering, after deducting the applicable Placement Fee, any transaction or filing fees imposed by any governmental, regulatory, or
self-regulatory organization in connection with any such sales of Offered Shares and the expenses of the Offering. The gross proceeds
of the Offering will be up to US$50,000,000. The Agents will receive the Placement Fee of up to 3.0% of the gross proceeds from the sale
of the Common Shares. Any Placement Fee paid to the Agents will be paid out of the proceeds from the sale of the Offered Shares. There
is no minimum amount of funds that must be raised under the Offering. This means that the Offering may terminate after raising only a
portion of the Offering amount set out above, or none at all. See “Plan of Distribution”.
The Company generates no operating revenue from
the exploration activities on its property interests and has negative cash flow from operating activities. To the extent that the Company
has negative cash flows in future periods, it may need to deploy a portion of net proceeds from the Offering to fund such negative cash
flow.
While
the Company currently anticipates that it will use the net proceeds of the Offering as set forth above, the Company may re-allocate the
net proceeds of the Offering from time to time, giving consideration to its strategy relative to the market, development and changes in
the industry and regulatory landscape, as well as other conditions relevant at the applicable time. Overall, management of the Company
will have broad discretion concerning the use of the net proceeds of the Offering, as well as the timing of their expenditure, and pending
their use, the Company may invest the net proceeds of the Offering in a manner that does not produce income or that loses value. See “Risk
Factors” in this Prospectus Supplement and the Shelf Prospectus.
PLAN
OF DISTRIBUTION
In
accordance with the terms of the Sales Agreement, and except as noted herein, the Company may distribute up to US$50,000,000 (or
the equivalent in Canadian dollars determined using the daily exchange rate posted by the Bank of Canada on the date the Offered
Shares are sold) of Offered Shares from time to time through the Agents as agents for the distribution of the Offered Shares pursuant
to the Offering.
Sales
of Offered Shares, if any, under the Prospectus will be made in transactions that are deemed to be “at-the-market distributions”
as defined in NI 44-102 and an “at-the-market offering” as defined in Rule 415 of the U.S. Securities Act, involving
sales made directly on the TSXV, the NYSE American or any other trading market for the Common Shares in Canada or the United States. Subject
to the terms and conditions of the Sales Agreement and upon receipt of instructions provided by the Company, the Agents, or selling agents
thereof, will severally and not jointly use their commercially reasonable efforts, consistent with their normal trading and sales practices,
applicable laws and the applicable rules of the TSXV, the NYSE American or any other applicable trading market for the Common Shares
in Canada or the United States, to sell the Offered Shares directly on the TSXV, the NYSE American or any other trading market for the
Common Shares in Canada or the United States in accordance with the parameters specified by the Company. The Offered Shares will be distributed
at market prices prevailing at the time of the sale of such Offered Shares. As a result, prices may vary as between purchasers and during
the period of distribution.
The Company will instruct an Agent as to the number
of Offered Shares to be sold by such Agent from time to time by sending the Agents a notice (a “Placement Notice”)
that requests that the Agents sell up to a specified dollar amount or a specified number of Offered Shares and specifies any parameters
in accordance with which the Company requires that the Offered Shares be sold. In the event of a conflict between the terms
of the Sales Agreement and the terms of a Placement Notice, the terms of the Placement Notice will control. Any placement
notice delivered to an Agent shall be effective upon receipt by the applicable Agent unless and until (i) the applicable Agent
declines to accept the terms contained therein for any reason, in its sole discretion, (ii) the entire amount of Offered
Shares under the placement notice are sold, (iii) the Company suspends or terminates the placement notice in accordance
with the terms of the Sales Agreement, (iv) the Company issues a subsequent Placement Notice with parameters superseding
those included in the earlier dated Placement Notice, or (v) the Sales Agreement is terminated in accordance with its terms.
The Company or the Agents may suspend the Offering upon proper notice and subject to other conditions set forth in the Sales Agreement.
The applicable Agent will provide written confirmation to the Company no later than the opening of the trading day immediately
following the day on which it has made sales of Offered Shares, setting forth the number of Offered Shares sold on such day, the
volume-weighted average price of the Offered Shares sold, and the net proceeds payable to the Company.
Settlement for sales of Offered Shares will occur
on the second business day following the date on which any sales are made, or on such earlier date as is then current industry practice
for regular-way trading, in return for payment of the net proceeds to the Company. There is no arrangement for funds to be received
in an escrow, trust or similar arrangement. Sales of Offered Shares through the TSXV or another Canadian marketplace will be settled
through the facilities of CDS Clearing and Depository Services Inc. or by such other means as permitted by the Sales Agreement
and sales of Offered Shares in through the NYSE American or another United States marketplace will be settled through the facilities
of The Depository Trust Corporation or by such other means as permitted by the Sales Agreement. Sales of Offered Shares in the United
States will be settled through the facilities of The Depository Trust Company or by such other means as permitted by the Sales Agreement.
The
Canadian Agent will only sell Offered Shares on marketplaces in Canada and the U.S. Agents will only sell Offered Shares on marketplaces
in the United States.
Pursuant to the terms of the Sales
Agreement, the Company will compensate the Agents for their services in acting as agents in the sale of the Offered Shares pursuant
to the Offering in an amount up to 3.0% of the gross proceeds from sales of the Offered Shares made on the TSXV, the NYSE American or
any other trading market for the Common Shares in Canada or the United States. The Company estimates that the total expenses that it will
incur for the Offering (including fees payable to stock exchanges, securities regulatory authorities, its counsel, its auditors and counsel
to the Agents, but excluding compensation payable to the Agents under the terms of the Sales Agreement) will be approximately C$750,000.
We have also agreed to reimburse the Agents for certain specified fees and disbursements, including the fees and disbursements of their
counsel, payable upon execution of the Sales Agreement, in an amount not to exceed $275,000, in addition to ongoing fees and disbursements,
including the fees and disbursements of their counsel payable in the amount of $25,000 in connection with each diligence bring-down thereafter.
In
connection with the sales of the Offered Shares on the Company’s behalf, each of the U.S. Agents may be deemed to be an “underwriter”
within the meaning of the U.S. Securities Act, and the compensation paid to the U.S. Agents may be deemed to be underwriting commissions
or discounts. The Company has agreed in the Sales Agreement to provide indemnification and contribution to the Agents against certain
liabilities, including liabilities under the U.S. Securities Act and under Canadian securities laws. In addition, the Company has agreed
to pay certain reasonable expenses of the Agents in connection with the Offering, pursuant to the terms of the Sales Agreement.
As sales agents, the Agents will not engage in
any transactions to stabilize or maintain the price of the Common Shares. No underwriter of the at-the-market distribution, and no person
or company acting jointly or in concert with an underwriter, may, in connection with the distribution, enter into any transaction that
is intended to stabilize or maintain the market price of the securities or securities of the same class as the securities distributed
under this Prospectus Supplement and the related Shelf Prospectus, including selling an aggregate number or principal amount of securities
that would result in the underwriter creating an over-allocation position in the securities.
The
Company will also disclose the number and average price of Offered Shares sold, as well as the total gross proceeds, commission
and net proceeds from sales hereunder, in the ordinary course in its annual and interim financial statements or associated management’s
discussion and analysis filed on SEDAR+ and EDGAR.
There is no minimum amount of funds that must
be raised under the Offering. This means that the Offering may terminate after only raising a small portion of the offering amount set
out herein, or none at all. An investor will not be entitled to a return of its investment if only a portion of the disclosed maximum
offering amount set out herein is in fact raised.
The
Offering will terminate upon the earlier of: (i) the sale of all Offered Shares subject to the Sales Agreement by the Agents;
and (ii) termination of the Sales Agreement in accordance with its terms. The Company and the Agents may each terminate the Sales
Agreement in their sole discretion at any time by giving 10 days prior written notice to the other party or under the circumstances specified
in the Sales Agreement.
The Agents and their affiliates may in the future
provide various investment banking, commercial banking and other financial services for the Company and its affiliates, for which services
they may in the future receive customary fees. To the extent required by Regulation M under the Exchange Act, the Agents will not engage
in any market making activities involving the Common Shares while the Offering is ongoing under this Prospectus Supplement.
If
the Company or any Agent has reason to believe that the Common Shares are no longer “actively-traded securities” as defined
under Rule 101(c)(l) of Regulation M under the Exchange Act, that party will promptly notify the others and sales of Offered
Shares pursuant to the Sales Agreement or any terms agreement will be suspended until in the Company’s and the Agents’ collective
judgment Rule 101(c)(1) or another exemptive provision has been satisfied.
The
Company has applied to list the Offered Shares on the TSXV and on the NYSE American. Listing will be subject to the Company fulfilling
all of the listing requirements of the TSXV and the NYSE American, respectively.
CERTAIN
CANADIAN FEDERAL INCOME TAX CONSIDERATIONS
In the opinion of Cassels Brock & Blackwell
LLP, Canadian counsel to the Company, and DLA Piper (Canada) LLP, Canadian counsel to the Agents, the following is, as of the date hereof,
a summary of the principal Canadian federal income tax considerations under the Income Tax Act (Canada) (the “Tax Act”)
and the regulations thereunder (the “Regulations”) generally applicable to a person who acquires Offered Shares pursuant
to the Offering as beneficial owner and who, for the purposes of the Tax Act, and at all relevant times: (i) deals at arm’s
length with the Company and the Agents; (ii) is not affiliated with the Company or the Agents; and (iii) acquires and holds
the Offered Shares as capital property (a “Holder”).
Offered Shares will generally be considered to
be capital property to a Holder unless the Holder holds or uses the Offered Shares or is deemed to hold or use the Offered Shares in the
course of carrying on a business of trading or dealing in securities or has acquired them or is deemed to have acquired them in a transaction
or transactions considered to be an adventure or concern in the nature of trade.
This summary is not applicable to a Holder: (i) that
is a “financial institution” for purposes of the “mark-to-market property” rules; (ii) that is a “specified
financial institution”; (iii) that has made a “functional currency” reporting election; (iv) an interest in
which is a “tax shelter investment”; (v) that has entered into or will enter into a “derivative forward agreement”
or “synthetic disposition arrangement” in respect of Offered Shares; or (vi) that receives dividends on the Offered Shares
under or as part of a “dividend rental arrangement”, all as defined in the Tax Act. Such Holders should consult their own
tax advisors with respect to an investment in Offered Shares.
Additional
considerations, not discussed herein, may be applicable to a Holder that is a corporation resident in Canada, and is, or becomes, or does
not deal at arm’s length for purposes of the Tax Act with a corporation resident in Canada that is or becomes, as part of a transaction
or event or series of transactions or events that includes the acquisition of the Offered Shares, controlled by a non-resident
person, or group of non-resident persons not dealing with each other at arm’s length, for purposes of the foreign affiliate dumping
rules in section 212.3 of the Tax Act. Such Holders should consult their own tax advisors.
This
summary is based upon: (i) the current provisions of the Tax Act and the Regulations in force as of the date hereof; (ii) all
specific proposals (“Proposed Amendments”) to amend the Tax Act or the Regulations that have been publicly announced
by, or on behalf of, the Minister of Finance (Canada) prior to the date hereof; and (iii) counsel’s understanding of the current
published administrative policies and assessing practices of the Canada Revenue Agency (“CRA”). No assurance can be
given that the Proposed Amendments will be enacted or otherwise implemented in their current form, if at all. If the Proposed Amendments
are not enacted or otherwise implemented as presently proposed, the tax consequences may not be as described below in all cases. Other
than the Proposed Amendments, this summary does not take into account or anticipate any changes in law, the CRA’s administrative
policies or assessing practices, whether by legislative, regulatory, administrative, governmental or judicial decision or action, nor
does it take into account any provincial, territorial or foreign income tax legislation or considerations, which considerations may differ
significantly from the Canadian federal income tax considerations discussed in this summary.
This summary is of a general nature only, is
not exhaustive of all possible Canadian federal income tax considerations and is not intended to be, nor should it be construed to be,
legal or tax advice to any particular Holder. Accordingly, Holders should consult their own tax advisors with respect to their particular
circumstances.
Currency Conversion
Subject to certain exceptions that are not discussed
herein, for the purposes of the Tax Act, all amounts relating to the acquisition, holding or disposition of Offered Shares (including
dividends, adjusted cost base and proceeds of disposition) must be expressed in Canadian dollars. Amounts denominated in U.S. dollars
must generally be converted into Canadian dollars based on the single daily exchange rate as quoted by the Bank of Canada on the date
such amounts arise or such other rate of exchange as is acceptable to the CRA.
Holders Resident in Canada
This section of the summary is generally applicable
to a Holder who, at all relevant times, is, or is deemed to be, resident in Canada for the purposes of the Tax Act (“Resident
Holder”). A Resident Holder whose Offered Shares might not otherwise qualify as capital property may be entitled to make an
irrevocable election pursuant to subsection 39(4) of the Tax Act to deem the Offered Shares, and every other “Canadian security”
(as defined in the Tax Act), held by such Resident Holder in the taxation year of the election and in all subsequent taxation years to
be capital property. Resident Holders should consult with their own tax advisors regarding this election.
Dividends
A Resident Holder will be required to include
in computing its income for a taxation year any taxable dividends received or deemed to be received on the Offered Shares.
In the case of a Resident Holder who is an individual
(including certain trusts), such dividends (including deemed dividends) received on the Offered Shares will be subject to the gross-up
and dividend tax credit rules in the Tax Act normally applicable to “taxable dividends” received from a “taxable
Canadian corporation” (each as defined in the Tax Act). An enhanced gross-up and dividend tax credit will be available to individuals
in respect of “eligible dividends” designated by the Company in accordance with the provisions of the Tax Act. There may be
limitations on the ability of the Company to designate dividends as eligible dividends.
In the case of a Resident Holder that is a corporation,
the amount of any such taxable dividend (including a deemed dividend) that is included in its income for a taxation year will generally
be deductible in computing its taxable income for that taxation year. In certain circumstances, subsection 55(2) of the Tax Act will
treat a taxable dividend received (or deemed to be received) by a Resident Holder that is a corporation as proceeds of disposition or
a capital gain. Resident Holders that are corporations should consult their own tax advisors in this regard.
A Resident Holder that is a “private corporation”
(as defined in the Tax Act) or a “subject corporation” (as defined in subsection 186(3) of the Tax Act) may be liable
to pay a refundable tax under Part IV of the Tax Act on dividends received (or deemed to be received) on the Offered Shares to the
extent such dividends are deductible in computing the Resident Holder’s taxable income for the year. A “subject corporation”
is generally a corporation (other than a private corporation) resident in Canada and controlled directly or indirectly by or for the benefit
of an individual (other than a trust) or a related group of individuals (other than trusts).
Dispositions of Offered Shares
A Resident Holder who disposes
of or is deemed to have disposed of an Offered Share (other than a disposition to the Company that is not a sale in the open market in
the manner in which shares would normally be purchased by any member of the public in an open market) will generally realize a capital
gain (or capital loss) in the taxation year of the disposition equal to the amount by which the proceeds of disposition of the Offered
Share net of any reasonable costs of disposition, are greater (or are less) than the adjusted cost base to the Resident Holder of the
Offered Share immediately before the disposition or deemed disposition. The adjusted cost base to a Resident Holder of an Offered Share
will be determined by averaging the cost of that Offered Share with the adjusted cost base (determined immediately before the acquisition
of the Offered Share) of all other Common Shares held as capital property at that time by the Resident Holder. Such capital gain (or capital
loss) will be subject to the tax treatment described below under “Holders Resident in Canada - Capital Gains and Capital Losses”.
Capital Gains and Capital Losses
A Resident Holder will generally be required to
include in computing its income for the taxation year of disposition, one-half of the amount of any capital gain (a “taxable
capital gain”) realized in such year. Subject to and in accordance with the provisions of the Tax Act, a Resident Holder will
generally be required to deduct one-half of the amount of any capital loss (an “allowable capital loss”) against taxable
capital gains realized in the taxation year of disposition. Allowable capital losses in excess of taxable capital gains for the taxation
year of disposition may be carried back and deducted in any of the three preceding taxation years or carried forward and deducted in any
subsequent taxation year against net taxable capital gains realized in such years, to the extent and under the circumstances specified
in the Tax Act.
The amount of any capital loss realized on the
disposition or deemed disposition of an Offered Share by a Resident Holder that is a corporation may, in certain circumstances, be reduced
by the amount of dividends received or deemed to have been received by it on such Offered Share to the extent and under the circumstances
specified in the Tax Act. Similar rules may apply where a Resident Holder that is a corporation is a member of a partnership or a
beneficiary of a trust that owns Offered Shares, directly or indirectly, through a partnership or trust. Resident Holders to whom these
rules may be relevant should consult their own tax advisors.
Other Income Taxes
A Resident Holder that is, throughout the relevant
taxation year, a “Canadian-controlled private corporation” (as defined in the Tax Act) may be liable to pay an additional
refundable tax on its “aggregate investment income” (as defined in the Tax Act) for the year, including any dividends or deemed
dividends that are not deductible in computing the Resident Holder’s taxable income and taxable capital gains. Proposed Amendments
released by the Minister of Finance (Canada) on August 9, 2022 are intended to extend this additional tax and refund mechanism in
respect of “aggregate investment income” to “substantive CCPCs” (as defined in such Proposed Amendments).
Generally, a Resident Holder that is an individual
(other than certain trusts) that receives or is deemed to have received taxable dividends on the Offered Shares or realizes a capital
gain on the disposition or deemed disposition of Offered Shares may be liable for minimum tax under the Tax Act. Resident Holders that
are individuals should consult their own tax advisors in this regard.
Holders Not Resident in Canada
This portion of the summary is generally applicable
to a Holder who, at all relevant times, for purposes of the Tax Act: (i) is not, and is not deemed to be, resident in Canada; and
(ii) does not use or hold and is not and will not be deemed to use or hold the Offered Shares in connection with carrying on a business
in Canada (“Non-Resident Holder”). This summary does not apply to a Non-Resident Holder that carries on, or is deemed
to carry on, an insurance business in Canada and elsewhere or that is an “authorized foreign bank” (as defined in the Tax
Act). Such Non-Resident Holders should consult their own tax advisors.
Dividends
Dividends
paid or credited or deemed under the Tax Act to be paid or credited by the Company to a Non-Resident Holder on the Offered Shares
will generally be subject to Canadian withholding tax at the rate of 25% on the gross amount of the dividend, unless such rate is reduced
by the terms of an applicable income tax treaty or convention. Under the Canada-United States Tax Convention (1980), as
amended (the “US Treaty”), the rate of withholding tax on dividends paid or credited to a Non-Resident Holder who is
resident in the U.S. for purposes of the US Treaty, is the beneficial owner of the dividends, and is fully entitled to benefits under
the US Treaty (a “U.S. Holder”) is generally limited to 15% of the gross amount of the dividend. The rate of withholding
tax is further reduced to 5% if the beneficial owner of such dividend is a U.S. Holder that is a company that owns, directly or indirectly,
at least 10% of the voting stock of the Company. The Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base
Erosion and Profit Shifting of which Canada is a signatory, affects many of Canada’s bilateral tax treaties (but not the US
Treaty), including the ability to claim benefits thereunder. Non-Resident Holders are urged to consult their own tax advisors to determine
their entitlement to relief under an applicable income tax treaty or convention.
Dispositions of Offered Shares
A Non-Resident Holder will not be subject to tax
under the Tax Act in respect of any capital gain realized on a disposition or deemed disposition of an Offered Share, nor will capital
losses arising therefrom be recognized under the Tax Act, unless the Offered Share is, or is deemed to be, “taxable Canadian property”
of the Non-Resident Holder for the purposes of the Tax Act and the Non-Resident Holder is not entitled to relief under an applicable
income tax treaty or convention between Canada and the country in which the Non-Resident Holder is resident.
Provided that the Offered Shares are listed on
a “designated stock exchange” for the purposes of the Tax Act (which currently includes the TSXV), at the time of disposition,
the Offered Shares generally will not constitute taxable Canadian property of a Non-Resident Holder at that time, unless at any time during
the 60 month period immediately preceding the disposition, (i) 25% or more of the issued shares of any class or series of the capital
stock of the Company were owned by, or belonged to, one or any combination of (a) the Non-Resident Holder, (b) persons with
whom the Non-Resident Holder did not deal at arm’s length, and (c) partnerships in which the Non-Resident Holder or a person
described in (b) holds a membership interest directly or indirectly through one or more partnerships; and (ii) at such time,
more than 50% of the fair market value of such shares was derived, directly or indirectly, from any combination of real or immovable property
situated in Canada, “Canadian resource property” (as defined in the Tax Act), “timber resource property” (as defined
in the Tax Act), or options in respect of, interests in, or for civil law rights in such properties, whether or not such property exists.
Notwithstanding the foregoing, an Offered Share may also be deemed to be taxable Canadian property to a Non-Resident Holder for purposes
of the Tax Act in certain other circumstances. Non-Resident Holders should consult their own tax advisors as to whether their Offered
Shares constitute “taxable Canadian property” in their own particular circumstances.
A
Non-Resident Holder’s capital gain (or capital loss) in respect of Offered Shares that constitute or are deemed to constitute taxable
Canadian property (and are not “treaty-protected property” as defined in the Tax Act) will generally be computed in the manner
described above under the headings “Holders Resident in Canada — Dispositions of Offered Shares” and “Holders
Resident in Canada —Capital Gains and Capital Losses”. Such Non-Resident Holders should consult their own tax advisors.
CERTAIN U.S. FEDERAL INCOME TAX CONSIDERATIONS
FOR U.S. HOLDERS
The following discussion summarizes the anticipated
U.S. federal income tax considerations generally applicable to a U.S. Holder (as defined below) of the ownership and disposition of the
Common Shares. This discussion addresses only holders who acquire Common Shares pursuant to this Offering and hold such Common Shares
as “capital assets” (generally, assets held for investment purposes).
This summary is based on the Internal Revenue
Code of 1986, as amended (the “Code”), U.S. Treasury regulations, administrative pronouncements and rulings of the
United States Internal Revenue Service (the “IRS”), and the Convention, all as in effect on the date hereof, and all
of which may be repealed, revoked or modified (possibly with retroactive effect) so as to result in U.S. federal income tax consequences
different from those discussed below. This summary does not describe any state, local or foreign tax law considerations, or any aspect
of U.S. federal tax law other than income taxation (e.g., alternative minimum tax, the 3.8% Medicare tax on certain net investment income,
or estate or gift tax). Except as specifically set forth below, this summary does not discuss applicable income tax reporting requirements.
U.S. Holders should consult their own tax advisers regarding such matters.
No ruling from the IRS has been requested, or
will be obtained, regarding the U.S. federal income tax consequences of the ownership or disposition of the Common Shares. This summary
is not binding on the IRS, and the IRS is not precluded from taking a position that is different from, and contrary to, the discussion
set forth in this summary. In addition, because the authorities on which this summary is based are subject to various interpretations,
the IRS and U.S. courts could disagree with one or more of the positions taken in this summary.
This summary does not purport to address all U.S.
federal income tax consequences that may be relevant to a U.S. Holder as a result of the ownership and disposition of the Common Shares,
nor does it take into account the specific circumstances of any particular holder, some of which may be subject to special tax rules,
including, but not limited to, tax exempt organizations, partnerships and other pass-through entities and their owners, banks or other
financial institutions, insurance companies, regulated investment companies, real estate investment trusts, qualified retirement plans,
individual retirement accounts or other tax-deferred accounts, persons that hold the Common Shares as part of a straddle, hedging transaction,
conversion transaction, constructive sale or other similar arrangements, persons that acquired the Common Shares in connection with the
exercise of employee share options or otherwise as compensation for services, persons that are resident or ordinarily resident in or have
permanent establishment in a jurisdiction outside the United States, brokers, dealers or traders in securities or foreign currencies,
traders in securities electing to mark to market, U.S. persons whose functional currency (as defined in the Code) is not the U.S. dollar,
U.S. expatriates, or persons that own directly, indirectly or by application of the constructive ownership rules of the Code 10%
or more of the Company’s shares by voting power or by value.
As used herein, a “U.S. Holder”
is a beneficial owner of the Common Shares who, for U.S. federal income tax purposes, is: (1) an individual who is a citizen or resident
of the United States; (2) a corporation (or other entity treated as a corporation for U.S. federal income tax purposes) that is created
or organized in or under the laws of the United States, any state thereof, or the District of Columbia, (3) an estate whose income
is subject to U.S. federal income tax regardless of its source, or (4) a trust (A) if a U.S. court is able to exercise primary
supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions
of the trust, or (B) that has validly elected to be treated as a U.S. person for U.S. federal income tax purposes.
If a partnership (or other entity or arrangement
treated as a partnership for U.S. federal income tax purposes) holds the Common Shares, the tax treatment of a partner in or owner of
the partnership or other entity or arrangement will generally depend upon the status of the partner or owner and the activities of the
entity. Prospective investors who are partners in partnerships (or other entities or arrangements treated as partnerships for U.S. federal
income tax purposes) that are beneficial owners of the Common Shares are urged to consult their own tax advisors regarding the tax consequences
of the ownership and disposition of the Common Shares.
This summary is of a general nature only and is
not intended to be tax advice to any prospective investor, and no representation with respect to the tax consequences to any particular
investor is made. Prospective investors are urged to consult their own tax advisors regarding the application of federal income
tax laws to their particular circumstances, as well as any state, provincial, local, non-U.S. and other tax consequences of investing
in the Common Shares and acquiring, holding or disposing of the Common Shares.
Passive Foreign Investment Company Rules
A foreign corporation will generally be considered
a passive foreign investment company (“PFIC”) for any taxable year in which (1) 75% or more of its gross income
is “passive income” under the PFIC rules or (2) 50% or more of the average quarterly value of its assets produce
(or are held for the production of) “passive income.” In general, “passive income” includes dividends, interest,
certain rents and royalties and certain gains, including the excess of gains over losses from certain commodities transactions. Net gains
from commodities transactions are generally treated as passive income unless such gains are active business gains from the sale of commodities
and “substantially all” of the Company’s commodities are stock in trade or inventory, depreciable property used in a
trade or business, or supplies regularly used or consumed in a trade or business. Moreover, for purposes of determining if the foreign
corporation is a PFIC, if the foreign corporation owns, directly or indirectly, at least 25%, by value, of the shares of another corporation,
it will be treated as if it directly holds its proportionate share of the assets and receives directly its proportionate share of the
income of such other corporation. If a corporation is treated as a PFIC with respect to a U.S. Holder for any taxable year, the Company
will generally continue to be treated as a PFIC with respect to that U.S. Holder in all succeeding taxable years, unless certain elections
are made.
The determination as to whether a foreign corporation
is a PFIC is based on the application of complex U.S. federal income tax rules, which are subject to differing interpretations, and the
determination will depend on the composition of the income, expenses and assets of the foreign corporation from time to time and the nature
of the activities performed by its officers and employees. The Company believes that it may have been classified as a PFIC for prior taxable
years and may continue to be classified as a PFIC for the current taxable year, but the Company expects that it may cease being classified
as a PFIC once it begins to generate revenues from operations. The Company’s status as a PFIC in any taxable year, however, requires
a factual determination that can only be made annually after the close of each taxable year. Therefore, there can be no assurance as to
whether the Company will be classified as a PFIC for the current taxable year or for any future taxable year.
If the Company is classified as a PFIC, a U.S.
Holder that does not make any of the elections described below would be required to report any gain on the disposition of the Common Shares
as ordinary income, rather than as capital gain, and to compute the tax liability on the gain and any “Excess Distribution”
(as defined below) received in respect of Common Shares as if such items had been earned ratably over each day in the U.S. Holder’s
holding period (or a portion thereof) for Common Shares. The amounts allocated to the taxable year during which the gain is realized or
distribution is made, and to any taxable years in such U.S. Holder’s holding period that are before the first taxable year in which
the Company is treated as a PFIC with respect to the U.S. Holder, would be included in the U.S. Holder’s gross income as ordinary
income for the taxable year of the gain or distribution. The amount allocated to each other taxable year would be taxed as ordinary income
in the taxable year during which the gain is realized or distribution is made at the highest tax rate in effect for the U.S. Holder in
that other taxable year and would be subject to an interest charge as if the income tax liabilities had been due with respect to each
such prior year. For purposes of these rules, gifts, exchanges pursuant to corporate reorganizations and use of Common Shares as security
for a loan may be treated as a taxable disposition of Common Shares. An “Excess Distribution” is the amount by which distributions
during a taxable year in respect of a common share exceed 125% of the average amount of distributions in respect thereof during the three
preceding taxable years (or, if shorter, the U.S. Holder’s holding period for Common Shares).
Certain additional adverse tax rules will
apply to a U.S. Holder for any taxable year in which the Company is treated as a PFIC with respect to such U.S. Holder and any of the
Company’s subsidiaries is also treated as a PFIC (a “Subsidiary PFIC”). In such a case, the U.S. Holder will
generally be deemed to own its proportionate interest (by value) in any Subsidiary PFIC and be subject to the PFIC rules described
above with respect to the Subsidiary PFIC regardless of such U.S. Holder’s percentage ownership in us.
The adverse tax consequences described above may
be mitigated if a U.S. Holder makes a timely “qualified electing fund” election (“QEF Election”), with
respect to its interest in the PFIC. If a U.S. Holder makes a timely QEF Election with respect to the Company, provided that the necessary
information is provided by the Company, the electing U.S. Holder would be required in each taxable year that the Company is considered
a PFIC to include in gross income (i) as ordinary income, the U.S. Holder’s pro rata share of the ordinary earnings of the
Company and (ii) as capital gain, the U.S. Holder’s pro rata share of the net capital gain (if any) of the Company, whether
or not the ordinary earnings or net capital gain are distributed. An electing U.S. Holder’s basis in Common Shares will be increased
to reflect the amount of any taxed but undistributed income. Distributions of income that had previously been taxed will result in a corresponding
reduction of basis in Common Shares and will not be taxed again as distributions to the U.S. Holder.
A QEF Election made with respect to the Company
will not apply to any Subsidiary PFIC; a QEF Election must be made separately for each Subsidiary PFIC (in which case the treatment described
above would apply to such Subsidiary PFIC). If a U.S. Holder makes a timely QEF Election with respect to a Subsidiary PFIC, it would be
required in each taxable year to include in gross income its pro rata share of the ordinary earnings and net capital gain of such Subsidiary
PFIC, but may not receive a distribution of such income. Such a U.S. Holder may, subject to certain limitations, elect to defer payment
of current U.S. federal income tax on such amounts, subject to an interest charge (which would not be deductible for U.S. federal income
tax purposes if the U.S. Holder were an individual).
The U.S. federal income tax on any gain from the
disposition of Common Shares or from the receipt of Excess Distributions may be greater than the tax if a timely QEF Election is made
in the first year in which a U.S. Holder holds Common Shares. There can be no assurance, however, that the Company will make available
to U.S. Holders the information necessary to make a QEF Election for any taxable year in which the Company is a PFIC. U.S. Holders are
urged to consult their own tax advisors about the U.S. federal income tax consequences to them if they are unable to make a timely and
valid QEF Election for any taxable year in which the Company is treated as PFIC.
Alternatively, if the Company was to be classified
as a PFIC, a U.S. Holder could also avoid certain rules described above by making a mark-to-market election (a “Mark-to-Market
Election”), instead of a QEF Election, provided Common Shares are treated as regularly traded on a qualified exchange or other
market within the meaning of the applicable U.S. Treasury Regulations. However, a U.S. Holder will not be permitted to make a Mark-to-Market
Election with respect to a Subsidiary PFIC. U.S. Holders should consult their own tax advisers regarding the potential availability and
consequences of a Mark-to-Market Election, as well as the advisability of making a protective QEF Election in case the Company is classified
as a PFIC in any taxable year.
During any taxable year in which the Company or
any Subsidiary PFIC is classified as a PFIC with respect to a U.S. Holder, that U.S. Holder generally must file IRS Form 8621. U.S.
Holders should consult their own tax advisers concerning annual filing requirements.
Distributions on Common
Shares
In general, subject to the PFIC rules discussed
above, the gross amount of any distribution received by a U.S. Holder with respect to the Common Shares (including amounts withheld to
pay Canadian withholding taxes) will be included in the gross income of the U.S. Holder as dividend income to the extent attributable
to the Company’s current or accumulated earnings and profits, as determined under U.S. federal income tax principles. Because the
Company does not expect to maintain calculations of the Company’s earnings and profits in accordance with U.S. federal income tax
principles, U.S. Holders should expect that a distribution will generally be treated as a dividend for U.S. federal income tax purposes.
The amount of any distributions paid in Canadian
dollars will equal the U.S. dollar value of such distributions determined by reference to the exchange rate on the day they are received
by the U.S. Holder (with the value of such distributions computed before any reduction for any Canadian withholding tax), regardless of
whether the payment is in fact converted into U.S. dollars at that time. A U.S. Holder will have a tax basis in Canadian dollars equal
to their U.S. dollar value on the date of receipt. If the Canadian dollars received are converted into U.S. dollars on the date of receipt,
the U.S. Holder should generally not be required to recognize foreign currency gain or loss in respect of the distribution. If the Canadian
dollars received are not converted into U.S. dollars on the date of receipt, a U.S. Holder may recognize foreign currency gain or loss
on a subsequent conversion or other disposition of the Canadian dollars. Such gain or loss generally will be treated as U.S. source ordinary
income or loss.
Subject to applicable limitations and provided
the Company is eligible for the benefits of the Canada-U.S. Tax Convention or the Common Shares are readily tradable on a United States
securities market, dividends paid by the Company to non-corporate US Holders, including individuals, generally will be eligible for the
preferential tax rates applicable to long-term capital gains for dividends, provided certain holding period and other conditions are satisfied,
including that the Company is not classified as a PFIC in the tax year of distribution or in the preceding tax year. Any amount of distributions
treated as dividends generally will not be eligible for the dividends received deduction available to certain corporate U.S. Holders in
respect of dividends received from U.S. corporations.
Distributions to a U.S. Holder with respect to
the Common Shares may be subject to Canadian non-resident withholding tax. See “Certain Canadian Federal Income Tax Considerations”
above. Any Canadian withholding tax paid will not reduce the amount treated as received by the U.S. Holder for U.S. federal income tax
purposes. However, subject to limitations imposed by U.S. law, a U.S. Holder may be eligible to receive a foreign tax credit for the Canadian
withholding tax. For purposes of calculating a U.S. Holder’s foreign tax credit, dividends received by such U.S. Holder with respect
to the shares of a foreign corporation, including the Common Shares, generally constitute foreign source income. However, and subject
to certain exceptions, a portion of the dividends paid by a foreign corporation will be treated as U.S. source income for U.S. foreign
tax credit purposes, in proportion to its U.S. source earnings and profits, if U.S. persons collectively own, directly, or indirectly,
50% or more of the voting power or value of the foreign corporation’s shares. If a portion of any dividends paid with respect to
the Common Shares are treated as U.S. source income under these rules, it may limit the ability of a U.S. Holder to claim a foreign tax
credit for any Canadian withholding taxes imposed in respect of such dividend, although certain elections under the Code and the Convention
may be available to mitigate these effects. Dividends received by a U.S. Holder with respect to the Common Shares will generally constitute
“passive category income” for purposes of the foreign tax credit. The rules governing the foreign tax credit are complex.
U.S. Holders are urged to consult their own tax advisors regarding the availability of the foreign tax credit under their particular circumstances,
including the impact of, and any exception available to, the special income sourcing rule described in this paragraph. U.S. Holders
who do not elect to claim a foreign tax credit may be able to claim an ordinary income tax deduction for Canadian income tax withheld,
but only for a taxable year in which the U.S. Holder elects to do so with respect to all non-U.S. income taxes paid or accrued in such
taxable year.
Sale, Exchange or Other
Taxable Disposition of Common Shares
Subject to the PFIC rules discussed above,
upon a sale, exchange or other taxable disposition of the Common Shares, a U.S. Holder will generally recognize a capital gain or loss
equal to the difference between the amount realized on such sale, exchange or other taxable disposition (or, if the amount realized is
denominated in Canadian dollars, its U.S. dollar equivalent, determined by reference to the spot rate of exchange on the date of disposition)
and the adjusted tax basis of such Common Shares. If any foreign tax is imposed on the sale, exchange or other disposition of the Common
Shares, a U.S. Holder’s amount realized will include the gross amount of the proceeds of the disposition before deduction of the
tax. A U.S. Holder’s initial tax basis in the Common Shares generally will equal the cost of such Common Shares. Such gain or loss
will be a long-term capital gain or loss if the Common Shares have been held for more than one year and will be short-term gain or loss
if the holding period is equal to or less than one year. Such gain or loss generally will be considered U.S. source gain or loss for U.S.
foreign tax credit purposes. Long-term capital gains of certain non-corporate U.S. Holders are eligible for reduced rates of taxation.
For both corporate and non-corporate U.S. Holders, limitations apply to the deductibility of capital losses. If a U.S. Holder receives
any foreign currency on the sale of the Common Shares, the U.S. Holder may recognize ordinary income or loss as a result of currency fluctuations
between the date of the sale of the Common Shares and the date the sale proceeds are converted into U.S. dollars.
Required Disclosure with
Respect to Foreign Financial Assets
Certain U.S. Holders are required to report information
relating to an interest in the Common Shares, subject to certain exceptions (including an exception for Common Shares held in accounts
maintained by certain financial institutions), by attaching a completed IRS Form 8938, Statement of Specified Foreign Financial Assets,
with their tax return for each year in which they hold an interest in the Common Shares. U.S. Holders are urged to consult their own tax
advisors regarding information reporting requirements relating to their ownership of the Common Shares.
PRIOR
SALES
The following tables set forth details regarding
issuances of Common Shares and issuances of securities convertible into or exchangeable, redeemable or exercisable for Common Shares by
the Company during the 12-month period before the date of this Prospectus Supplement.
Securities Issuances
| Date | |
Type of Security Issued | |
Number of Securities | |
Issuance/Exercise/
Conversion Price per
Security |
| April 11, 2023 | |
Options | |
3,750,000(1) | |
C$5.08(2) |
| April 11, 2023 | |
Deferred Share Units | |
1,991,004(3) | |
C$5.08 |
| April 24, 2023 | |
Common Shares | |
400,000 | |
N/A(4) |
| May 24, 2023 | |
Options | |
200,000(5) | |
C$5.23(2) |
| August 31, 2023 | |
Common Shares | |
100,000 | |
C$N/A(6) |
| September 25, 2023 | |
Options | |
1,750,000(7)(8) | |
US$4.00(9) |
Notes
| (1) | Issued to directors, officers and employees of the Company pursuant to the stock option plan. |
| (3) | Issued to directors and officers of the Company. |
| (4) | Issued as partial consideration pursuant to the Option Agreement between the Company and TETRA. |
| (5) | Issued to an advisor of the Company. |
| (6) | Issued to directors and officers of the Company. |
| (7) | 350,000 options issued to Salah Gamoudi and Michael Barman, respectively, as partial consideration of
employment, with options vesting and becoming exercisable over a 36-month period, with 100,000 vesting after six months and the balance
in three equal parts on each anniversary. |
| (8) | 1,050,000 options issued to Company consultants. |
| (9) | The exercise price is noted in United States dollars and is determined based on the exchange rate on the
date of exercise of each option. |
TRADING
PRICE AND VOLUME
The
Common Shares are listed and posted for trading on the TSXV and the NYSE American under the symbol “SLI”. The following table
sets forth the reported intraday high and low prices and trading volumes of the Common Shares on the TSXV on a monthly basis for
the 12-month period prior to the date of this Prospectus Supplement.
| Period | |
High Trading Price
(C$) | | |
Low Trading Price
(C$) | | |
Volume | |
| November 2022 | |
6.54 | | |
5.14 | | |
2,990,513 | |
| December 2022 | |
5.80 | | |
3.90 | | |
1,899,397 | |
| January 2023 | |
6.39 | | |
3.85 | | |
3,075,317 | |
| February 2023 | |
6.62 | | |
5.55 | | |
1,453,058 | |
| March 2023 | |
6.02 | | |
4.20 | | |
2,023,078 | |
| April 2023 | |
5.85 | | |
4.53 | | |
1,189,530 | |
| May 2023 | |
5.69 | | |
4.25 | | |
1,713,520 | |
| June 2023 | |
6.24 | | |
5.50 | | |
1,818,175 | |
| July 2023 | |
6.38 | | |
5.56 | | |
1,730,875 | |
| August 2023 | |
6.18 | | |
4.40 | | |
2,222,325 | |
| September 2023 | |
4.81 | | |
3.70 | | |
1,681,360 | |
| October 2023 | |
4.85 | | |
3.14 | | |
4,768,921 | |
| November 1 to November 15, 2023 | |
4.10 | | |
3.42 | | |
1,535,001 | |
On November 16, 2023, the last trading day prior to the date of this Prospectus Supplement, the closing price per Common Share on the
TSXV was C$3.44.
The
following table sets forth the reported intraday high and low prices and trading volumes of the Common Shares on the NYSE American
on a monthly basis for the 12-month period prior to the date of this Prospectus Supplement.
| Period | |
High Trading Price
(US$) | | |
Low Trading Price
(US$) | | |
Volume(1) | |
| November 2022 | |
4.93 | | |
3.80 | | |
14,122,151 | |
| December 2022 | |
4.31 | | |
2.87 | | |
17,050,309 | |
| January 2023 | |
4.80 | | |
2.83 | | |
20,950,268 | |
| February 2023 | |
4.98 | | |
4.09 | | |
11,113,582 | |
| March 2023 | |
4.44 | | |
3.05 | | |
17,616,032 | |
| April 2023 | |
4.37 | | |
3.34 | | |
10,505,045 | |
| May 2023 | |
4.18 | | |
3.15 | | |
16,563,962 | |
| June 2023 | |
4.69 | | |
4.04 | | |
14,415,069 | |
| July 2023 | |
4.85 | | |
4.19 | | |
11,487,783 | |
| August 2023 | |
4.61 | | |
3.26 | | |
14,424,610 | |
| September 2023 | |
3.54 | | |
2.74 | | |
16,249,368 | |
| October 2023 | |
3.59 | | |
2.28 | | |
25,934,363 | |
| November 1 to November 15, 2023 | |
3.00 | | |
2.47 | | |
7,820,100 | |
Notes
| (1) | Total volume of Common Shares traded is rounded to the nearest ten thousand. |
On
November 16, 2023, the last trading day prior to the date of this Prospectus Supplement, the closing price per Common Share on the NYSE
American was US$2.51.
RISK
FACTORS
An investment in securities of the Company including
the Offered Shares is subject to certain risks, which should be carefully considered by prospective purchasers before purchasing such
securities. In addition to information set out or incorporated by reference in this Prospectus Supplement and the Shelf Prospectus currently
and from time to time, investors should carefully consider the risk factors contained and incorporated by reference in this Prospectus
Supplement and the Shelf Prospectus before purchasing the Offered Shares. Some of the risk factors described herein and in the Shelf Prospectus
and the documents incorporated by reference therein are interrelated and, consequently, investors should treat such risk factors
as a whole. The risks described herein, in the Shelf Prospectus and in the documents incorporated by reference herein and therein are
not the only risks facing the Company and should not be considered exhaustive.
Any one of such risk factors could materially
adversely affect the Company’s business, prospects, financial condition, results of operations, cash flows and/or an investment
in the Common Shares and could cause actual events to differ materially from those described in forward-looking information and statements
relating to the Company set out or incorporated by reference in this Prospectus Supplement and the Shelf Prospectus. Additional risks
and uncertainties of which the Company is currently unaware or that are unknown or that the Company currently deems to be immaterial could
have a material adverse effect on the Company’s business, prospects, financial condition, results of operations, cash flows and/or
an investment in the Common Shares. Further, many of the risks are beyond the Company’s control and there is no guarantee that risk
management activities will successfully mitigate such exposure. The Company cannot provide any assurances that it will successfully address
any or all of these risks. Prospective purchasers should carefully consider the risks described under the heading “Risk Factors”
in the Shelf Prospectus and in the AIF, and consult with their professional advisors to assess any investment in the Offered Shares. See
“Documents Incorporated by Reference”. A purchaser should not purchase Offered Shares unless the purchaser understands,
and can bear, all of the investment risks involving the Offered Shares.
Macroeconomic Risks
Political and economic instability (including
Russia’s invasion of Ukraine and the war in the Middle East), global or regional adverse conditions, such as pandemics or other
disease outbreaks or natural disasters, currency exchange rates, trade tariff developments, transport availability and cost, including
import-related taxes, transport security, inflation and other factors are beyond the Company’s control. The macroeconomic environment
remains challenging and the Company’s results of operations could be materially affected by such macroeconomic conditions.
Inflationary Pressures
General inflationary pressures may affect labor
and other costs, which could have a material adverse effect on the Company’s financial condition, results of operations and the
capital expenditures required to advance the Company’s business plans. There can be no assurance that any governmental action taken
to control inflationary or deflationary cycles will be effective or whether any governmental action may contribute to economic uncertainty.
Governmental action to address inflation or deflation may also affect currency values. Accordingly, inflation and any governmental response
thereto may have a material adverse effect on the Company’s business, results of operations, cash flow, financial condition and
the price of the Company’s securities.
Negative Operating Cash
Flow
The Company is an exploration stage company with
respect to its mineral properties and is a pre-operations stage company with respect to its Demonstration Plant, and as a result has not
generated cash flow from operations. Given that none of the Company’s properties have yet to enter commercial production and generate
cash flow, the Company had negative operating cash flow for its financial year ended June 30, 2023. To the extent that the Company
has negative cash flow in future periods, the Company may need to deploy a portion of its cash reserves or a portion of the proceeds of
any offering of securities to fund such negative cash flow.
Capital Resources
Historically, capital requirements have been primarily
funded through the sale of Common Shares. Factors that could affect the availability of financing include the progress and results of
ongoing exploration at the Company’s mineral properties, the state of international debt and equity markets and investor perceptions
and expectations of the global market for lithium and its derivatives. There can be no assurance that such financing will be available
in the amount required at any time or for any period or, if available, that it can be obtained on terms satisfactory to the Company. Based
on the amount of funding raised, the Company’s planned exploration or other work programs may be postponed, or otherwise revised,
as necessary.
No Certainty Regarding
the Gross Proceeds to the Company
There is no certainty that the maximum gross proceeds
of US$50,000,000, or any amount, will be raised under the Offering. The Agents have agreed to use their commercially reasonable efforts
to sell, on the Company’s behalf, the Offered Shares designated by the Company, but the Company is not required to request the sale
of the maximum amount offered or any amount at all and, if the Company requests a sale, the Agents are not obligated to purchase any Common
Shares that are not sold. As a result of the Offering being made on a commercially reasonable efforts basis with no minimum offering amount,
and only as requested by the Company, the Company may raise substantially less than the maximum total Offering amount or nothing at all.
Furthermore, even if the Company receives gross
proceeds of US$50,000,000 from the Offering, the Company anticipates it will require further capital in order to fully fund the development
of its material properties. There is no assurance that it will be able to obtain such additional funds on terms favourable to the Company
or at all. Failure to obtain additional financing on a timely basis may cause the Company to postpone its development plans, which could
have a material adverse effect on the Company’s business, financial condition and results of operations.
Discretion in the Use of
Proceeds
Management will have broad discretion concerning
the use of the net proceeds from the Offering, as well as the timing of their expenditures. Depending on fluctuations of lithium prices
and other factors, the intended use of net proceeds from the Offering may change. As a result, an investor will be relying on the judgment
of management for the application of the net proceeds from the Offering. Management may use the net proceeds from the Offering in ways
that an investor may not consider desirable if they believe it would be in the best interests of the Company to do so and could spend
the proceeds in ways that do not improve the Company’s results of operations or enhance the value of the Common Shares. The results
and the effectiveness of the application of proceeds from the Offering are uncertain. If the proceeds are not applied effectively, the
Company’s business, financial condition, results of operations or prospects may suffer. Pending their use, the Company may invest
the net proceeds from the Offering in a manner that does not produce income or that loses value.
At-the-Market Offering
Purchasers who purchase Offered Shares in the
Offering at different times will likely pay different prices, and so may experience different outcomes in their investment results. The
Company will have discretion, subject to market demand, to vary the timing, prices and numbers of Offered Shares sold, and there is no
minimum or maximum sales price. Purchasers may experience a decline in the value of their Common Shares as a result of Offered Share sales
made at prices lower than the prices they paid.
Share Price Volatility
Capital and securities markets have a high level
of price and volume volatility, and the market price of securities of many companies have experienced wide fluctuations in price which
have not necessarily been related to the operating performance, underlying asset values or prospects of such companies. Factors unrelated
to the financial performance or prospects of the Company include macroeconomic developments in North America and globally, and market
perceptions of the attractiveness of particular industries or asset classes. There can be no assurance that continued fluctuations in
mineral or commodity prices will not occur. As a result of any of these factors, the market price of the Common Shares of the Company
at any given time may not accurately reflect the long-term value of the Company.
Securities class action litigation has been brought
against companies following years of volatility in the market price of their securities. The Company could in the future be the target
of similar litigation. Securities litigation could result in substantial costs and damages and divert management’s attention and
resources. Further, there is no guarantee that an active trading market for the Common Shares will be maintained on the TSXV and/or the
NYSE American.
Market Price Depression
Sales of a substantial number of Common Shares
or other equity-related securities in the public markets by the Company or its significant shareholders could depress the market price
of the Common Shares and impair the Company’s ability to raise capital through the sale of additional equity securities. The Company
cannot predict the effect that future sales of Common Shares or other equity-related securities would have on the market price of the
Common Shares. The price of the Common Shares could be affected by possible sales of the Common Shares by hedging or arbitrage trading
activity. If the Company raises additional funding by issuing additional equity securities, such financing may substantially dilute the
interests of shareholders of the Company and reduce the value of their investment.
Dilution Risk
The Company may issue additional securities in
the future, which may dilute a shareholder’s holdings in the Company. The Company’s notice of articles permit the issuance
of an unlimited number of Common Shares, and shareholders will have no pre-emptive rights in connection with such further issuance. The
directors of the Company have discretion to determine the price and the terms of further issuances. Moreover, additional Common Shares
may be issued by the Company on the conversion of convertible securities, including the exercise of options under the Company’s
stock option plan, other securities under the Company’s long term incentive plan, and upon the exercise of outstanding warrants.
No Dividends
The Company has never declared
or paid any dividends on its Common Shares. The Company intends, for the foreseeable future, to retain future earnings, if any, to finance
its development activities. As a result, the return on an investment in Offered Shares will likely depend upon any future appreciation
in value, if any, and on a shareholder’s ability to sell Offered Shares.
Loss of Entire Investment
An
investment in the Offered Shares is speculative and may result in the loss of an investor’s entire investment. Only potential
investors who are experienced in high risk investments and who can afford to lose their entire investment should consider an investment
in the Company.
Active Liquid Market for
Common Shares
There may not be an active, liquid market for
the Common Shares. There is no guarantee that an active trading market for the Common Shares will be maintained on the TSXV and/or the
NYSE American. Investors may not be able to sell their Common Shares quickly or at the latest market price if trading in the Common Shares
is not active.
Lithium Supply and Demand
Lithium is considered an industrial mineral and
the sales prices for the different lithium compounds are not public. Lithium is not a traded commodity like base and precious metals.
Sales agreements are negotiated on an individual and private basis with each separate end-user. Therefore, it is possible that the sales
prices used in the Lanxess Technical Report or South West Arkansas Project preliminary feasibility study will be different than the actual
prices at which the Company is able to sell its lithium compounds. In addition, there are a limited number of producers of lithium compounds
and it is possible that these existing producers will try to prevent newcomers from entering the chain of supply by increasing their production
capacity and lowering sales prices. Factors such as foreign currency fluctuation, supply and demand, industrial disruption and actual
lithium market sale prices could have an adverse impact on operating costs and stock market prices and on the Company’s ability
to fund its activities. In each case, the economics of the Lanxess Property Project and South West Arkansas Project could be materially
adversely affected, even to the point of being rendered uneconomic.
Economic Dependence
Development of the Lanxess Property Project is
substantially dependent on the maintenance of the memorandum of understanding entered into between the Company and LANXESS (the “Amended
and Restated MOU”). Under the terms of the Amended and Restated MOU, the Company has committed to selling the bulk of its product
offtake, lithium carbonate at the Lanxess Property to LANXESS, pursuant to an offtake agreement to be entered into with LANXESS. The Company’s
dependence on the Amended and Restated MOU, and the ability for the Amended and Restated MOU to be terminated outside of the Company’s
control, could materially adversely impact the development of the Lanxess Property Project to the point of being rendered uneconomic.
Competition
The lithium mining industry
is highly competitive, and our competition includes larger, more established companies with longer operating
histories and greater financial and technical resources. Those larger companies may also have a greater ability to continue long-term
development activities and to absorb the burden of present and future federal, state, local and other laws and regulations. In addition,
other companies may be able to offer better compensation packages to attract and retain qualified personnel than we are able to offer,
and pay more to acquire leases or technical equipment.
Enforcement of U.S. Judgments
The Company is incorporated under the laws of
Canada, and the majority of the Company’s directors and officers are not residents of the United States. Because certain of the
Company’s assets and the assets of these persons are located outside of the United States, it may be difficult for U.S. investors
to effect service of process within the United States upon the Company or upon such persons who are not residents of the United States,
or to realize in the United States upon judgments of U.S. courts predicated upon civil liabilities under U.S. securities laws. A judgment
of a U.S. court predicated solely upon such civil liabilities may be enforceable in Canada by a Canadian court if the U.S. court in which
the judgment was obtained had jurisdiction, as determined by the Canadian court, in the matter. There is substantial doubt whether an
original action could be brought successfully in Canada against any of such persons or the Company predicated solely upon such civil liabilities.
Passive Foreign Investment
Company Risk
A foreign corporation is classified as a PFIC
for any taxable year if, after the application of certain look-through rules, either: (i) 75% or more of its gross income for such
year is “passive income” as defined in the relevant provisions of the Code or (ii) 50% or more of the value of its assets,
determined on the basis of a quarterly average, during such year is attributable to assets that produce or are held for the production
of passive income. The Company believes that it may have been classified as a PFIC for prior taxable years and may continue to be classified
as a PFIC for the current taxable year, but the Company expects that it may cease being classified as a PFIC once it begins to generate
revenues from operations. The Company’s status as a PFIC in any taxable year, however, requires a factual determination that depends
on, among other things, the composition of the Company’s income, assets, and activities in each year, and can only be made annually
after the close of each taxable year. Therefore, there can be no assurance as to whether the Company will be classified as a PFIC for
the current taxable year or for any future taxable year. If the Company is treated as a PFIC for any taxable year during which a U.S.
Holder holds the Company’s Common Shares, the U.S. Holder may be subject to material adverse tax consequences upon a sale, exchange
or other disposition of such Common Shares, or upon the receipt of distributions in respect of such Common Shares, unless certain elections
are made. Each prospective investor is strongly urged to consult its own tax advisors regarding the application of these rules, along
with the availability and advisability of any elections, to such investor’s particular circumstances. See “Certain U.S.
Federal Income Tax Considerations for U.S. Holders”.
U.S. Federal Income Tax
Risk for U.S. Persons Treated as Owning At Least 10% of the Company’s Common Shares
If a U.S. person is treated as owning (directly,
indirectly or constructively) at least 10% of the value or voting power of the Company’s shares, such person may be treated as a
United States shareholder with respect to each controlled foreign corporation in the Company’s group (if any). A United States shareholder
of a controlled foreign corporation may be required to annually report and include in its U.S. taxable income its pro rata share of Subpart
F income, global intangible low-taxed income and investments in U.S. property by controlled foreign corporations, whether or not the Company
will make any distributions. An individual that is a United States shareholder with respect to a controlled foreign corporation generally
would not be allowed certain tax deductions or foreign tax credits that would be allowed to a United States shareholder that is a corporation.
A failure to comply with these reporting obligations may subject a United States shareholder to significant monetary penalties and may
prevent the statute of limitations with respect to a United States shareholder’s U.S. federal income tax return for the year for
which reporting was due from starting. Furthermore, the Company cannot provide any assurances that it will have sufficient information
to assist investors in determining whether the Company or any of its subsidiaries are treated as a controlled foreign corporation or whether
such investor is treated as a United States shareholder with respect to any such controlled foreign corporations. The Company also cannot
guarantee that it will be in a position to furnish to any United States shareholder information that may be necessary to comply with the
aforementioned reporting and tax payment obligations. Prospective U.S. investors should consult their own advisors regarding the potential
application of these rules to an investment in the Company’s Common Shares.
Forward-Looking Statements May Prove to
be Inaccurate
Investors are cautioned not to place undue reliance
on forward-looking statements. By their nature, forward-looking statements involves numerous assumptions, known and unknown risks
and uncertainties, of both a general and specific nature, that could cause actual results to differ materially from those suggested
by the forward-looking statements or contribute to the possibility that predictions, forecasts or projections will prove to be materially
inaccurate. Additional information on the risks, assumptions and uncertainties are found in this Prospectus Supplement and the
Shelf Prospectus under the heading “Cautionary Note Regarding Forward-Looking Statements”.
LEGAL
MATTERS
Certain legal matters relating to the Offering
will be passed upon on behalf of the Company by Cassels Brock & Blackwell LLP, Canadian counsel to the Company, and Skadden,
Arps, Slate, Meagher & Flom LLP, U.S. counsel to the Company, and on behalf of the Agents by DLA Piper (Canada) LLP, Canadian
counsel to the Agents, and Latham & Watkins, LLP, U.S. counsel to the Agents. As of the date hereof, Cassels Brock &
Blackwell LLP, and its partners and associates, and DLA Piper (Canada) LLP, and its partners and associates, beneficially own, directly
or indirectly, in their respective groups, less than 1% of any class of outstanding securities of the Company.
DOCUMENTS
FILED AS PART OF THE REGISTRATION STATEMENT
In addition to the documents specified in this
Prospectus Supplement and accompanying Shelf Prospectus under “Documents Incorporated by Reference”, the consents of auditors,
counsel and any experts identified herein, if applicable, powers of attorney of the directors and officers of the Company, and the Sales
Agreement have been, or will be, furnished to the SEC under the cover of Form 6-K and are hereby incorporated by reference as an
exhibit to the Registration Statement of which this Prospectus Supplement forms a part.
WHERE
YOU CAN FIND MORE INFORMATION
Copies of the documents incorporated by reference
in this Prospectus Supplement and the Shelf Prospectus may be obtained on request without charge from the Corporate Secretary of the Company
at Suite 1625, 1075 West Georgia Street, Vancouver, British Columbia, V6E 3C9, telephone (604) 409-8154, e-mail: info@standardlithium.com,
and are also available electronically under the SEDAR+ profile of the Company at www.sedarplus.ca or through EDGAR at the website of the
SEC at www.sec.gov.
The Company has filed with the SEC the Registration
Statement under the U.S. Securities Act with respect to the Offered Shares offered under this Prospectus Supplement. This Prospectus Supplement,
the accompanying Shelf Prospectus and the documents incorporated by reference herein and therein, which form a part of the Registration
Statement, do not contain all of the information set forth in the Registration Statement, certain parts of which are contained in the
exhibits to the Registration Statement as permitted by the rules and regulations of the SEC. Information omitted from this Prospectus
Supplement or the Shelf Prospectus but contained in the Registration Statement is available on EDGAR under the Company’s profile
at www.sec.gov. Reference is also made to the Registration Statement and the exhibits thereto for further information with respect
to SLI, the Offering and the Common Shares. Statements contained in this Prospectus Supplement as to the contents of certain documents
are not necessarily complete and, in each instance, reference is made to the copy of the document filed as an exhibit to the Registration
Statement. Each such statement is qualified in its entirety by such reference.
The Company is required to file with the various
securities commissions or similar authorities in all of the provinces of Canada, annual and quarterly reports, material change reports
and other information. The Company is also an SEC registrant subject to the informational requirements of the Exchange Act and, accordingly,
files with, or furnishes to, the SEC certain reports and other information. Under the MJDS, these reports and other information (including
financial information) may be prepared in accordance with the disclosure requirements of Canada, which differ from those of the United
States. As a “foreign private issuer” (as defined under United States securities laws), the Company is exempt from the rules under
the Exchange Act prescribing the furnishing and content of proxy statements, and the Company’s officers, directors and principal
shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act.
ENFORCEABILITY
OF CIVIL LIABILITIES
The Company is incorporated under and governed
by the Canada Business Corporations Act. All except one of the officers, all except one of the directors and some of the experts
named in this Prospectus are not residents of the United States, some of the Agents or experts named in this Prospectus Supplement and
in the accompanying Shelf Prospectus are not residents of the United States, and certain of the Company’s assets and all or a substantial
portion of the assets of such persons are located outside of the United States. The Company has appointed an agent for service of process
in the United States, but it may be difficult for holders of Common Shares who reside in the United States to effect service within the
United States upon the Company or these persons in the United States. It may also be difficult for holders of Common Shares who reside
in the United States to realize in the United States upon judgments of courts of the United States predicated upon the Company’s
civil liability and the civil liability of the Company’s directors and officers and experts under the United States federal securities
laws. The Company has been advised by its Canadian counsel, Cassels Brock & Blackwell LLP, that a judgment of a United States
court predicated solely upon civil liability under United States federal securities laws would probably be enforceable in Canada if the
United States court in which the judgment was obtained has a basis for jurisdiction in the matter that would be recognized by a Canadian
court for the same purposes. The Company has also been advised by Cassels Brock & Blackwell LLP, however, that there is substantial
doubt whether an action could be brought in Canada in the first instance on the basis of liability predicated solely upon United States
federal securities laws.
The Company filed with the SEC, concurrently with
the Registration Statement of which this Prospectus forms a part, an appointment of agent for service of process on Form F-X. Under
the Form F-X, the Company appointed C T Corporation System, with an address at 1015 15th Street N.W., Suite 1000,
Washington, DC, 20005, as its agent for service of process in the United States in connection with any investigation or administrative
proceeding conducted by the SEC and any civil suit or action brought against or involving the Company in a United States court arising
out of or related to or concerning the Offering.
INTEREST
OF EXPERTS
The following are the names of persons or companies
(a) that are named as having prepared or certified a report, valuation, statement or opinion included in or incorporated by reference
in this Prospectus Supplement; and (b) whose profession or business gives authority to the statement, report or valuation made by
the person or the Company:
| • | Randal M. Brush, P.E. and Robert E. Williams Jr., PG, CPG, of William M. Cobb & Associates, Inc.,
Charles Daniel Campbell, P.E., of Alliance Technical Group, Frank Gay, P.E., of Hunt, Guillot & Associates, LLC, Susan B. Patton,
P.E., of RESPEC Company, LLC and Mike Rockandel, RM-SME of Mike Rockandel Consulting, LLC prepared the Lanxess Technical Report; and |
| • | Caleb Mutschler, P.E., Dutch Johnson, P.E. and Frank Gay, P.E.,
of Hunt, Guillot & Associates, LLC, Charles Campbell, P.E., of Alliance Technical Group, Marek
Dworzanowski, EUR ING, CEng and Randal M. Brush, P.E. and Robert E. Williams Jr., PG, CPG, of William M. Cobb & Associates, Inc.
prepared the technical report entitled “South West Arkansas Project Pre-Feasibility Study” dated effective August 8,
2023. |
As of the date hereof, to the best knowledge of
the Company, the aforementioned persons, collectively, held less than one percent of the outstanding securities of the Company when they
prepared or certified a report, valuation, statement or opinion, as applicable, referred to above and as at the date hereof, and they
did not receive any direct or indirect interest in any securities of the Company or of any associate or affiliate of the Company in connection
with the preparation or certification of such report, valuation, statement or opinion, as applicable.
Experts who have prepared reports
for the Company directly or in a document incorporated by reference to this Prospectus Supplement include the following: (i) PricewaterhouseCoopers
LLP, Chartered Professional Accountants, the current auditor of the Company, who prepared the auditors’ report accompanying the
audited financial statements of the Company for the fiscal year ended June 30, 2023, and report that they are independent of the Company
within the meaning of the Chartered Professional Accountants of British Columbia Code of Professional Conduct and the rules of the SEC
and the Public Company Accounting Oversight Board (United States) on auditor independence, and (ii) Manning Elliott LLP, Chartered Professional
Accountants, the previous auditor of the Company until October 17, 2022, who prepared the auditors’ report accompanying the audited
financial statements of the Company for the fiscal year ended June 30, 2022, and report that they are independent of the Company within
the meaning of the Chartered Professional Accountants of British Columbia Code of Professional Conduct and the rules of the SEC and the
Public Company Accounting Oversight Board (United States) on auditor independence.
All scientific and technical information in this
Prospectus Supplement has been reviewed and approved by Steve Ross, Professional Geologist and Senior Project Manager at SLI, who is a
qualified person under NI 43-101. As of the date hereof, Mr. Ross has beneficial ownership of less than one percent of the outstanding
securities of the Company.
AUDITORS,
TRANSFER AGENTS AND REGISTRARS
PricewaterhouseCoopers LLP, Chartered Professional
Accountants, was appointed as auditor of the Company on October 17, 2022.
The
registrar and transfer agent for the Common Shares is TSX Trust Company, located at its principal offices in Vancouver, British
Columbia.
SHORT FORM BASE SHELF PROSPECTUS
Standard Lithium Ltd.
US$250 million
Common Shares
Preferred Shares
Debt Securities
Subscription Receipts
Warrants
Units
Standard Lithium Ltd. (“SLI”,
“we” or the “Company”) may from time to time offer and issue the following securities: (i) common
shares of the Company (“Common Shares”); (ii) preferred shares of the Company (“Preferred Shares”);
(iii) senior and subordinated debt securities of the Company, including convertible debt securities (collectively, “Debt
Securities”); (iv) subscription receipts (“Subscription Receipts”) exchangeable for Common Shares and/or
other securities of the Company; (v) warrants (“Warrants”) exercisable to acquire Common Shares and/or other securities
of the Company; and (vi) securities comprised of more than one of Common Shares, Preferred Shares, Debt Securities, Subscription
Receipts and/or Warrants offered together as a unit (“Units”, and together with the Common Shares, Preferred Shares,
Debt Securities, Subscription Receipts and Warrants, the “Securities”), or any combination thereof, having an aggregate
offering price of up to US$250 million (or the equivalent thereof, at the date of issue, in any other currency or currencies, as the case
may be), at any time during the 25-month period that this short form base shelf prospectus, including any amendments hereto (the “Prospectus”),
remains effective. The Securities may be offered separately or together, in separate series, in amounts, at prices and on terms to be
determined at the time of sale and set forth in one or more prospectus supplements (each, a “Prospectus Supplement”).
This Prospectus qualifies the distribution of Securities by the Company. In addition, Securities may be offered and issued in consideration
for the acquisition of other businesses, assets or securities by the Company or a subsidiary of the Company. The consideration for any
such acquisition may consist of any of the Securities separately, a combination of Securities or any combination of, among other things,
Securities, cash and assumption of liabilities.
The specific terms of any offering of Securities
will be set out in the applicable Prospectus Supplement and may include, without limitation, where applicable: (i) in the case of
Common Shares, the number of Common Shares being offered, the offering price (or the manner of determination thereof if offered on a non-fixed
price basis), whether the Common Shares are being offered for cash, and any other terms specific to the Common Shares being offered; (ii) in
the case of Preferred Shares, the designation of the particular class, series, liquidation preference amount, the number of Preferred
Shares being offered, the offering price (or the manner of determination thereof if offered on a non-fixed price basis), whether the Preferred
Shares are being offered for cash, the currency or currency unit for which such Preferred Shares may be purchased, any voting rights,
any rights to receive dividends, any terms of redemption, any conversion or exchange rights, and any other terms specific to the Preferred
Shares being offered; (iii) in the case of Debt Securities, the specific designation of the Debt Securities, whether such Debt Securities
are senior or subordinated, the aggregate principal amount of the Debt Securities being offered, the currency or currency unit in which
the Debt Securities may be purchased, authorized denominations, any limit on the aggregate principal amount of the Debt Securities of
the series being offered, the issue and delivery date, the maturity date, the offering price (at par, at a discount or at a premium),
the interest rate or method of determining the interest rate, the interest payment date(s), any conversion or exchange rights that are
attached to the Debt Securities, any redemption provisions, any repayment provisions, and any other terms specific to the Debt Securities
being offered; (iv) in the case of Subscription Receipts, the number of Subscription Receipts being offered, the offering price (or
the manner of determination thereof if offered on a non-fixed price basis), whether the Subscription Receipts are being offered for cash,
the terms, conditions and procedures for the exchange of Subscription Receipts for Common Shares and/or other securities of the Company,
as the case may be, the currency or currency unit in which the Subscription Receipts are issued, and any other terms specific to the Subscription
Receipts being offered; (v) in the case of Warrants, the number of Warrants being offered, the offering price (or the manner of determination
thereof if offered on a non-fixed price basis), whether the Warrants are being offered for cash, the terms, conditions and procedures
for the exercise of such Warrants into or for Common Shares and/or other securities of the Company, and any other terms specific to the
Warrants being offered; and (vi) in the case of Units, the designation and terms of the Units and of the Securities comprising the
Units, the offering price (or the manner of determination thereof if offered on a non-fixed price basis), whether the Units are being
offered for cash, the currency or currency unit in which the Units are issued, and any other terms specific to the Units being offered.
A Prospectus Supplement may include other specific terms pertaining to the Securities that are not within the alternatives and parameters
described in this Prospectus. You should read this Prospectus and any applicable Prospectus Supplement carefully before you invest in
any Securities.
All shelf information permitted under applicable
securities legislation to be omitted from this Prospectus will be contained in one or more Prospectus Supplements that will be delivered
to purchasers together with this Prospectus, unless an exemption from the prospectus delivery requirements is available. Each Prospectus
Supplement will be incorporated by reference into this Prospectus for the purposes of securities legislation as of the date of such Prospectus
Supplement and only for the purposes of the distribution of the Securities to which such Prospectus Supplement pertains.
This Prospectus may qualify an “at-the-market
distribution” as defined in NI 44-102. This Prospectus does not qualify for issuance Debt Securities, or Securities convertible
into or exchangeable for Debt Securities, in respect of which the payment of principal and/or interest may be determined, in whole or
in part, by reference to one or more underlying interests including, for example, an equity or debt security, a statistical measure of
economic or financial performance including, but not limited to, any currency, consumer price or mortgage index, or the price or value
of one or more commodities, indices or other items, or any other item or formula, or any combination or basket of the foregoing items.
For greater certainty, this Prospectus may qualify for issuance Debt Securities, or Securities convertible into or exchangeable for Debt
Securities, in respect of which the payment of principal and/or interest may be determined, in whole or in part, by reference to published
rates of a central banking authority or one or more financial institutions, such as a prime rate or bankers’ acceptance rate, or
to recognized market benchmark interest rates such as the Canadian Overnight Repo
Rate Average (“CORRA”) or a United States federal funds rate.
We may offer and sell the Securities to or through
underwriters or dealers purchasing as principals and may also sell the Securities to one or more purchasers directly or through agents
designated by the Company from time to time. The Prospectus Supplement relating to a particular offering of Securities will identify each
underwriter, dealer or agent, if any, engaged by the Company in connection with the offering and sale of the Securities and will set forth
the terms of the offering of such Securities, the method of distribution of such Securities, including the proceeds to us, and, to the
extent applicable, any fees, discounts or any other compensation payable to underwriters, dealers or agents and any other material terms
of the plan of distribution. If offered on a non-fixed price basis, Securities may be offered at market prices prevailing at the time
of sale, at prices related to such prevailing market prices or at prices to be negotiated with purchasers at the time of sale, which prices
may vary between purchasers and during the period of distribution. If Securities are offered on a non-fixed price basis, the underwriters’,
dealers’ or agents’ compensation will be increased or decreased by the amount by which the aggregate price paid for Securities
by the purchasers exceeds or is less than the gross proceeds paid by the underwriters, dealers or agents to the Company. See “Plan
of Distribution”.
Unless otherwise specified in the relevant Prospectus
Supplement, subject to applicable laws, in connection with any offering of Securities, other than an “at-the-market distribution”,
the underwriters, dealers or agents may over-allot or effect transactions that are intended to stabilize or maintain the market price
of the offered Securities at levels other than those which otherwise might prevail on the open market. Such transactions, if commenced,
may be discontinued at any time. No underwriter, dealer or agent involved in an “at-the-market distribution”, no affiliate
of such an underwriter, dealer or agent and no person or company acting jointly or in concert with such an underwriter, dealer or agent
may, in connection with the distribution, enter into any transaction that is intended to stabilize or maintain the market price of the
Securities distributed, including selling an aggregate number or principal amount of securities that would result in the underwriter,
dealer or agent creating an over-allocation position in the Securities distributed. See “Plan of Distribution”.
As at the date of this Prospectus, no underwriter,
dealer or agent is in a contractual relationship with the Company requiring the underwriter, dealer or agent to distribute under this
Prospectus. No underwriter, dealer or agent has been involved in the preparation of this Prospectus or performed any review of the contents
of this Prospectus.
Investors should rely only on the information
contained in or incorporated by reference in this Prospectus and any applicable Prospectus Supplement. The Company has not authorized
anyone to provide investors with different or additional information. There are certain risks inherent in an investment in our Securities
and in our activities. Prospective investors should carefully read and consider the risk factors described or referenced under the headings
“Forward-Looking Information” and “Risk Factors” in this Prospectus, contained in any of the documents incorporated
by reference herein, and in any applicable Prospectus Supplement and any of the documents incorporated by reference therein, before purchasing
Securities. See “Forward-Looking Information” and “Risk Factors” below and the “Risk Factors” section
of the applicable Prospectus Supplement.
All dollar amounts in this Prospectus are in
Canadian dollars, unless otherwise indicated. See “Currency and Exchange Rate Information”.
The outstanding Common Shares are listed and posted
for trading in Canada on the TSX Venture Exchange (“TSXV”) and in the United States on the NYSE American LLC (“NYSE
American”) under the trading symbol “SLI”, and on the Frankfurt Stock Exchange (“FRA”) under
the symbol “S5L”. On July 25, 2023, the last trading day prior to the date of this Prospectus, the closing price of the
Common Shares on the TSXV was C$5.85, on the NYSE American was US$4.36 and on the FRA was €3.95.
Unless otherwise specified in the applicable
Prospectus Supplement, the Preferred Shares, Debt Securities, Subscription Receipts, Warrants and Units will not be listed on any securities
exchange. There is no market through which the Securities, other than the Common Shares, may be sold and purchasers may not be able to
resell such Securities purchased under this Prospectus and any applicable Prospectus Supplement. This may affect the pricing of such Securities
in the secondary market, the transparency and availability of trading prices, the liquidity of such Securities, and the extent of issuer
regulation. See “Risk Factors” below and the “Risk Factors” section of the applicable Prospectus Supplement.
THESE SECURITIES HAVE NOT BEEN APPROVED OR
DISAPPROVED BY THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION (THE “SEC”) OR ANY STATE SECURITIES COMMISSION OR REGULATOR
NOR HAS THE SEC OR ANY STATE SECURITIES COMMISSION OR REGULATOR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
We are permitted, under the multi-jurisdictional
disclosure system adopted by the securities regulatory authorities in the United States and Canada (“MJDS”), to prepare this
Prospectus in accordance with Canadian disclosure requirements, which are different from United States disclosure requirements.
We prepare our annual financial statements,
certain of which are incorporated by reference herein, in Canadian dollars and in accordance with International Financial Reporting Standards
as issued by the International Accounting Standards Board (“IFRS”) and our interim financial statements in Canadian dollars
and in accordance with IFRS as applicable to interim financial reporting, including IAS 34, Interim Financial Reporting (“IAS
34”), and they therefore may not be comparable to financial statements of United States companies.
Owning Securities may subject you to tax consequences
both in Canada and the United States. Such tax consequences, including for investors who are resident in, or citizens of, the United States
and Canada, are not described in this Prospectus and may not be fully described in any applicable Prospectus Supplement. You should read
the tax discussion in any Prospectus Supplement with respect to a particular offering of Securities and consult your own tax advisor with
respect to your own particular circumstances.
Your ability to enforce civil liabilities under
United States federal securities laws may be affected adversely because: (i) the Company is governed by the Canada Business Corporations
Act (“CBCA”); (ii) the officers, all but one of the directors and some of the experts named in this Prospectus are
not residents of the United States; and (iii) certain of the Company’s assets and all or a substantial portion of the assets
of such persons are located outside of the United States. See “Enforceability of Certain Civil Liabilities and Agent for Service
of Process”.
A director of the Company and certain of the experts
named in this Prospectus reside outside of Canada. See “Enforceability of Certain Civil Liabilities and Agent for Service of Process”.
The Company’s head office is located at
Suite 1625, 1075 West Street Vancouver, British Columbia, V6E 3C9 and
the Company’s registered office is located at Suite 2200, 885 West Georgia Street, Vancouver, British Columbia, V6C 3E8.
TABLE OF CONTENTS
Page
ABOUT
THIS PROSPECTUS
This Prospectus provides a
general description of the Securities that we may offer. Each time we sell Securities under this Prospectus, we will prepare a Prospectus
Supplement that will contain specific information about the terms of that offering. The Prospectus Supplement may also add, update or
change information contained in this Prospectus. Before investing in any Securities, you should read both this Prospectus and any applicable
Prospectus Supplement, together with the additional information described below and in the applicable Prospectus Supplement under “Documents
Incorporated by Reference”.
Investors should rely only
on the information contained in or incorporated by reference in this Prospectus and any applicable Prospectus Supplement and are not entitled
to rely on certain parts of the information contained in or incorporated by reference in this Prospectus and any applicable Prospectus
Supplement to the exclusion of the remainder. We have not authorized anyone to provide investors with different or additional information.
If anyone provides you with different or additional information, you should not rely on it. We are not making an offer of Securities in
any jurisdiction where the offer or sale of Securities is not permitted by law. Prospective investors should not assume that the information
contained in or incorporated by reference in this Prospectus and any applicable Prospectus Supplement is accurate as of any date other
than the date on the front of such documents (including the documents incorporated by reference herein and therein), regardless of the
time of delivery of this Prospectus, any applicable Prospectus Supplement or any sale of Securities. Our business, financial condition,
results of operations and prospects may have changed since those dates. Information contained on the Company’s website should not
be deemed to be a part of this Prospectus, nor incorporated by reference herein.
Market data and certain industry
forecasts used in the Prospectus and the documents incorporated by reference herein were obtained from market research, publicly
available information and industry publications. We believe that these sources are generally reliable, but the accuracy and completeness
of this information is not guaranteed. We have not independently verified such information, nor have we ascertained the validity
or accuracy of the underlying economic assumptions relied upon therein, and we do not make any representation as to the accuracy of
such information.
Unless we have indicated otherwise,
or the context otherwise requires, references in this Prospectus and any Prospectus Supplement to “SLI”, the “Company”,
“we”, “us” and “our” refer to Standard Lithium Ltd. and/or, as applicable, one or more of its subsidiaries,
its predecessors and/or its co-ownership arrangement.
Certain capitalized terms
and other terms used in this Prospectus are defined in the “Glossary of Terms”.
FORWARD-LOOKING
INFORMATION
This Prospectus, including
the documents incorporated herein by reference, contains “forward-looking information” within the meaning of applicable Canadian
securities legislation and “forward-looking statements” within the meaning of the United States Private Securities Litigation
Reform Act of 1995 (collectively referred to herein as “forward-looking information”). These statements relate to future events
or the Company’s future performance. All statements, other than statements of historical fact, may be forward-looking information.
Information concerning mineral resource and mineral reserve estimates also may be deemed to be forward-looking information in that it
reflects a prediction of mineralization that would be encountered if a mineral deposit were developed and mined. Forward-looking information
generally can be identified by the use of words such as “seek”, “anticipate”, “plan”, “continue”,
“estimate”, “expect”, “may”, “will”, “project”, “predict”, “propose”,
“potential”, “target”, “intend”, “could”, “might”, “should”, “believe”,
“scheduled”, “implement” and similar words or expressions. These statements involve known and unknown risks, uncertainties
and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking information.
In particular, this Prospectus
contains or incorporates by reference forward-looking information, including, without limitation, with respect to the following matters
or the Company’s expectations relating to such matters: the Company’s planned exploration and development programs (including,
but not limited to, plans and expectations regarding advancement, testing and operation of the lithium extraction demonstration plant),
commercial opportunities for lithium products, expected results of exploration, accuracy of mineral or resource exploration activity,
accuracy of mineral reserves or mineral resources estimates, including the ability to develop and realize on such estimates, whether mineral
resources will ever be developed into mineral reserves, and information and underlying assumptions related thereto, budget estimates and
expected expenditures by the Company on its properties, regulatory or government requirements or approvals, the reliability of third party
information, continued access to mineral properties or infrastructure, payments and share issuances pursuant to property agreements, fluctuations
in the market for lithium and its derivatives, expected timing of the expenditures, performance of SLI’s business and operations,
changes in exploration costs and government regulation in Canada and the United States, competition for, among other things, capital,
acquisitions, undeveloped lands and skilled personnel, changes in commodity prices and exchange rates, currency and interest rate fluctuations,
inflation, the Company’s funding requirements and ability to raise capital, and other factors or information.
Forward-looking statements
do not take into account the effect of transactions or other items announced or occurring after the statements are made. Forward-looking
information is based upon a number of expectations and assumptions and is subject to a number of risks and uncertainties, many of which
are beyond the Company’s control, that could cause actual results to differ materially from those that are disclosed in or implied
by such forward-looking information. With respect to forward-looking information listed above and incorporated by reference herein, the
Company has made assumptions regarding, among other things: current technological trends; ability to fund, advance and develop the Company’s
properties; the Company’s ability to operate in a safe and effective manner; uncertainties with respect to receiving, and maintaining,
mining, exploration, environmental and other permits; pricing and demand for lithium, including that such demand is supported by growth
in the electric vehicle market; impact of increasing competition; commodity prices, currency rates, interest rates and general economic
conditions; the legislative, regulatory and community environments in the jurisdictions where the Company operates; impact of unknown
financial contingencies; market prices for lithium products; budgets and estimates of capital and operating costs; estimates of mineral
resources and mineral reserves; reliability of technical data; and the anticipated timing and results of operation and development. Although
the Company believes that the assumptions and expectations reflected in such forward-looking statements are reasonable, SLI can give no
assurance that these assumptions and expectations will prove to be correct. Since forward-looking information inherently involves risks
and uncertainties, undue reliance should not be placed on such information.
Forward-looking information
involves known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the
Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.
Such factors include, but are not limited to: general economic conditions in Canada, the United States and globally; industry conditions,
including the state of the electric vehicle market; governmental regulation of the mining industry, including environmental regulation;
geological, technical and drilling problems; unanticipated operating events; competition for and/or inability to retain drilling rigs
and other services and to obtain capital, undeveloped lands, skilled personnel, equipment and inputs; the availability of capital on acceptable
terms; the need to obtain required approvals from regulatory authorities; uncertainties associated with estimating mineral resources and
mineral reserves, including uncertainties relating to the assumptions underlying mineral resource and mineral reserve estimates; whether
mineral resources will ever be converted into mineral reserves; uncertainties in estimating capital and operating costs, cash flows and
other project economics; liabilities and risks, including environmental liabilities and risks inherent in mineral extraction operations;
health and safety risks; risks related to unknown financial contingencies, including litigation costs, on the Company’s operations;
unanticipated results of exploration activities; unpredictable weather conditions; unanticipated delays in preparing technical studies;
inability to generate profitable operations; restrictive covenants in debt instruments; lack of availability of additional financing on
terms acceptable to the Company; intellectual property risk; stock market volatility; volatility in market prices for commodities; liabilities
inherent in the mining industry; volatility in financial markets caused by the ongoing conflict between Russia and Ukraine; increased
inflation; changes in tax laws and incentive programs relating to the mining industry; other risks pertaining to the mining industry;
conflicts of interest; dependency on key personnel; and fluctuations in currency and interest rates, as well as those factors discussed
in the section entitled “Risk Factors” in this Prospectus and in the AIF (as defined herein). Although the Company has attempted
to identify important factors that could cause actual actions, events or results to differ materially from those described in forward-looking
statements, there may be other factors that cause actions, events or results to differ from those anticipated, estimated or intended.
Readers are cautioned that
the foregoing lists of factors are not exhaustive. The forward-looking information contained in or incorporated by reference in this
Prospectus is expressly qualified by these cautionary statements. All forward-looking information in this Prospectus or incorporated
by reference in this Prospectus speaks as of the date of this Prospectus (or as of the date in the document incorporated by reference).
The Company does not undertake any obligation to update or revise any forward-looking information, whether as a result of new information,
future events or otherwise, except as required by law. All forward-looking information contained in this Prospectus, including the documents
incorporated by reference herein, are expressly qualified in their entirety by this cautionary statement. Additional information about
these assumptions and risks and uncertainties is contained in the Company’s filings with securities regulators, including the Company’s
most recent AIF and most recent management’s discussion and analysis for our most recently completed financial year and, if applicable,
interim financial period, which are available on SEDAR at www.sedar.com and EDGAR at www.sec.gov.
NOTICE
REGARDING REPRESENTATION OF MINERAL RESERVE AND MINERAL RESOURCE ESTIMATES
The disclosure included in
or incorporated by reference in this Prospectus uses mineral reserves and mineral resources classification terms that comply with reporting
standards in Canada and are made in accordance with National Instrument 43-101 - Standards of Disclosure for Mineral Projects (“NI
43-101”). NI 43-101 is a rule developed by the Canadian Securities Administrators that establishes standards for all public
disclosure an issuer makes of scientific and technical information concerning mineral projects.
These standards differ significantly
from the requirements of the SEC that are applicable to domestic United States reporting companies. Any mineral reserves and mineral resources
reported by the Company in accordance with NI 43-101 may not qualify as such under SEC standards. Accordingly, information included in
this Prospectus and the documents incorporated by reference herein that describes the Company’s mineral reserves and mineral resources
estimates may not be comparable with information made public by United States companies subject to the SEC’s reporting and disclosure
requirements.
PRESENTATION
OF FINANCIAL INFORMATION
We present our financial statements
in Canadian dollars. Our annual financial statements are prepared in accordance with IFRS and our interim financial statements are prepared
in accordance with IFRS as applicable to interim financial reporting, including IAS 34. Unless otherwise indicated, financial information
included in or incorporated by reference in this Prospectus has been derived from financial statements prepared in accordance with IFRS,
or in accordance with IAS 34. As a result, certain financial information included in or incorporated by reference in this Prospectus may
not be comparable to financial information prepared by companies in the United States reporting under US GAAP. Certain calculations included
in tables and other figures in this Prospectus have been rounded for clarity of presentation.
CURRENCY
AND EXCHANGE RATE INFORMATION
Unless otherwise indicated,
all references to “$”, “C$” or “dollars” in this Prospectus refer to Canadian dollars. References
to “€” in this Prospectus refer to Euros. References to “US$” in this Prospectus refer to United States dollars.
The following table sets forth,
for each of the periods indicated, the high, low and average exchange rates, and the exchange rate at the end of the period, for the conversion
of one (1) Canadian dollar into the Euro and United States dollar equivalent, based on the indicative exchange rate as reported by
the Bank of Canada:
| | |
C$ to € | | |
C$ to US$ | |
| | |
YE 2022 | | |
Q3 | | |
YE 2022 | | |
Q3 | |
| High | |
€ | 0.7754 | | |
€ | 0.7754 | | |
| US$0.8031 | | |
| US$0.7841 | |
| Low | |
€ | 0.6847 | | |
€ | 0.7449 | | |
| US$0.7217 | | |
| US$0.7285 | |
| Average | |
€ | 0.7308 | | |
€ | 0.7612 | | |
| US$0.7692 | | |
| US$0.7662 | |
| Rate at end of period | |
€ | 0.6949 | | |
€ | 0.7373 | | |
| US$0.7388 | | |
| US$0.7507 | |
The indicative exchange rates
on July 25, 2023, as reported by the Bank of Canada for the conversion of Canadian dollars into Euros was $1.00 equals €0.687
and for the conversion of Canadian dollars into United States dollars was $1.00 equals US$0.758.
DOCUMENTS
INCORPORATED BY REFERENCE
Information has been incorporated
by reference in this Prospectus from documents filed by us with the securities commissions or similar regulatory authorities in Canada,
which have also been filed with, or furnished to, the SEC. Copies of the documents incorporated by reference herein may be obtained
on request without charge from the Corporate Secretary of the Company at Suite 1625, 1075 West Georgia Street, Vancouver, British
Columbia, V6E 3C9, telephone (604) 409-8154, e-mail: info@standardlithium.com, and are also available electronically under the profile
of the Company at www.sedar.com or in the United States through EDGAR at the website of the SEC at www.sec.gov.
As at the date of this Prospectus,
the following documents, filed by the Company with the securities commissions or similar regulatory authorities in each of the provinces
of Canada, other than Québec, and filed with, or furnished to, the SEC, are specifically incorporated by reference into, and form
an integral part of, this Prospectus, provided that such documents are not incorporated by reference to the extent that their contents
are modified or superseded by a statement contained in this Prospectus or in any other subsequently filed document that is also incorporated
by reference in this Prospectus, as further described below:
Except as otherwise stated
below, any documents of the foregoing type, and all other documents of the type required to be incorporated by reference in a short form
prospectus pursuant to NI 44-101, including, without limitation, any material change reports (excluding material change reports filed
on a confidential basis), interim financial statements, annual financial statements and the auditor’s report thereon, management’s
discussion and analysis, information circulars, annual information forms and business acquisition reports filed by the Company with the
securities commissions or similar regulatory authorities in any of the provinces or territories of Canada subsequent to the date of this
Prospectus and during the 25-month period this Prospectus remains effective, shall be deemed to be incorporated by reference in this Prospectus.
Notwithstanding anything herein to the contrary, any statement contained in this Prospectus or in a document incorporated or deemed to
be incorporated by reference in this Prospectus shall be deemed to be modified or superseded, for purposes of this Prospectus, to the
extent that a statement contained herein or in any other subsequently filed document that also is incorporated or is deemed to be incorporated
by reference herein, modifies or supersedes such prior statement. The modifying or superseding statement need not state that it has modified
or superseded a prior statement or include any other information set forth in the document that it modifies or supersedes. The making
of a modifying or superseding statement shall not be deemed an admission for any purposes that the modified or superseded statement, when
made, constituted a misrepresentation, an untrue statement of a material fact or an omission to state a material fact that was required
to be stated or that is necessary to make a statement not misleading in light of the circumstances in which it was made. Any statement
so modified or superseded shall be deemed, except as so modified or superseded, not to constitute a part of this Prospectus.
In addition, to the extent
that any document or information incorporated by reference into this Prospectus pursuant to the foregoing paragraph is also included in
any report that we file with or furnish to the SEC pursuant to Section 13(a) or 15(d) of the Exchange Act, such document
or information shall be deemed to be incorporated by reference as an exhibit to the registration statement of which this Prospectus forms
a part. Furthermore, we may incorporate by reference into the registration statement of which this Prospectus forms a part, any report
on Form 6- K furnished to the SEC, including the exhibits thereto, if and to the extent provided in such report.
Upon new annual financial
statements and related management’s discussion and analysis of the Company being filed with the applicable securities commissions
or similar regulatory authorities in Canada during the period that this Prospectus is effective, the previous annual financial statements
and related management’s discussion and analysis and the previous interim financial statements and related management’s discussion
and analysis of the Company most recently filed shall be deemed to no longer be incorporated by reference into this Prospectus for purposes
of future offers and sales of Securities hereunder. Upon new interim financial statements and related management’s discussion and
analysis of the Company being filed with the applicable securities commissions or similar regulatory authorities in Canada during the
period that this Prospectus is effective, the previous interim financial statements and related management’s discussion and analysis
of the Company most recently filed shall be deemed to no longer be incorporated by reference into this Prospectus for purposes of future
offers and sales of Securities hereunder. Upon a new annual information form of the Company being filed with the applicable securities
commissions or similar regulatory authorities in Canada during the period that this Prospectus is effective, notwithstanding anything
herein to the contrary, the following documents shall be deemed to no longer be incorporated by reference into this Prospectus for purposes
of future offers and sales of Securities hereunder: (i) the previous annual information form; (ii) any material change reports
filed by the Company prior to the end of the financial year in respect of which the new annual information form is filed; (iii) any
business acquisition reports filed by the Company for acquisitions completed prior to the beginning of the financial year in respect of
which the new annual information form is filed; and (iv) any information circulars filed by the Company prior to the beginning of
the financial year in respect of which the new annual information form is filed. Upon a new management information circular prepared in
connection with an annual general meeting of the Company being filed with the applicable securities commissions or similar regulatory
authorities in Canada during the period that this Prospectus is effective, the previous management information circular prepared in connection
with an annual general meeting of the Company shall be deemed to no longer be incorporated by reference into this Prospectus for purposes
of future offers and sales of Securities hereunder.
References to our website
in any documents that are incorporated by reference into this Prospectus and any Prospectus Supplement do not incorporate by reference
the information on such website into this Prospectus or any Prospectus Supplement, and we disclaim any such incorporation by reference.
A Prospectus Supplement containing
the specific terms of an offering of Securities and other information relating to the Securities will be delivered to purchasers of such
Securities together with this Prospectus, unless an exemption from the prospectus delivery requirements is available, and will be deemed
to be incorporated by reference into this Prospectus as of the date of such Prospectus Supplement, but only for the purpose of the distribution
of the Securities to which the Prospectus Supplement pertains.
In addition, certain marketing
materials (as that term is defined in applicable Canadian securities legislation) may be used in connection with a distribution of Securities
under this Prospectus and the applicable Prospectus Supplement(s). Any “template version” of “marketing materials”
(as those terms are defined in applicable Canadian securities legislation) pertaining to a distribution of Securities, and filed by the
Company after the date of the Prospectus Supplement for the distribution of such Securities and before the termination of the distribution
of such Securities, will be deemed to be incorporated by reference in that Prospectus Supplement for the purposes of the distribution
of Securities to which the Prospectus Supplement pertains.
AVAILABLE
INFORMATION
In addition to our continuous
disclosure obligations under the securities laws of the provinces and territories of Canada, we are subject to the informational requirements
of the Exchange Act and in accordance therewith file reports and other information with the SEC. Under the MJDS, such reports and other
information may be prepared in accordance with the disclosure requirements of Canada, which requirements are different from those of the
United States. As a foreign private issuer, the Company is exempt from the rules under the Exchange Act prescribing the furnishing
and content of proxy statements, and the Company’s officers and directors are exempt from the reporting and short swing profit recovery
provisions contained in Section 16 of the Exchange Act. The Company’s reports and other information filed or furnished with
or to the SEC are electronically available from EDGAR at www.sec.gov.
The Company has filed with
the SEC a registration statement on Form F-10 under the United States Securities Act of 1933, as amended, with respect to the Securities.
This Prospectus, which forms a part of the registration statement, does not contain all of the information set forth in the registration
statement, certain items of which are contained in the exhibits to the Registration Statement as permitted or required by the rules and
regulations of the SEC. Items of information omitted from this Prospectus but contained in the Registration Statement will be available
on the SEC’s website at www.sec.gov.
ENFORCEABILITY
OF CERTAIN CIVIL LIABILITIES AND AGENT FOR SERVICE OF PROCESS
Purchasers are advised
that it may not be possible for investors to enforce judgments obtained in Canada against any person that resides outside of Canada, even
if the party has appointed an agent for service of process.
Your ability to enforce civil
liabilities under United States federal securities laws may be affected adversely because: (i) the Company is governed by the CBCA;
(ii) the officers, all except one of the directors and some of the experts named in this Prospectus are not residents of the United
States; and (iii) certain of the Company’s assets and all or a substantial portion of the assets of such persons are located
outside of the United States. The Company has appointed an agent for service of process in the United States, but it may be difficult
for investors who reside in the United States to effect service of process upon the Company or these persons in the United States, or
to enforce a U.S. court judgment predicated upon the civil liability provisions of the U.S. federal securities laws against the Company
or any of these persons. There is substantial doubt whether an action could be brought in Canada in the first instance predicated solely
upon U.S. federal securities laws.
The Company will file with
the SEC, concurrently with the registration statement on Form F-10 of which this Prospectus forms a part, an appointment of agent
for service of process on Form F-X. Under the Form F-X, the Company will appoint CT Corporation System, with an address at 1015
15th Street N.W., Suite 1000, Washington, DC, 20005, as its agent for service of process in the United States in connection
with any investigation or administrative proceeding conducted by the SEC, and any civil suit or action brought against or involving the
Company in a United States court arising out of or related to or concerning the offering of Securities under the registration statement
on Form F-10.
Dr. Volker Berl, a
director of the Company, and Marek Dworzanowski, Rodney Breuer and Trotter Hunt, each a “qualified person” under NI 43-101
who has prepared or supervised the preparation of certain scientific and technical information contained or incorporated by reference
in this Prospectus, reside outside of Canada and have appointed Cassels Brock & Blackwell LLP, Suite 2200, 885 West Georgia
Street, Vancouver, British Columbia, V6C 3E8 as agent for service of process in Canada.
THE
COMPANY
The Company was incorporated
under the laws of the Province of British Columbia on August 14, 1998 under the name “Tango Capital Corp.” On April 7,
1999, the Company changed its name to “Patriot Capital Corp.” and to “Patriot Petroleum Corp.” effective March 5,
2002. At its annual general meeting held on November 3, 2016, the shareholders of the Company approved the change of name of the
Company to “Standard Lithium Ltd.” and the continuance of the Company from the Business Corporations Act (British Columbia)
to the CBCA.
The Company’s registered
office is located at Suite 2200, 885 West Georgia Street, Vancouver, British Columbia, V6C 3E8. The Company’s head office is
located at Suite 1625, 1075 West Georgia Street, Vancouver, British Columbia, V6E 3C9.
BUSINESS
OF THE COMPANY
The Company is an innovative
technology and lithium development company focused on the sustainable development of a portfolio of lithium-brine bearing properties in
the United States utilizing scalable, fully integrated start to finish Direct Lithium Extraction (“DLE”) and purification
technologies.
The Company’s flagship
projects, the LANXESS Property Project (as defined below) and the South West Arkansas Project (as defined below), are located in southern
Arkansas near the Louisiana stateline. The Company is focused on the evaluation and testing of commercial lithium extraction and purification
from brine sourced from the Smackover Formation on approximately 180,000 acres of leases across these two projects.
The Company’s most advanced
project is the LANXESS Property Project, a brownfield project consisting of 150,000 acres and being developed in partnership with specialty
chemicals company, LANXESS Corporation (“LANXESS”). LANXESS operates the largest brine extraction and processing operations
in southern Arkansas, that includes three operating brine processing facilities – the South, West and Central plants. Each plant
has its own brine supply, disposal and pipeline network and bromine processing (separation) infrastructure. The Company operates its first-of-a-kind
industrial-scale DLE demonstration plant (the “Demonstration Plant”) at LANXESS’ South plant in southern Arkansas
(the “LANXESS Property Project”). The Demonstration Plant is being used for proof-of-concept and commercial feasibility
studies.
The Company is also pursuing
the resource development of over 27,000 acres of separate brine leases located in southwest Arkansas (the “South West Arkansas
Project” (formerly known as the “TETRA Project”), and together with the LANXESS Property Project, the “Arkansas
Lithium Projects”). The Company has identified a number of highly prospective
lithium brine project areas in the Smackover Formation in East Texas and began an extensive brine leasing program in the key project areas.
In addition, the Company also has an interest in certain mineral leases located in the Mojave Desert in San Bernardino County, California.
The Company considers the
LANXESS Property Project and the South West Arkansas Project to be separate and independent projects on the basis that they are not contiguous
or located within immediate proximity of each other, do not share common ownership and are unlikely to be developed using common infrastructure
or financing. The Company anticipates any decision with respect to commercial development of the LANXESS Property Project and the South
West Arkansas Project will be made independently.
Project Overview
Arkansas Lithium Projects
The Arkansas Lithium Projects
consists of two independent development properties: the LANXESS Property Project and the South West Arkansas Project. The South West Arkansas
Project is maintained pursuant to an option agreement dated December 29, 2017 between Tetra Technologies Inc. (the “TETRA”)
and the Company (the “TETRA 1st Option Agreement”) to acquire certain rights to conduct brine exploration and production
and lithium extraction activities on approximately 27,262 net acres of brine leases and deeds located in Columbia and Lafayette Counties,
Arkansas. The second, the LANXESS Property Project, is maintained pursuant to a memorandum of understanding dated May 4, 2018 (“LANXESS
MOU”) and subsequent joint venture term sheet dated November 9, 2018 with LANXESS, regarding the testing and proving of
commercial viability of lithium extraction from brine that is produced as part of LANXESS’ bromine extraction business at its three
facilities in Union County, southern Arkansas.
Under the TETRA 1st Option
Agreement, the Company is required to pay additional annual payments of US$1,000,000 by each annual anniversary date beginning on the
date that is 48 months following the date of the TETRA 1st Option Agreement, until the earlier of the expiration of the Exploratory Period
(as defined therein) or, if the Company exercises the option, the Company beginning payment of the Royalty (as defined therein). During
the Lease Period (as defined therein), at any time following the commencement of Commercial Production 14 (as defined therein), the Company
agreed to pay a royalty of 2.5% (minimum royalty US$1,000,000) to TETRA.
All of the Company’s
activities in southern Arkansas relate to brine leases that overlie the Smackover Formation in a region with a long history of commercial
scale brine processing. Historical published brine data and current unpublished brine data from within and adjacent to the Company’s
two areas of interest lead the Company to believe that lithium-bearing brines are present.
The South West Arkansas Project
brine lease area has been historically drilled for oil and gas exploration, and approximately 2,041 exploration and production wells have
been completed in the Smackover Formation in or immediately adjacent to Company’s lease area. A portion of these wells had available
petro-physical logs of the Smackover Formation brine-bearing zone. On January 28, 2019, the Company announced a maiden inferred mineral
resource of 802,000 tonnes lithium carbonate equivalent (“LCE”) at the South West Arkansas Project. The South West
Arkansas Project resource was increased to 1,195,000 tonnes LCE at the inferred category on October 12, 2021 during the preliminary
economic assessment (“PEA”). Mineral resources are not mineral reserves and do not have demonstrated economic viability.
There is no guarantee that all or any part of the mineral resource will be converted into a mineral reserve. The resource is defined across
a total footprint of approximately 36,000 unitized acres, which is comprised over 800 separate brine leases and eight deeds.
On November 14, 2018,
the Company announced a maiden inferred resource of 3,086,000 tonnes LCE at its LANXESS Property Project. The LANXESS Property Project
resource was upgraded to 3,140,000 tonnes LCE at the indicated category on June 19, 2019 during the PEA. Mineral resources are not
mineral reserves and do not have demonstrated economic viability. There is no guarantee that all or any part of the mineral resource will
be converted into a mineral reserve. The resource is defined across a total footprint of approximately 150,000 acres, which is comprised
over 10,000 separate brine leases.
In Q1 2019 the Company undertook
minipilot scale process work, using tail brine collected from operating facilities in Southern Arkansas. This work provided the engineering
data for the design of the full-scale, continuously operated Demonstration Plant. The Company contracted Zeton Inc. (“Zeton”)
to build the Demonstration Plant. The Demonstration Plant was constructed by Zeton in three phases and the final modules of the Company’s
Demonstration Plant were transported to and installed at LANXESS’ South plant facility in southern Arkansas. The Demonstration Plant
is based on the Company’s proprietary LiSTR technology, that uses a solid sorbent material to selectively extract lithium from LANXESS’
tail brine. The Company and their contractors completed initial installation of the Demonstration Plant at LANXESS’ South plant
facility in southern Arkansas. This installation was completed in mid-October 2019. During November and December 2019,
a semi-permanent all-weather structure was installed to enclose the Demonstration Plant, and an office/control room and an analytical
laboratory were also installed.
On May 19, 2020, the
Company announced full-time operation of the Demonstration Plant. The plant is designed to process up to 50 USGPM of tail brine, extract
the lithium, with the aim of producing a high quality, concentrated lithium chloride intermediate product. This product can then be converted
into battery quality lithium carbonate, either via conventional OEM processes, or via the proprietary SiFT technology the Company is developing.
As of July 15, 2020, the Company’s SiFT pilot plant was operational and represents the next generation of lithium carbonate
crystallization, promising higher purities and more consistent product specifications, all requirements of the next generations of lithium-ion
batteries
On September 1, 2021,
the Company announced completion of the installation of the SiFT lithium carbonate plant, with all major connections made to the existing
plant and the installation of a new weatherproof enclosure.
On October 12, 2021,
the Company announced the results of a PEA and updated inferred mineral resource estimate on its South West Arkansas Project which were
later published in the South West Arkansas Technical Report, which is dated effective November 25, 2021 and was subsequently amended
and restated as of June 16, 2023, available under the Company’s SEDAR profile at www.sedar.com. The results of the
PEA led to the commencement of a pre-feasibility study (“PFS”) at the South West Arkansas Project on May 2, 2022.
On December 15, 2021,
the Company announced that it signed a letter of intent with Koch Engineered Solutions for support with pre-front end engineering design
at the Company’s proposed first commercial plant located at the LANXESS facility in southern Arkansas. On January 25, 2022,
the Company signed a letter of intent with Koch Minerals & Trading LLC for the purchase of lithium chemical offtake and the procurement
of key raw materials.
The Company also announced
that it had entered into an amended and restated memorandum of understanding dated February 23, 2022 (the “Amended and Restated
MOU”) with LANXESS to streamline and expedite the development of the first commercial lithium project in Arkansas to be constructed
at the LANXESS Property Project in El Dorado, Arkansas. Under the Amended and Restated MOU, the Company will control all development of
the LANXESS Property Project leading up to and including the completion of the Front-End Engineering Design (“FEED”)
study. The Company will form an initially wholly-owned company (the “Project Company”) which will own 100% of the LANXESS
Property Project during pre-FEED and FEED engineering studies and the FEED engineering will be used to produce a definitive feasibility
study (“DFS”). Upon completion of the DFS, LANXESS has the option to acquire an equity interest of up to 49% and not
less than 30% in the Project Company, at a price equal to a ratable share of the Company’s aggregate investment in the Project Company.
The Company will also retain 100% ownership of its South West Arkansas Project, all of the proprietary extraction technologies, relevant
intellectual property and know-how.
Lithium Brine Processing Project
The Company has a technical
group that is engaged in continuously improving the Company’s core lithium extraction and refining technologies. Work has been completed
on five main fronts: (i) pre-treating the Company’s brines using modern filtration technologies; (ii) selectively extracting
lithium from pre-treated brine(s) to produce a concentrated lithium salt solution; (iii) purifying and crystallization of concentrated
lithium solutions to produce battery-grade lithium products; (iv) de-risking the technology by designing, building and operating
progressively larger pilot and pre-commercial plants; and (v) assisting in developing, refining and submitting patent applications
and other intellectual property (“IP”) protections. The Company currently holds substantial IP and has filed full,
non-provisional patent applications in several jurisdictions for its LiSTR (selective lithium extraction) technology, as well as full,
non-provisional patent applications for its SiFT lithium carbonate crystallization technology. This work is ongoing at the project site(s) and
at various other locations in the United States and Canada.
Carbon Capture Project
On September 14, 2021,
the Company announced that it was undertaking and funding a pilot project in southern Arkansas to test a novel carbon capture technology.
The pilot project is being conducted with the owner of the technology Aqualung Carbon Capture AS (“Aqualung”) and will
have a pilot carbon capture unit installed at a natural gas processing site in southern Arkansas owned and operated by Mission Creek Resources
LLC. The pilot project will take a slipstream of flue gas for processing through the Aqualung pilot unit. The resulting concentrated carbon
dioxide (“CO2”) stream will then be used in SLI’s ongoing research and development (“R&D”)
program to understand how CO2 may be permanently sequestered by the Company as part of normal brine reinjection activities. This R&D
program will then expand to consider how CO2 may also be used as an alternative reagent at several points in the Company’s process
flowsheet.
The Company believes the patent-protected
Aqualung carbon capture and storage (“CCS”) technology, developed by the Norwegian University of Science and Technology
(“NTNU”), is an innovative approach with the ability to deliver a cost effective, scalable, modular decarbonization
solution.
The Aqualung CCS technology
results from over 20 years of research at NTNU and is based on a membrane system that selectively extracts CO2 from a wide
range of CO2 sources emitted by hydrocarbon-burning energy sources. It produces a high purity CO2 gas stream that can either
be sequestered or reused.
The Company has invested US$2,500,000
in Aqualung as part of a US$10,000,000 strategic equity round that included Nasdaq listed, Golar LNG and London-based shipowner, Global
Ship Lease and Geneva-based metals trading services group, MKS Pamp. Dr. Andrew Robinson, President and COO of the Company also joined
the board of Aqualung.
California Lithium Project
The Company’s California
lithium property (the “California Lithium Project”) is located in San Bernardino County, California approximately 240
kilometers east-northeast of Los Angeles. The California Lithium Project comprises 55 (fifty-five) unpatented placer mining claims located
on Bristol Dry Lake adjacent to Amboy, California. The claims cover a total of approximately 4,020 acres on federal lands controlled by
the Bureau of Land Management. As public lands, there is free right of access within the restrictions of special land designations. Both
surface and mineral rights are held by the Federal government. The Company acquired its interests in the overall land package through
a series of commercial agreements.
Other
The Company is continuing
to review its options with respect to the current and other prospective properties.
Recent Developments
On September 7, 2022,
the Company announced that it had completed a competitive selection process for the FEED study and DFS for the first commercial lithium
project, LANXESS Project 1A, being developed at the LANXESS Property Project, and awarded the contract to OPD LLC, a Koch-owned business
based in Katy, Texas.
On October 18, 2022,
the Company announced that it had appointed PricewaterhouseCoopers LLP as its new independent registered public accounting firm, effective
October 17, 2022.
On October 27, 2022,
the Company announced that it had successfully commissioned a first-of-its-kind chloride-to-hydroxide conversion demonstration plant.
The plant was installed at the LANXESS Property Project and operates as a self-contained unit taking the lithium chloride feed produced
by the existing Demonstration Plant and converting this feed directly into a lithium hydroxide solution using a novel ion-exchange process.
The Company also announced that drilling work west of the South West Arkansas Project had commenced.
On November 1, 2022,
the Company announced that the United States Patent and Trademark Office (“USPTO”) had issued Notices of Allowance
for Standard Lithium’s first two U.S. patent applications, both titled “Process for Recovering Lithium from Brines”,
a novel and proprietary technique for continuous Direct Lithium Extraction from lithium brines. These U.S. patent applications are two
of the three pending U.S. patent applications for elements of SLI’s innovative DLE processes.
On December 6, 2022,
the Company announced the completion of all necessary agreements with LANXESS to secure access to the proposed commercial lithium plant
site at the LANXESS Property Project and to conduct all required fieldwork to support the DFS in respect of the LANXESS Property Project.
On December 29, 2022,
the Company announced that the USPTO issued a Notice of Allowance for Standard Lithium’s third U.S. parent application titled “Process
for Recovering Lithium from Brines”.
On January 16, 2023,
Claudia D’Orazio and Anca Rusu were appointed to the Board of Directors of the Company.
On January 31, 2023,
the Company announced it had successfully installed its carbon capture pilot plant in Southern Arkansas to assess sustainable production
practices in collaboration with its investment partner, Aqualung. The plant will test cutting-edge carbon capture technology to inform
and support the Company’s efforts to minimize CO2 emissions at future production facilities.
On March 20, 2023, the
Company announced commencement of a drilling program at its South West Arkansas Project to support its upcoming PFS by informing the resource
definition, de-risking the resource estimate, providing additional porosity and permeability data through the entire thickness of the
productive zones in the Smackover Formation, and optimizing production-wellfield design. The drilling program covers two new locations
and three re-entries of pre-existing plugged and abandoned oil and gas wells. When complete, the PFS will provide an updated view of project
feasibility and economics.
On March 28, 2023, the
Company announced drilling and sampling results from East Texas, an area of the Smackover Formation in which it had done extensive brine
leasing in prospective project areas. The drilling samples confirmed the highest-grade lithium brine in North America to the best of the
Company’s knowledge, with a grade of 634 mg/L lithium. In the Company’s experience, higher grade lithium in brine used for
DLE typically lowers capital expenditures and operating costs.
On April 24, 2023, the
Company issued 400,000 Common Shares as partial consideration for the acquisition of the Bristol Dry Lake Project pursuant to the option
agreement as between the Company and TY & Sons Explorations (Nevada), Inc and Nevada Alaska Mining Company Inc.
On May 30, 2023, the
Company announced the engagement of BNP Paribas as exclusive financial advisor to the Company in connection with limited recourse debt
financing.
Detailed Project Descriptions
For additional information
with respect to the Arkansas Lithium Projects, the Company’s other mineral interests and the business of the Company, readers are
referred to the Company’s then-current AIF, annual management’s discussion and analysis and interim management’s discussion
and analysis, if applicable, all of which are incorporated by reference herein, and the other documents incorporated by reference herein.
See also “Risk Factors” in this Prospectus and “Risk Factors” in the Company’s then-current AIF.
Summary of Quarterly Results
The following summary should
be read in conjunction with the Company’s Management’s Discussion and Analysis for the three and nine months ended March 31,
2023 and the unaudited condensed consolidated interim financial statements and related notes thereto of the Company for the three and
nine months ended March 31, 2023.
The following table presents
selected unaudited consolidated financial information for each of the eight most recently completed quarters ending as at March 31,
2023, derived from financial statements prepared in accordance with IFRS, as applicable to interim financial reporting, including IAS
34, stated in Canadian dollars:
| Quarter Ended | |
Total Revenues | |
Net Income/(Loss) | | |
Earnings/(Loss)
Per Share | |
| June 30, 2021 | |
$Nil | |
$ | (7,080,345 | ) | |
$ | (0.05 | ) |
| September 30, 2021 | |
$Nil | |
$ | (9,358,988 | ) | |
$ | (0.07 | ) |
| December 31, 2021 | |
$Nil | |
$ | (8,567,905 | ) | |
$ | (0.06 | ) |
| March 31, 2022 | |
$Nil | |
$ | (13,740,984 | ) | |
$ | (0.08 | ) |
| June 30, 2022 | |
$Nil | |
$ | (6,432,435 | ) | |
$ | (0.04 | ) |
| September 30, 2022 | |
$Nil | |
$ | (1,558,454 | ) | |
$ | (0.01 | ) |
| December 31, 2022 | |
$Nil | |
$ | (6,880,335 | ) | |
$ | (0.04 | ) |
| March 31, 2023 | |
$Nil | |
$ | (7,100,612 | ) | |
$ | (0.04 | ) |
Developments Following the Date of the Prospectus
If, after the date of this
Prospectus, the Company is required by Section 4.2 of NI 43-101 to file a technical report to support scientific or technical information
that relates to a mineral project on a property that is material to the Company, the Company will file such technical report in accordance
with Section 4.2(5)(a)(i) of NI 43-101 as if the words “preliminary short form prospectus” refer to “shelf
prospectus supplement”.
CONSOLIDATED
CAPITALIZATION
As at April 30, 2023
there were 172,552,197 Common Shares issued and outstanding, as well as 3,462,502 Warrants, 8,170,000 Options, and 1,991,004 DSUs outstanding.
As at June 30, 2023, there were 172,752,197 Common Shares issued and outstanding, as well as 3,462,502 Warrants, 7,970,000 Options,
and 1,991,004 DSUs outstanding.
On April 11, 2023, the
Company granted a total of 3,750,000 Options and 1,991,004 DSUs to the directors and management of the Company in accordance with the
amended and restated rolling stock option and the long-term incentive plans adopted by shareholders of the Company at the recent annual
general and special meeting held on April 4, 2023.
Other than as noted above,
there have been no material changes in our share or loan capital, on a consolidated basis, since March 31, 2023.
The applicable Prospectus
Supplement will describe any material change in, and the effect of such material change on, the share and loan capital of the Company
since the date of the Company’s financial statements for its most recently completed financial period included in such Prospectus
Supplement, including any material change that will result from the issuance of Securities pursuant to such Prospectus Supplement.
EARNINGS
COVERAGE RATIOS
Earnings coverage ratios will
be provided in the applicable Prospectus Supplement with respect to any issuance of Preferred Shares or Debt Securities (having a term
to maturity in excess of one year) pursuant to this Prospectus, as required by applicable securities laws.
DESCRIPTION
OF COMMON SHARES
Common Shares
The Company is authorized
to issue an unlimited number of Common Shares without par value of which, as at June 30, 2023, 172,752,197 Common Shares are issued
and outstanding. All rights and restrictions in respect of the Common Shares are set out in the Company’s constating documents and
the CBCA and its regulations. The Common Shares have no pre-emptive, subscription, redemption or conversion rights. Neither the CBCA nor
the constating documents of the Company impose restrictions on the transfer of Common Shares on the register of the Company, provided
that the Company receives the certificate representing the Common Shares to be transferred together with a duly endorsed instrument of
transfer and payment of any fees and taxes which may be prescribed by the Board of Directors from time to time. There are no sinking fund
provisions in relation to the Common Shares and they are not liable to further calls or assessment by the Company. The CBCA and the Company’s
constating documents provide that the rights and restrictions attached to any class of shares may not be modified, amended or varied unless
consented to by special resolution passed by not less than two-thirds of the votes cast in person or by proxy by holders of shares of
that class.
The holders of the Common
Shares are entitled to: (i) notice of and to attend any meetings of shareholders and shall have one vote per Common Share at any
meeting of shareholders of the Company; (ii) dividends, if as and when declared by the Board of Directors; and (iii) upon liquidation,
dissolution or winding up of the Company, on a pro rata basis, the net assets of the Company after payment of debts and other liabilities,
in each case subject to the rights, privileges, restrictions and conditions attaching to any other series or class of shares ranking senior
in priority.
Dividend Policy
The Company has no fixed dividend
policy and the Company has not declared any dividends on its Common Shares since its incorporation. The Company anticipates that all available
funds will be used to undertake exploration and development programs on its mineral properties as well as for the acquisition of additional
mineral properties. The payment of dividends in the future will depend, among other things, upon the Company’s earnings, capital
requirements and operating and financial condition. Generally, dividends can only be paid if a corporation has retained earnings. There
can be no assurance that the Company will generate sufficient earnings to allow it to pay dividends.
DESCRIPTION
OF PREFERRED SHARES
The Company is authorized
to issue an unlimited number of Preferred Shares, without par value of which, as at June 30, 2023, nil Preferred Shares are issued
and outstanding. The particular class of Preferred Shares and the particular terms and provisions of any series of such class of Preferred
Shares offered by any Prospectus Supplement will be described in the Prospectus Supplement filed in respect of such series of Preferred
Shares.
DESCRIPTION
OF DEBT SECURITIES
The following sets forth certain
general terms and provisions of the Debt Securities. The particular terms and provisions of a series of Debt Securities offered pursuant
to this Prospectus will be set forth in the applicable Prospectus Supplement, and the extent to which the general terms and provisions
described below may apply to such Debt Securities, will be described in the applicable Prospectus Supplement. The Company may issue Debt
Securities, separately or together, with Common Shares, Preferred Shares, Subscription Receipts, Warrants or Units or any combination
thereof, as the case may be.
The Debt Securities will
be issued in one or more series under an indenture to be entered into between the Company and one or more Trustees that will be named
in a Prospectus Supplement for a series of Debt Securities. To the extent applicable, the indenture will be subject to and governed by
the United States Trust Indenture Act of 1939, as amended. A copy of the form of the indenture to be entered into will be filed with
the SEC as an exhibit to the registration statement and will be filed with the securities commissions or similar authorities in Canada
when it is entered into. The description of certain provisions of the indenture in this section do not purport to be complete and are
subject to, and are qualified in their entirety by reference to, the provisions of the indenture. Terms used in this summary that are
not otherwise defined herein have the meaning ascribed to them in the indenture. A copy of any such indenture will be available on SEDAR
at www.sedar.com.
The particular terms relating
to Debt Securities offered by a Prospectus Supplement will be described in the related Prospectus Supplement. This description may include,
but may not be limited to, any of the following, if applicable:
| · | the specific designation of the Debt Securities; |
| · | any limit on the aggregate principal amount of the Debt Securities; the date or dates, if any, on which
the Debt Securities will mature and the portion (if less than all of the principal amount) of the Debt Securities to be payable upon declaration
of acceleration of maturity; |
| · | the rate or rates (whether fixed or variable) at which the Debt Securities will bear interest, if any,
the date or dates from which any such interest will accrue and on which any such interest will be payable and the record dates for any
interest payable on the Debt Securities that are in registered form; |
| · | the terms and conditions under which we may be obligated to redeem, repay or purchase the Debt Securities
pursuant to any sinking fund or analogous provisions or otherwise; |
| · | the terms and conditions upon which we may redeem the Debt Securities, in whole or in part, at our option; |
| · | the covenants applicable to the Debt Securities; |
| · | the terms and conditions for any conversion or exchange of the Debt Securities for any other securities; |
| · | the extent and manner, if any, to which payment on or in respect of the Debt Securities of the series
will be senior or will be subordinated to the prior payment of other liabilities and obligations of the Company; |
| · | whether the Debt Securities will be secured or unsecured; |
| · | whether the Debt Securities will be issuable in registered form or bearer form or both, and, if issuable
in bearer form, the restrictions as to the offer, sale and delivery of the Debt Securities which are in bearer form and as to exchanges
between registered form and bearer form; |
| · | whether the Debt Securities will be issuable in the form of registered global securities (“Global
Securities”), and, if so, the identity of the depositary for such registered Global Securities; |
| · | the denominations in which registered Debt Securities will be issuable, if other than denominations of
$1,000 and integral multiples of $1,000 and the denominations in which bearer Debt Securities will be issuable, if other than denominations
of $5,000; |
| · | each office or agency where payments on the Debt Securities will be made and each office or agency where
the Debt Securities may be presented for registration of transfer or exchange; |
| · | if other than United States dollars, the currency in which the Debt Securities are denominated or the
currency in which we will make payments on the Debt Securities; |
| · | material Canadian federal income tax consequences and United States federal income tax consequences of
owning the Debt Securities; |
| · | any index, formula or other method used to determine the amount of payments of principal of (and premium,
if any) or interest, if any, on the Debt Securities; and |
| · | any other terms, conditions, rights or preferences of the Debt Securities which apply solely to the Debt
Securities. |
If we denominate the purchase
price of any of the Debt Securities in a currency or currencies other than United States dollars or a non-United States dollar unit or
units, or if the principal of and any premium and interest on any Debt Securities is payable in a currency or currencies other than United
States dollars or a non-United States dollar unit or units, we will provide investors with information on the restrictions, elections,
general tax considerations, specific terms and other information with respect to that issue of Debt Securities and such non-United States
dollar currency or currencies or non-United States dollar unit or units in the applicable Prospectus Supplement.
Each series of Debt Securities
may be issued at various times with different maturity dates, may bear interest at different rates and may otherwise vary.
The terms on which a series
of Debt Securities may be convertible into or exchangeable for Common Shares or other securities of the Company will be described in the
applicable Prospectus Supplement. These terms may include provisions as to whether conversion or exchange is mandatory, at the option
of the holder or at the option of the Company, and may include provisions pursuant to which the number of Common Shares or other securities
to be received by the holders of such series of Debt Securities would be subject to adjustment.
To the extent any Debt Securities
are convertible into Common Shares or other securities of the Company, prior to such conversion the holders of such Debt Securities will
not have any of the rights of holders of the securities into which the Debt Securities are convertible, including the right to receive
payments of dividends or the right to vote such underlying securities.
This Prospectus does not qualify
for issuance Debt Securities, or Securities convertible into or exchangeable for Debt Securities, in respect of which the payment of principal
and/or interest may be determined, in whole or in part, by reference to one or more underlying interests including, for example, an equity
or debt security, a statistical measure of economic or financial performance including, but not limited to, any currency, consumer price
or mortgage index, or the price or value of one or more commodities, indices or other items, or any other item or formula, or any combination
or basket of the foregoing items. For greater certainty, this Prospectus may qualify for issuance Debt Securities, or Securities convertible
into or exchangeable for Debt Securities, in respect of which the payment of principal and/or interest may be determined, in whole or
in part, by reference to published rates of a central banking authority or one or more financial institutions, such as a prime rate or
bankers’ acceptance rate, or to recognized market benchmark interest rates such as CORRA or a United States federal funds rate.
DESCRIPTION
OF SUBSCRIPTION RECEIPTS
The following sets forth certain
general terms and provisions of the Subscription Receipts. The Company may issue Subscription Receipts, which may be offered separately
or together with Common Shares, Preferred Shares, Debt Securities, Warrants or Units, as the case may be, or may be converted into or
exchanged for Common Shares, Preferred Shares, Debt Securities, Warrants, Units and/or other securities upon the satisfaction of certain
conditions. The particular terms and provisions of the Subscription Receipts offered pursuant to this Prospectus will be set forth in
the applicable Prospectus Supplement, and the extent to which the general terms and provisions described below may apply to such Subscription
Receipts, will be described in such Prospectus Supplement.
The Subscription Receipts
will be issued under one or more subscription receipt agreements, in each case between the Company and a subscription receipt agent determined
by the Company. A copy of any such subscription receipt agreement will be available on SEDAR at www.sedar.com.
The Prospectus Supplement
relating to any Subscription Receipts being offered will include specific terms and provisions of the Subscription Receipts being offered
thereby. These terms and provisions will include some or all of the following:
| · | the name or designation of the Subscription Receipts; |
| · | the number of Subscription Receipts being offered; |
| · | the price at which Subscription Receipts will be offered and whether the price is payable in instalments; |
| · | the terms, conditions and procedures pursuant to which the holders of Subscription Receipts will become
entitled to receive Common Shares, Preferred Shares, Debt Securities, Warrants, Units and/or other securities, as the case may be, and
the consequences of such terms and conditions not being satisfied; |
| · | the number of Common Shares, Preferred Shares, Debt Securities, Warrants, Units and/or other securities
that may be issued or delivered upon the conversion or exchange of each Subscription Receipt; |
| · | the identity of the Subscription Receipt agent; |
| · | the manner in which funds will be invested and held, and procedures for the release of funds (including
interest or other income earned on funds) pending satisfaction or non-satisfaction of the escrow release or other conditions; |
| · | any entitlements of the holders of Subscription Receipts to receive distributions declared on Common Shares
or distribution-equivalent payments; |
| · | the designation and terms of any other Securities with which the Subscription Receipts will be offered,
if any, and the number of Subscription Receipts that will be offered with each Security; |
| · | the dates or periods during which the Subscription Receipts may be converted or exchanged into Common
Shares, Preferred Shares, Debt Securities, Warrants, Units and/or other securities; |
| · | whether such Subscription Receipts will be listed on any securities exchange; |
| · | material Canadian federal income tax consequences of owning, holding or disposing of the Subscription
Receipts, if any; |
| · | if applicable, whether the Subscription Receipts shall be in registered or unregistered form; |
| · | if applicable, that the Subscription Receipts shall be issuable in whole or in part as one or more Global
Securities and, in such case, the depositary or depositaries for such Global Securities in whose name the Global Securities will be registered; |
| · | any terms, procedures and limitations relating to the transferability, exchange or conversion of the Subscription
Receipts; |
| · | any other rights, privileges, restrictions and conditions attaching to the Subscription Receipts; and |
| · | any other material terms and conditions of the Subscription Receipts. |
Prior to the exchange of their
Subscription Receipts, holders of Subscription Receipts will not have any of the rights of holders of the securities to be received on
the exchange of the Subscription Receipts.
Subscription Receipts, if
issued in registered form, will be exchangeable for other Subscription Receipts of the same tenor, at the office indicated in the Prospectus
Supplement. No charge will be made to the holder for any such exchange or transfer except for any tax or government charge incidental
thereto.
DESCRIPTION
OF WARRANTS
The following sets forth certain
general terms and provisions of the Warrants. The Company will deliver an undertaking to the securities regulatory authority in each of
the provinces and territories of Canada) pursuant to which the Company will agree not to distribute pursuant to this Prospectus, as it
may be supplemented or amended, any Warrants that are “novel” (as such term is defined in NI 44-102), including Warrants that
are convertible into or exchangeable or exercisable for securities of an entity other than the Company or its affiliates, unless the applicable
Prospectus Supplement(s) pertaining to the distribution of the novel securities is either (a) first approved for filing by the
securities commissions or similar regulatory authorities in each of the provinces and territories of Canada) where such novel securities
are distributed, or (b) 10 business days have elapsed since the date of delivery to the applicable securities regulatory authority
of the draft Prospectus Supplement in substantially final form and the applicable securities regulatory authority has not provided written
comments on the draft Prospectus Supplement.
The Company may issue Warrants
for the purchase of Common Shares and/or or other securities. The particular terms and provisions of the Warrants offered pursuant to
this Prospectus will be set forth in the applicable Prospectus Supplement, and the extent to which the general terms and provisions described
below may apply to such Warrants, will be described in such Prospectus Supplement.
Warrants may be offered separately
or together with Common Shares, Preferred Shares, Debt Securities, Subscription Receipts or other Securities offered by any Prospectus
Supplement and may be attached to, or separate from, any such offered Securities. Each series of Warrants will be issued under one or
more warrant indentures, in each case between the Company and a warrant agent determined by the Company. Each such warrant indenture,
as supplemented or amended from time to time, will set out the terms and conditions of the applicable Warrants. The statements in this
Prospectus relating to any warrant indenture and the Warrants to be issued under it are summaries of anticipated provisions of an applicable
warrant indenture and do not purport to be complete and are subject to, and are qualified in their entirety by reference to, all provisions
of such warrant indenture, as applicable. A copy of any such warrant indenture will be available on SEDAR at www.sedar.com.
The Prospectus Supplement
relating to any Warrants being offered will include specific terms and provisions of the Warrants being offered thereby. These terms and
provisions will include some or all of the following:
| · | the designation of the Warrants; |
| · | the aggregate number of Warrants offered and the offering price; |
| · | the designation, number and terms of the Common Shares and/or other Securities purchasable upon exercise
of the Warrants, and procedures that will result in the adjustment of those numbers; |
| · | the exercise price of the Warrants; |
| · | the dates or periods during which the Warrants are exercisable; |
| · | the designation and terms of any Securities with which the Warrants are issued; |
| · | if the Warrants are issued as a Unit with another Security, the date on and after which the Warrants and
the other Security will be separately transferable; |
| · | the currency or currency unit in which the exercise price is denominated; |
| · | whether such Warrants will be subject to redemption or call, and if so, the terms of such redemption or
call provisions; |
| · | any minimum or maximum amount of Warrants that may be exercised at any one time; |
| · | whether such Warrants will be listed on any securities exchange; |
| · | whether the Warrants will be issued in fully registered or global form; |
| · | any terms, procedures and limitations relating to the transferability, exchange or exercise of the Warrants; |
| · | any other rights, privileges, restrictions and conditions attaching to the Warrants; and |
| · | any other material terms and conditions of the Warrants. |
Prior to the exercise of their
Warrants, holders of Warrants will not have any of the rights of holders of the Securities issuable on exercise of the Warrants.
Warrants, if issued in registered
form, will be exchangeable for other Warrants of the same tenor, at the office indicated in the Prospectus Supplement. No charge will
be made to the holder for any such exchange or transfer except for any tax or government charge incidental thereto.
DESCRIPTION
OF UNITS
The following sets forth certain
general terms and provisions of the Units. The Company may issue Units comprising any combination of the other Securities described in
this Prospectus. Each Unit will be issued so that the holder of the Unit is also the holder of each Security included in the Unit. Thus,
the holder of a Unit will have the rights and obligations of a holder of each Security comprising the Unit. The agreement, if any, under
which a Unit is issued may provide that the Securities comprising the Unit may not be held or transferred separately, at any time or at
any time before a specified date.
The Prospectus Supplement
relating to any Units being offered will include specific terms and provisions of the Units being offered thereby. These terms and provisions
will include some or all of the following:
| · | the designation and terms of the Units and of the Securities comprising the Units, including whether and
under what circumstances those Securities may be held or transferred separately; |
| · | any provisions for the issuance, payment, settlement, transfer or exchange of the Units or of the Securities
comprising the Units; |
| · | how, for income tax purposes, the purchase price paid for the Units is to be allocated among the component
Securities; |
| · | the currency or currency units in which the Units may be purchased, and the underlying Securities denominated; |
| · | whether such Units will be listed on any securities exchange; |
| · | whether the Units and the underlying Securities will be issued in fully registered or global form; |
| · | any other rights, privileges, restrictions and conditions attaching to the Units; and |
| · | any other materials terms and conditions of the Units and the underlying Securities. |
The preceding description
and any description of Units in the applicable Prospectus Supplement does not purport to be complete and is subject to and is qualified
in its entirety by reference to, if applicable, the unit agreement, collateral arrangements and depositary arrangements relating to such
Units.
PLAN
OF DISTRIBUTION
The Company may, during the
25-month period that this Prospectus remains effective, offer for sale and issue, as applicable, the Securities, separately or together:
(i) through underwriters, dealers or agents purchasing as principal or acting as agent; (ii) directly to one or more purchasers,
including sales upon the exercise of conversion or exchange rights attaching to convertible or exchangeable securities held by the purchaser;
or (iii) through a combination of any of these methods of sale. Securities sold to the public pursuant to this Prospectus may be
offered and sold exclusively in Canada or the United States, or in both jurisdictions. The Prospectus Supplement relating to each offering
of Securities will indicate the jurisdiction or jurisdictions in which such offering is being made to the public, identify each underwriter,
dealer or agent, as the case may be, and will also set forth the terms of that offering, including the purchase price or prices of the
Securities (or the manner of determination thereof if offered on a non- fixed price basis), the proceeds to the Company and any underwriters’,
dealers’ or agents’ fees, commissions or other items constituting underwriters’ or agents’ compensation. Only
underwriters, dealers or agents so named in the applicable Prospectus Supplement are deemed to be underwriters, dealers or agents, as
the case may be, in connection with the Securities offered thereby. A Prospectus Supplement may provide that the Securities sold thereunder
will be “flow-through” securities.
The Securities may be sold,
from time to time in one or more transactions at a fixed price or prices which may be changed or at market prices prevailing at the time
of sale, at prices related to such prevailing market prices or at negotiated prices, including sales in transactions that are deemed to
be “at-the-market distributions” as defined in NI 44-102, including sales made directly on the TSXV, the NYSE American or
other existing trading markets for the securities. The prices at which the Securities may be offered may vary between purchasers and during
the period of distribution.
If, in connection with the
offering of Securities at a fixed price or prices, the underwriters have made a bona fide effort to sell all of the Securities at the
initial offering price fixed in the applicable Prospectus Supplement, the offering price may be decreased and thereafter further changed,
from time to time, to an amount not greater than the initial offering price fixed in such Prospectus Supplement, in which case the compensation
realized by the underwriters will be decreased by the amount that the aggregate price paid by purchasers for the Securities is less than
the gross proceeds paid by the underwriters to the Company.
Any offering of Preferred
Shares, Debt Securities, Subscription Receipts, Warrants or Units will be a new issue of Securities with no established trading market.
Unless otherwise specified in the applicable Prospectus Supplement, Preferred Shares, Debt Securities, Subscription Receipts, Warrants
and Units will not be listed on any securities exchange. There is no market through which the Securities, other than the Common Shares,
may be sold and purchasers may not be able to resell such Securities purchased under this Prospectus and any applicable Prospectus Supplement.
This may affect the pricing of such Securities in the secondary market, the transparency and availability of trading prices, the liquidity
of such Securities, and the extent of issuer regulation. See “Risk Factors”.
Underwriters, dealers or agents
may make sales of Securities in privately negotiated transactions and/or any other method permitted by law, including sales deemed to
be an “at-the-market distribution” and subject to limitations imposed by and the terms of any regulatory approvals required
and obtained under, applicable Canadian securities laws, which includes sales made directly on an existing trading market for the Common
Shares, or sales made to or through a market maker other than on an exchange. In connection with any offering of Securities, except with
respect to “at-the-market distributions” or as otherwise set out in a Prospectus Supplement relating to a particular offering
of Securities, the underwriters, dealers or agents may over-allot or effect transactions which are intended to stabilize or maintain the
market price of the offered Securities at a level other than that which might otherwise prevail in the open market. Such transactions
may be commenced, interrupted or discontinued at any time. No underwriter, dealer or agent involved in an “at-the-market distribution”,
no affiliate of such an underwriter, dealer or agent and no person or company acting jointly or in concert with such an underwriter, dealer
or agent may, in connection with the distribution, enter into any transaction that is intended to stabilize or maintain the market price
of the Securities distributed, including selling an aggregate number or principal amount of Securities that would result in the underwriter,
dealer or agent creating an over-allocation position in the Securities distributed.
If underwriters or dealers
purchase Securities as principals, the Securities will be acquired by the underwriters or dealers for their own account and may be resold
from time to time in one or more transactions, including negotiated transactions, at a fixed offering price or at varying prices determined
at the time of sale. The obligations of the underwriters or dealers to purchase those Securities will be subject to certain conditions
precedent, and the underwriters or dealers will be obligated to purchase all the Securities offered by the Prospectus Supplement if any
of such Securities are purchased. If agents are used in an offering, unless otherwise indicated in the Prospectus Supplement, such agents
will be acting on a “best efforts” basis for the period of their appointment. Any offering price and any discounts or concessions
allowed or re-allowed or paid may be changed from time to time.
Under agreements which may
be entered into by the Company, underwriters, dealers and agents who participate in the distribution of Securities may be entitled to
indemnification by the Company against certain liabilities, including liabilities under securities legislation, or to contribution with
respect to payments which such underwriters, dealers or agents may be required to make in respect thereof. Such underwriters, dealers
and agents may be customers of, engage in transactions with, or perform services for, the Company in the ordinary course of business.
USE
OF PROCEEDS
Unless otherwise indicated
in a Prospectus Supplement, we currently expect to use the net proceeds from the sale of Securities to fund ongoing work programs to advance
the South West Arkansas Project, the LANXESS Property Project, the Demonstration Plant, the expansion in East Texas, for working capital
– meaning current assets minus current liabilities – and general corporate purposes, to repay indebtedness outstanding from
time to time and for discretionary capital programs. Specific information about the use of the net proceeds to the Company of any offering
of Securities under this Prospectus and the specific business objectives which the Company expects to accomplish with such proceeds will
be set forth in the applicable Prospectus Supplement relating to that offering of Securities.
In the next twelve months,
the business objectives of the Company are to continue advancement of the LANXESS Property Project and South West Arkansas Project, and
to secure additional brine leases and property rights throughout the Smackover Formation in Arkansas and Texas to provide the Company
with the flexibility for future development of direct lithium extraction methodologies. The following development milestones are necessary
to achieve these objectives, with the estimated costs of each as indicated:
| · | Completion of a PFS in respect of the South West Arkansas Project; $500,000 (Q3 2023); |
| · | Completion of a DFS and FEED study in respect of the LANXESS 1A Project; $2,500,000 (Q3/4 2023); |
| · | Completion of a DFS and FEED for the South West Arkansas Project (including some additional drilling);
$12,000,000 (ongoing through Q2 2024); |
| · | Acquisition of additional brine leases East Texas; $10,000,000 (ongoing through Q3 2024); |
| · | Drilling and resource development in East Texas ; $5,000,000 (ongoing through Q3 2024); and |
| · | Negotiation of LXS 1A project finance, finalise commercial agreements and LSTK/EPC pricing; $1,500,000
(ongoing through Q1 2024). |
There may be circumstances
where, based on results obtained or for other sound business reasons, a reallocation of funds may be necessary or prudent. Accordingly,
management of the Company will have broad discretion in the application of the net proceeds of an offering of Securities. The actual amount
that the Company spends in connection with each intended use of proceeds may vary significantly from the amounts specified in the applicable
Prospectus Supplement and will depend on a number of factors, including those referred to under “Risk Factors” in this Prospectus
and in the documents incorporated by reference herein and any other factors set forth in the applicable Prospectus Supplement. The Company
may invest funds which it does not immediately use. Such investments may include short-term marketable investment grade securities denominated
in Canadian dollars, United States dollars or other currencies. The Company may, from time to time, issue securities (including debt securities)
other than pursuant to this Prospectus.
Any specific allocation of
the net proceeds of an offering to a specific purpose will be determined at the time of the offering and will be described in the relevant
Prospectus Supplement. To date, the Company has not generated significant revenues from operations. The Company had negative operating
cash flows for the year ended June 30, 2022 and for the three and nine months ended March 31, 2023 and the Company may continue
to incur negative operating cash flows. As a result, the Company may need to allocate a portion of its existing working capital or a portion
of the proceeds of any offering of Securities to fund any such negative operating cash flow in future periods. See “Risk Factors
– Negative Operating Cash Flows”.
PRIOR
FINANCINGS
The Company completed an offering
of 13,480,083 Common Shares by way of non-brokered private placement on December 1, 2021. The net proceeds of the offering were approximately
US$95,000,000, after deducting fees associated with the offering. The Company did not previously disclose a budget for the utilization
of the proceeds of the offering, but did disclose that the proceeds were intended to be utilized to support the strategic development
goals of the Company, and to pursue the following objectives:
| · | Continue advancement of the first commercial project proposed for the LANXESS Property Project; |
| · | Accelerate and expand the continued development of the South West Arkansas Project; |
| · | Continue to develop and commercialize modern lithium extraction and processing technologies in collaboration
with Koch Engineered Solutions; and |
| · | Pursue strategic project acquisitions. |
As of the date of this Prospectus,
the Company continues to utilize the proceeds of the offering in the achievement of these objectives.
TRADING
PRICE AND VOLUME
The outstanding Common Shares
are listed and posted for trading in Canada on the TSXV and in the United States on the NYSE American under the symbol “SLI”,
and on the FRA under the symbol “S5L”. Trading prices and volumes of the Common Shares for the previous 12-month period will
be provided, as required, in each Prospectus Supplement.
PRIOR
SALES
Information in respect of
prior sales of Common Shares and other Securities distributed under this Prospectus and for securities that are convertible into or exchangeable
for Common Shares or such other Securities within the previous 12-month period will be provided, as required, in a Prospectus Supplement
with respect to the issuance of Common Shares and/or other Securities pursuant to such Prospectus Supplement.
CERTAIN
INCOME TAX CONSIDERATIONS
Owning any of the Securities
may subject holders to tax consequences. The applicable Prospectus Supplement may describe certain material Canadian federal income tax
considerations generally applicable to investors described therein of the acquisition, ownership and disposition of any Securities offered
thereunder. The applicable Prospectus Supplement may describe certain United States federal income tax considerations generally applicable
to investors described therein who are U.S. persons (within the meaning of the United States Internal Revenue Code of 1986, as amended)
of the acquisition, ownership and disposition of any Securities offered thereunder. Prospective investors should consult their own tax
advisors prior to deciding to purchase any of the Securities.
RISK
FACTORS
An investment in the Securities
is speculative and subject to a number of risks, including those set forth below and in the Company’s then-current AIF and in the
then-current management’s discussion and analysis for our most recently completed financial year and interim financial period, if
applicable. Additional risk factors relating to a specific offering of Securities will be described in the applicable Prospectus Supplement.
Prospective investors should
carefully consider these risks, in addition to the information contained and incorporated by reference herein and in the Prospectus Supplement
relating to an offering and the information incorporated by reference therein, before purchasing Securities. Some of the risk factors
described herein and in the documents incorporated by reference herein (including subsequently filed documents incorporated by reference
herein), including the applicable Prospectus Supplement are interrelated and, consequently, investors should treat such risk factors as
a whole. If any of the events identified in these risks and uncertainties were to actually occur, it could have a material adverse effect
on the business, assets, financial condition, results of operations or prospects of the Company. These are not the only risks and uncertainties
that the Company faces. Additional risks and uncertainties not presently known to the Company or that are currently considered immaterial
may also have a material adverse effect on the business, assets, financial condition, results of operations or prospects of the Company.
The Company cannot assure you that it will successfully address any or all of these risks. There is no assurance that any risk management
steps taken will avoid future loss due to the occurrence of the risks described in this Prospectus or the applicable Prospectus Supplement
or the documents incorporated by reference herein and therein or other unforeseen risks.
Liquidity and Capital Resources
At March 31, 2023, the
Company had a cash balance of $91,422,174, a working capital surplus of $88,678,997 and current obligations of $6,676,125. As at May 31,
2023, the Company had a cash balance of approximately $67,000,000, a working capital surplus of approximately $65,300,000 and current
obligations of approximately $9,300,000.
Historically, capital requirements
have been primarily funded through the sale of Common Shares. Factors that could affect the availability of financing include the progress
and results of ongoing exploration at the Company’s mineral properties, the state of international debt and equity markets and investor
perceptions and expectations of the global market for lithium and its derivatives. There can be no assurance that such financing will
be available in the amount required at any time or for any period or, if available, that it can be obtained on terms satisfactory to the
Company. Based on the amount of funding raised, the Company’s planned exploration or other work programs may be postponed, or otherwise
revised, as necessary.
There is No Market for the Securities
Unless otherwise specified
in the applicable Prospectus Supplement, the Preferred Shares, Debt Securities, Subscription Receipts, Warrants and Units will not be
listed on any securities exchange. There is no market through which the Securities, other than the Common Shares, may be sold and purchasers
may not be able to resell such Securities purchased under this Prospectus and any applicable Prospectus Supplement. This may affect the
pricing of such Securities in the secondary market, the transparency and availability of trading prices, the liquidity of such Securities,
and the extent of issuer regulation.
Dilution from Further Financings
The Company may need to raise
additional financing in the future through the issuance of additional equity securities or convertible debt securities. If the Company
raises additional funding by issuing additional equity securities or convertible debt securities, such financings may substantially dilute
the interests of shareholders of the Company and reduce the value of their investment and the value of the Company’s securities.
Active Liquid Market for Common Shares and
Market Price of Securities
There may not be an active,
liquid market for the Common Shares. There is no guarantee that an active trading market for the Common Shares will be maintained on the
TSXV and/or the NYSE American. Investors may not be able to sell their Common Shares quickly or at the latest market price if trading
in the Common Shares is not active.
Securities markets have a
high level of price and volume volatility, and the market price of securities of many companies have experienced wide fluctuations in
price which have not necessarily been related to the operating performance, underlying asset values or prospects of such companies. Securities
of companies with small capitalization have experienced substantial volatility in the past, often based on factors unrelated to the financial
performance or prospects of the companies involved. These risk factors included global economic developments and market perceptions of
the attractiveness of certain industries. There can be no assurance that continuing fluctuations in price will not occur. In addition,
from time to time, the stock market experiences significant price and volume volatility that may affect the market price of the Common
Shares for reasons unrelated to the Company’s performance.
Other factors unrelated to
the performance of the Company that may have an effect on the price of Common Shares include the following: lessening in trading volume
and general market interest in the Company’s securities may affect a purchaser’s ability to trade significant numbers of Common
Shares; and the size of the Company’s public float may limit the ability of some institutions to invest in the Company’s securities.
The price per Common Share may be adversely affected by a variety of factors relating to the Company’s business, including fluctuation
in the Company’s operating and financial results, the result of any public announcement made by the Company and the Company’s
failure to meet analysts’ expectations. Additionally, the value of the Common Shares is subject to market value fluctuations based
upon factors that influence the Company’s activity and changes in interest and currency rates.
The market value of the Common
Shares may also be affected by the Company’s financial results and political, economic, financial, and other factors that can affect
the capital markets generally, the stock exchanges on which the Common Shares are traded and the market segment of which the Company is
a part.
The Company May Be Impacted by Inflationary
Pressures
General inflationary pressures
may affect labor and other costs, which could have a material adverse effect on the Company’s financial condition, results of operations
and the capital expenditures required to advance the Company’s business plans. There can be no assurance that any governmental action
taken to control inflationary or deflationary cycles will be effective or whether any governmental action may contribute to economic uncertainty.
Governmental action to address inflation or deflation may also affect currency values. Accordingly, inflation and any governmental response
thereto may have a material adverse effect on the Company’s business, results of operations, cash flow, financial condition and
the price of the Company’s securities.
Discretion in the Use of Proceeds
Management will have broad
discretion concerning the use of the net proceeds from the offering of any Securities, as well as the timing of their expenditures. Depending
on fluctuations in lithium prices and other factors, the intended use of net proceeds from the offering of any Securities may change.
As a result, an investor will be relying on the judgment of management for the application of the net proceeds from the offering of any
Securities. Management may use the net proceeds from the offering of any Securities in ways that an investor may not consider desirable
if they believe it would be in the best interests of the Company to do so. The results and the effectiveness of the application of proceeds
from an offering of any Securities are uncertain. If the proceeds are not applied effectively, the Company’s business, financial
condition, results of operations or prospects may suffer.
Negative Operating Cash Flows
Given that none of the Company’s
properties have yet to enter commercial production and generate cash flow, the Company had negative operating cash flow for its financial
year ended June 30, 2022. To the extent that the Company has negative cash flow in future periods, the Company may need to deploy
a portion of its cash reserves or a portion of the proceeds of any offering of Securities to fund such negative cash flow.
LEGAL
MATTERS
Unless otherwise specified
in the Prospectus Supplement relating to a specific offering of Securities, certain legal matters relating to the offering of the Securities
will be passed upon on behalf of the Company by Cassels Brock & Blackwell LLP with respect to matters of Canadian law and Skadden,
Arps, Slate, Meagher & Flom LLP with respect to matters of U.S. law. As at the date of this Prospectus, the partners and associates
of Cassels Brock & Blackwell LLP, as a group, beneficially own, directly or indirectly, less than 1% of the outstanding securities
of any class or series of the Company.
exemption
from national instrument 44-101
Pursuant to a decision of
the Autorité des marchés financiers dated May 17, 2023, the Company was granted exemptive relief from the requirement
that this Prospectus as well as the documents incorporated by reference herein and any Prospectus Supplement and the documents incorporated
by reference therein to be filed in relation to an “at-the-market” distribution be publicly filed in both the French
and English languages. This exemptive relief is granted on the condition that this Prospectus, any Prospectus Supplement (other than in
relation to an “at-the-market” distribution) and the documents incorporated by reference herein and therein be publicly
filed in both the French and English languages if the Company offers Securities to Quebéc purchasers in connection with an offering
other than in relation to an “at-the-market” distribution.
AUDITORS,
TRANSFER AGENT AND REGISTRAR
PricewaterhouseCoopers
LLP, Chartered Professional Accountants, was appointed as auditor of the Company on October 17, 2022 and have confirmed they are
independent of the Company within the meaning of the Chartered Professional Accountants of British Columbia Code of Professional Conduct
and the rules of the SEC and the Public Company Accounting Oversight Board on auditor independence.
The registrar and transfer
agent for the Common Shares is TSX Trust Company, located at its principal offices in Vancouver, British Columbia.
INTERESTS
OF EXPERTS
Experts who have prepared
reports for the Company directly or in a document incorporated by reference to the Prospectus include the following: Manning Elliott LLP,
Chartered Professional Accountants, who prepared the auditors’ report accompanying the audited financial statements of the Company
for the fiscal year ended June 30, 2022, report that they are independent in accordance with the Chartered Professional Accountants
of British Columbia and the Public Company Accounting Oversight Board as at the date of such audit report.
Experts who have prepared
reports or summaries of reports for the Company directly or in a document incorporated by reference to the Prospectus include the following:
Marek Dworzanowski, P.Eng., B.Sc. (Hons), FSAIMM, Roy Eccles, M.Sc. P. Geol. of APEX Geoscience Ltd., Stanislaw Kotowski, P.Eng, M.Sc.
of WorleyParsons Canada Services Ltd. and Dr. Ron Molnar Ph.D. P. Eng. of METNETH2O Inc. have acted as qualified persons under NI
43-101 in connection with the LANXESS PEA (as defined in the AIF). Mr. Rodney Breuer, P.Eng. of Engineering, Compliance and Construction, Inc
(ECCI), Mr. Roy Eccles M.Sc. P. Geol. of APEX Geoscience Ltd., Mr. Trotter Hunt, P.Eng. of Guillot & Associates LLC,
Mr. Tony Boyd, B.A.Sc., PhD., P.Eng. of NORAM Engineering and Constructors Ltd., Dr. Ron Molnar Ph.D. P. Eng. of METNETH2O Inc.
and Mr. Steve Shikaze, M.Sc., P. Eng. of Matrix Solutions Inc. have acted as qualified persons under NI 43-101 in connection with
the South West Arkansas Technical Report.
None of the above-mentioned
experts has any registered or beneficial interest, directly or indirectly, in any securities or other properties of the Company. None
of the aforementioned firms or persons, nor any directors, officers or employees of such firms, are currently, or are expected to be elected,
appointed or employed as, a director, officer or employee of the Company. As at the date hereof, such persons, and the directors, officers,
partners and employees, as applicable, of each of the experts beneficially own, directly or indirectly, in the aggregate, less than 1%
of the securities of the Company.
All scientific and technical
information in this Prospectus has been reviewed and approved by Stephen D. Ross, Professional Geologist, who is a qualified person under
NI 43-101. Mr. Ross is not independent of the Company as he is a Consultant and Vice President Resource Development of the Company.
As of the date hereof, Mr. Ross holds 460,500 Common Shares and 100,000 Options.
GLOSSARY
OF TERMS
When used in this Prospectus,
the following terms have the meanings set forth below unless expressly indicated otherwise.
“AIF” has the meaning given
to that term under “Documents Incorporated by Reference”.
“Arkansas Lithium Projects”
has the meaning given to that term under “Business of the Company”.
“Board of Directors” means
the board of directors of the Company.
“CBCA” means the Canada
Business Corporations Act.
“Common Shares” has the meaning
given to that term on the cover page of this Prospectus.
“Company” has the meaning given
to that term on the cover page of this Prospectus.
“Demonstration Plant” has the
meaning given to that term under “Business of the Company”.
“Debt Securities” has the meaning
given to that term on the cover page of this Prospectus.
“DSUs” means the deferred share
units of the Company.
“EDGAR” means the Electronic
Data Gathering, Analysis, and Retrieval system.
“Exchange Act” means the United
States Securities Exchange Act of 1934, as amended.
“FRA” has the meaning given
to that term on the cover page of this Prospectus.
“Forward-Looking Information”
has the meaning given to that term under “Forward-Looking Information”.
“GAAP” means the Generally
Accepted Accounting Principles.
“Global Securities” has the
meaning given to that term under “Description of Debt Securities”.
“IFRS” has the meaning given
to that term on the cover page of this Prospectus.
“LANXESS” means LANXESS Corporation.
“LANXESS Property Project”
has the meaning given to that term under “Business of the Company”.
“LANXESS MOU” has the meaning
given to that term under “Business of the Company”.
“LCE” means lithium carbonate
equivalent. Lithium is converted to lithium carbonate (Li2CO3) by multiplying lithium by 5.323.
“MJDS” has the meaning given
to that term on the cover page of this Prospectus.
“NI 43-101” has the meaning
given to that term under “Notice Regarding Representation of Mineral Reserve and Mineral Resource Estimates”.
“NI 44-101” means National
Instrument 44-101 – Short Form Prospectus Distributions.
“NI 44-102” means National
Instrument 44-102 – Shelf Distributions.
“NYSE American” has the meaning
given to that term on the cover page of this Prospectus.
“Options” means the incentive
stock options of the Company.
“Preferred Shares” has the
meaning given to that term on the cover page of this Prospectus.
“Prospectus” has the meaning
given to that term on the cover page of this Prospectus.
“Prospectus Supplement” has
the meaning given to that term on the cover page of this Prospectus.
“SEC” has the meaning given
to that term on the cover page of this Prospectus.
“Securities” has the meaning
given to that term on the cover page of this Prospectus.
“SEDAR” means the System for
Electronic Document Analysis and Retrieval.
“SLI” or “we”
has the meaning given to that term on the cover page of this Prospectus.
“South West Arkansas Project”
has the meaning given to that term under “Business of the Company”.
“South West Arkansas Technical Report”
has the meaning given to that term under “Business of the Company”.
“Subscription Receipts” has
the meaning given to that term on the cover page of this Prospectus.
“TETRA” has the meaning given
to that term under “Business of the Company”.
“TETRA 1st Option Agreement”
has the meaning given to that term under “Business of the Company”.
“Trustee” has the meaning given
to that term under “Description of Debt Securities”.
“TSXV” has the meaning given
to that term on the cover page of this Prospectus.
“Units” has the meaning given
to that term on the cover page of this Prospectus.
“Warrants” has the meaning
given to that term on the cover page of this Prospectus.
“Zeton” has the meaning given to that term under
“Business of the Company”.
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