Pantera Lithium (ASX:PFE)
thinks its Smackover project will become considerably de-risked as the Arkansas Oil and Gas Commission has approved a lithium royalty framework for brine-based lithium initiatives within the geologically identical Smackover formation.
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The royalty will initially apply to the Standard Lithium–Equinor joint venture, yet it will also establish a crucial commercial benchmark for all developers involved in projects within the Smackover Formation, such as Pantera.
This royalty aims to enhance the company’s project economics in two key manners: First, by safeguarding initial economic benefits as the royalty must be paid solely when lithium carbonate or an equivalent end-product is sold—not at the time of extraction—thus maintaining profitability further along the production chain.
Moreover, a 2.5% royalty rate is fairly competitive and notably lower compared to royalty frameworks in other lithium brine regions, thereby enhancing the economic viability of projects for numerous companies active in this sector.
Implementing this structure will eliminate doubts regarding royalty payments, which will encourage investor participation. Additionally, it will enable investors to understand how this framework operates within the context of international lithium companies.
This is anticipated to bolster Pantera’s stance when conversing with infrastructure, off-take, and capital market partners.
The executive chairperson and CEO, Barnaby Egerton-Warburton, stated that this choice would considerably benefit the company.
“The AOGC’s support for a structured lithium royalty is transformative for Pantera and every major developer operating in the Smackover Basin,” he stated.
We currently function within a system that provides clear guidance, financial stability, and supportive policies for lithium as a key mineral.
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He stated, “Alongside this, the Arkansas State has passed legislation aimed at boosting industrial development by providing a temporary waiver on severance taxes. This means that from July 1, 2028, until June 30, 2033—a period spanning six years—lithium producers will be free from paying the state’s severance tax on saltwater brine. This extended tax break significantly augments the financial prospects for Pantera.”
PFE
has been trading at 1.4 Australian cents.
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