Tetra Applied sciences, Inc., has up to date its traders on the event of the corporate’s bromine belongings in Columbia and Lafayette counties.
The Woodlands, TX-based firm beforehand introduced the completion of an inferred sources report that recognized an estimated 5.25 million tons of bromine on its roughly 40,000 acres and 234,000 tons of lithium carbonate equal (LCE). The useful resource is contained in 5,000 acres inside TETRA’s 40,000 acres within the Smackover Formation within the two Arkansas counties.
“Inferred sources” is the class utilized by the Securities and Change Fee as essentially the most preliminary indication of mineral useful resource, with extra evaluation required for classifying such minerals as “indicated sources” or “measured sources” that present rising ranges of assurance.
TETRA cites a number of company occasions to advance the bromine growth venture, together with the next:
— Recruited and added two board members with intensive chemical substances government administration expertise, together with one with government roles with one of many largest world bromine and lithium producers, and employed a senior supervisor with 12 years of engineering and 22 years of operations administration expertise with Arkansas bromine processing vegetation.
— Drilled and accomplished a take a look at nicely and picked up brine samples which validated the estimated bromine and lithium focus ranges mirrored within the inferred sources report. From these brine samples TETRA was capable of produce elemental bromine and lithium carbonate at its analysis middle in The Woodlands.
— Accomplished a FEED (entrance finish engineering and design) examine with Hargrove Engineers & Contractors for the design of a brine to bromine processing plant, pipeline and associated belongings. Tetra engaged Hargrove for engineering, procurement and building administration capabilities with intensive expertise with bromine initiatives. Over 20,000 hours have been collectively invested by Hargrove, Hargrove subcontractors and TETRA personnel to design an environment friendly bromine processing plant and develop a price range and timeline for its building and operation.
— The FEED examine additionally included estimates of the required variety of working personnel, prices for power consumption and key uncooked supplies. Processing bromine from brine includes confirmed strategies and applied sciences which have been used within the U.S. and overseas for a number of many years.
— Obtained price estimates to drill and full manufacturing and injection wells. These estimated prices have been validated by evaluating them to prices being incurred by others within the rapid areas of the Arkansas Smackover Formation. Estimated manufacturing volumes have been based mostly partly on nicely designs and manufacturing from present wells within the surrounding Smackover Formation space.
— Continued its beforehand introduced reservoir evaluation with Lonquist Engineering, LLC to extra definitively assess TETRA’s bromine and lithium sources and simulated manufacturing over time. Lonquist is a acknowledged skilled in reservoir engineering and provide research in financial evaluations.
— Engaged Novopro Tasks, Inc. (“Novopro”), a venture growth and implementation firm servicing the mineral and metallurgical industries. Novopro has been concerned in a number of large-scale engineering initiatives and was engaged to carry out a evaluate of the fee estimates developed for Tetra’s bromine venture, together with a evaluate of the capital expenditures, working expenditures, sustaining capital, in addition to a money circulate evaluation.
The corporate mentioned bromine has lengthy been used as a part of Tetra’s completion fluids enterprise, primarily in offshore functions and particularly deepwater the place Tetra estimates that roughly 70% of the Gulf of Mexico deepwater growth wells use bromine-based fluids for nicely completions. The offshore and deepwater markets proceed to indicate indicators of restoration. In 2022, the corporate once more exceeded the bromine volumes obtainable underneath its long-term provide settlement.
Tetra has been supplementing its bromine provide with spot market purchases at prices larger than its long-term provide settlement. The demand in 2023 and past is predicted to exceed 2022 ranges assuming comparatively fixed commodity costs.
Along with the standard oil and gasoline bromine fluids market, in Might 2021, Tetra introduced the introduction of a excessive purity zinc-bromide Tetra PureFlow fluids to be used as a key electrolyte element for lengthy length power storage. Tetra has certified gross sales of PureFlow with three zinc-bromide based mostly electrolyte power storage corporations based mostly on their analysis of the product and, thus far, has delivered business orders to one among these corporations with an extra buy order from one other buyer scheduled for supply later this quarter.
Tetra’s discussions with its potential “PureFlow” fluids prospects suggests they anticipate vital progress. Tetra PureFlow prospects should obtain their very own financing and operational milestones as a predicate to ramping up their manufacturing and ensuing demand for PureFlow fluids, the achievement of which can’t be assured, the corporate mentioned.
The mixed present and potential demand for bromine from a recovering offshore market and an rising lengthy length power storage market represents vital progress alternatives for the corporate.
Tetra Applied sciences’ assertion mentioned the bromine venture has a multi-purpose focus with the next targets.
The primary is to extend the quantity of cost-effective bromine obtainable to Tetra to deal with an anticipated multi-year progress interval within the offshore oil and gasoline markets assuming commodity costs stay comparatively fixed.
The second is to deal with rising demand for zinc-bromide based mostly power storage, which can be vital if Tetra’s PureFlow prospects are profitable in ramping up their operations.
The third is to cut back TETRA’s dependence on open market third celebration purchases of bromine by producing bromine at doubtlessly materially decrease manufacturing prices.
The fourth goal can be to regulate its personal provide chain for the long run and past the lifetime of its multi-year provide settlement. Acquiring these targets can’t be assured given the developmental nature of our bromine venture however underpin TETRA’s rationale for persevering with to expend sources on the analysis of this chance.
Tetra has printed on its web page a report titled “TETRA Bromine Challenge SK-1300 Part 19 Financial Evaluation”. The Part 19 Report has been reviewed and licensed by Novopro, topic to the {qualifications} contained within the report.
The corporate cautions there isn’t any certainty that the economics contained within the SK-1300 Part 19 Report can be realized. These economics are preliminary in nature and embrace inferred mineral sources which are thought of too speculative geologically to have the financial issues utilized to them that may allow them to be categorized as mineral reserves. Mineral sources that aren’t mineral reserves haven’t demonstrated financial viability. Further wells and geological evaluation can be required to transform inferred mineral sources to indicated or measured mineral sources.
The FEED examine and reservoir evaluation are a part of Tetra’s ongoing course of in figuring out whether or not to advocate to the Tetra Board of Administrators shifting ahead with additional investigation of the bromine venture. These research and evaluation are additionally the idea for the event of goal economics related to this venture.
Tetra has recognized the next subsequent steps as predicates for doubtlessly shifting ahead with the venture:
— Drilling a second nicely to additional validate the geological mannequin and mineral sources.
— Finishing an indicated sources report back to additional quantify the volumes of bromine and lithium on TETRA’s acreage.
— Finishing a pre-feasibility and/or feasibility examine following this preliminary and preliminary financial evaluation to additional refine the fee estimates and associated economics.
— Figuring out required permits, timing and probability of acquiring such permits.
— Figuring out and securing cost-effective sources of capital and/or strategic companions.
— Acquiring required contractual consents underneath sure circumstances.
Tetra has engaged a monetary advisor to doubtlessly search strategic companions to develop its bromine acreage and/or offtake agreements. The corporate can be in early discussions with the Division of Power for potential obtainable grants and loans to fund a portion of the capital famous within the FEED examine.
Solely upon completion of the indicated sources report, the feasibility examine and acquiring capital commitments from strategic companions, authorities grants or loans, or different cost-effective sources of capital would Tetra resolve to proceed on the event of the bromine belongings. The profitable completion of those contingencies in addition to the profitable growth of this chance can’t be assured.
