Namensänderung in Standard Lithium......

The first gray tone in which Hindenburg tries to paint is stock promotion. (Another term for this is marketing.) This obviously carries a negative tone with investors, but in the mining industry stock marketing is the norm and is fine if disclosed by the promoter. Now of course marketing comes in various flavors: Paid interviews, research reports, and trade shows can all be considered marketing. Obviously, the first two are the ones to be cautious about. As long as the promoters disclose they are paid to write Bob Ross-like "happy little trees" pieces all is kosher, but the reader must be astute to recognize that any negative information will be ignored or glossed over in these paid reports. That is the danger in reports (be it a bullish or bearish report). Take them with a grain of salt. It is really not that much different from a short seller writing a misguided hit piece full of half truths and then admitting "Well, it is only my opinion, but I get paid if I bash it." In both cases your internal "Danger, Danger... Danger" needs to surface. The take away on marketing is to read, mull it over, and then do your own diligent research.
Breaking Down the Hindenburg Groups Misdirection

Any questionable article is going to try to direct your mind down a singular path hoping you concur with their conclusions. It is a bit more organic if you put 2+2 together in your mind rather than the author having to tell you the answer is 4. Let's look at some pathing the author is attempting.

1. Stock promotion aka Marketing. This is a reoccurring theme in the Hindenburg article and it is an easy win. Saying the word "promotion" comes with negative connotations. Yet (as previously stated) promotion is normal in the mining industry. Pull up ANY mining company and you will see some degree of promotion. Now how much promotion is too much is a topic of debate. Too much promotion and yes the stock price rockets up; but if the underlying company is not sound it then comes back to earth. Too little promotion and the company never gets the attention it needs and the share price does not rise. This limits the company's ability to tap the markets for capital in order to grow. The prudent thing to do is to examine peers and ask yourself "Is marketing out of line compared to peers?"
Breath in Your Fear - DLE

Now that Hindenburg has pushed the company as having spent some money on marketing, next up they attack the technology being used by calling DLE (Direct Lithium Extraction) into question.

Now on this one I got quite the kick out of the tone employed. DLE is everywhere in the industry. Many companies are using or testing DLE. One must also realize though that a part of the industry may not want DLE to be successful as they are extracting lithium via Brine (salt water) evaporation pools or they are crushing rocks to extract lithium.

Clay and DLE is the new kid on the block and some vested interests do not want the new kid stepping on their turf. The report tries to paint a glass half empty picture by saying the company received only one of three patents for its DLE tech and then continues on to say that DLE is old tech. Well, yes, it is but like engines in cars. Car engines are rather old (1807 in fact) but that does not mean you will not see new patents for engines. Another way of looking at this was Standard was successful in obtaining one patent for DLE, but frankly this point is a nothing burger presented by Hindenburg. Many companies are using DLE and I do not see any patent wars breaking out as, simply put, DLE is too common.
But Wait There's More!

To quote the late great Billy Mays "But wait there's more!" concerning DLE. Riddle me this. If DLE in general was so unsuccessful why would Bill Gates, Jeff Bezos invest in DLE technology via Liliac Solutions? Why are many players in the industry looking to DLE? Companies such as:

Cypress Development (OTCQB:CYDVF) in Nevada has teamed up with none other than the famous Craig Brown of Chemionex (whom Hindenburg noted but failed to research.) If Craig Brown were so inexperienced and the process did not work it's a small wonder that Cypress Development went with it and paid Craig Brown $350,000 CAN dollars and 1 million shares in Cypress (Currently $1.44 USD).

Pure Energy (OTCQB:PEMIF) - Has teamed up with Schlumberger for DLE in Clayton Valley Nevada. Note: Everyone in Clayton Valley, except Albemarle (ALB) has gone the DLE route to my knowledge due to extreme lack of water and ALB is eying the tech (more on this later).

HeliosX Lithium (OTCQB:DJIFF) - Formerly known as Dajin Lithium. They have teamed up with Liliac solutions for one of its Nevada properties.

Lake Resources (OTCQB:LLKKF) - Has teamed up with Liliac.

Vulcan Energy in Europe is going down the DLE route. Livent (LTHM) is using DLE and producing revenue. Lithium South (OTCQB:LISMF) is exploring DLE technology and the list goes on and on.

Additional information about DLE and companies using it can be found via Matt Bolshen's article on the subject. It has some informative graphics in it. Moving on.
Cherry Picking Quotes

I also find it interesting when an author cherry picks a quote from a big name but provides no context nor the full picture. Case in point when Hindenburg quotes Eric Norris but skews the full picture by omitting quotes that go against the picture they are trying to paint. Hindenburg paints DLE in a negative light via:
"It's more capital intensive and actually consumes a lot more water and energy" - Eric Norris, President of Lithium Division, Albemarle Corporation

Yet in the same article we see Eric Norris of Albemarle talking about Arkansas DLE in a somewhat positive light via:
"Norris, Albemarle’s president for Lithium, said the company continues to look at its Magnolia-area chemical plants “as being a spot where we could process lithium in DLEs. There is potential technology for that.”

(Source: Magnoliareport.com via the Hindenburg Report)

You the reader are not being presented with the entire truth but simply one misdirected angle. So now it is time to paint my own picture for you and show you that the big boys are indeed looking at DLE.
Albemarle and DLE Tech

Let's see if Albemarle is playing coy with us. Looking at the September 2021 Investor Day presentation, we see that 35% of sales are from bromine. Keep this in mind as we go to the next slide.

Now realize that only two locations produce bromine for Albemarle (one of which is right next door to where Standard Lithium is operating). Looking at slide #26 of the ALB presentation, we can guess that the Arkansas location brings in 25% of bromine 2021 estimated capacity, if we assign them 175 kT of capacity.

Do you think ALB is going to ignore the capability to tap that market much like Standard Lithium is currently endeavoring to do? I think not. Now let's do a bit of guesswork. Given all the locations ALB has world wide, it does not hurt them to expand tried and true processes (like lithium rock extraction or brine), while DLE technology is proven and matures. It hurts them nothing to watch Standard Lithium to see if the technology works, and (if so) mimic it for their bromine operation.

Now realize that ALB has some DLE plans even though they might not advertise it constantly. We can theorize this via "Albemarle to double capacity at Silver Peak lithium brine operation". Note the use of the word "clay" in the below snippet. Clay = DLE in many cases. Per the article:

"Albemarle Corp has confirmed it will expand capacity at its lithium production facility in Silver Peak, Nevada, USA, and begin a program to evaluate clays and other available Nevada resources for commercial production of lithium.

Beginning in 2021, the company plans to invest $30-$50 million to double the current production at the Nevada site by 2025, making full use of its brine water rights. Additionally, the company plans to commence exploration of clay and evaluate technology that could accelerate the viability of lithium production from clay resources in the region this year."

Our good friend Eric Norris, Albemarle President, (whom Hindenburg cherry picked earlier) pops up via:

Eric Norris, Albemarle President, Lithium, said: “As a leader in the lithium industry, our priority is to optimize our world-class resources and production. This includes Silver Peak, a site uniquely positioned as the only lithium-producing resource in the United States.

“This investment in domestic capacity shows that we are committed to looking at the many ways in which Silver Peak can provide domestic support for the growing electric vehicle market.”

When I read "many ways" I translate that as clay to support domestic lithium, and if it is clay that means DLE technology. The majority of lithium clay resource I've seen uses some form or mutation of DLE tech, but wait Hindenburg said DLE is pie in the sky right... right? (Insert Anakin meme). Moving on.
Next Fear Point - Costs

The next avenue of attack is hitting the Standard Lithium project via unnamed "sources". Why not name them so we can see the credentials? Oh well. The conjecture of the unnamed "sources" is costs will be "stunningly expensive". Let's see how expensive the costs will actually be via 3rd party verified NI 43-101 Preliminary Economic Assessment Technical Report. This is a document you will often see via Canadian based mining companies. Consider it a required standard. Can it be off a bit? Sure. Remember, it is preliminary (after all), but typically they are somewhat close to reality (give or take) since it is created by 3rd parties and they have to certify the report. In this case, Worley created the 43-101. You can download the 43-101 and read it yourself rather than go out and party on a Saturday night.

Per the 43-101, we can see

  All-in operating costs, including all direct and indirect costs, reagent, sustaining capital, insurance and mine-closure costs of US$4,319 per tonne of lithium carbonate (4)"[4] Includes all operating expenditures, including sustaining capital and allowance for mine closure.

So the estimate is $4,319 costs per ton and selling prices of lithium were modeled at $13,550. Obviously these modeled prices are a bit low now days. Granted, it is a bit hard to nail down what average selling prices are with long term agreements in place by various large lithium sellers (ALB, SQM, etc.) and such, but take the below chart. Subtract a large imaginary number and you are still much higher than the $13,550 SLI was projecting back in the day as prices are approaching $60,000. Again, this does not always mean a company will get $60,000 a ton but you can see that $13,550 is on the low side of the equation.

If you take anything away from this article it should be this: Always sit down and read the entire 43-101. You will not initially understand all of it but the more of them you read the more you will learn. The 43-101 is chock full of valuable data and plans. It is THE blueprint for a project. If you are not reading them then you are at a severe disadvantage in this game of financial Mortal Kombat.
More Nothing Burger Than Nothing

So far, we have covered bogus marketing claims of Hindenburg, then the negligent DLE side of the equation along with unconfirmed cost fears. The next stage of attack is to try to tie the CEO Robert Mintak to various companies and shady actions. Oddly they fail to mention Mr. Mintak was recognized as CEO of the top mining companies on the TSXV50 in both 2016 & 2018.

Here is the thing to note while reading this: Did the CEO commit these actions and then somehow get listed on the New York stock exchange and then somehow magically Koch never bothered to look into management while plopping down $100 million, technical support, and an LOI offtake agreement? Seems unlikely, but what the heck. Let's see what Hindenburg says as it paints a picture to profit at the expense of other investors.
Space Balls

Anyone remember the comedy "Space Balls"? Reading over the Hindenburg report I feel like I'm watching Space Balls via some of the far fetched connections they are grasping at.
Dark Helmet: I am your father’s brother’s nephew’s cousin’s former roommate. Lone Star: So what does that make us? Dark Helmet: Absolutely nothing.

(Source: Space Balls)

Point #1 - Hindenburg says CEO Mintak worked for an IR firm back in 2005 and now (gasp) his former coworker Jeremy Poirier in 2022, at a totally different company (Bearing Lithium), is being investigated by the B.C. Securities Commission for failure to disclose promotional material.

It should be noted that Hindenburg once again displays its apparent lack of knowledge by calling Bearing Lithium (OTCQB:BLILF) "another failed lithium project". I suppose they do not realize that Bearing owns 17.14% of the Maricunga lithium project. The rest of the project is owned by Lithium Power International (OTCPK:LTHHF) at 55.55% and Minera Salar Blanceo at 31.31% (but enough digressions). To wrap up every single error on Hindenburg's part would require a small treatise.

Point #2 - Hindenburg paints:

"Many of Mintak’s ventures, often involving Jeremy Poirier, saw meteoric rises in share price on the back of paid stock promotion, only to collapse just as quickly during major sell-offs. As we will demonstrate, several also came under regulatory scrutiny."

I would not personally call a gold company that Mr. Mintak is a director at a "Mintak Venture" and I do not see any promotion going on at the surface. If we did, we would see a meteoric rise in share price and a collapse. This chart does not meet that definition for ticker GIDMF. All we see is a small penny stock that has drifted down and one might surmise that is why the CEO stepped down.

Frankly, the Hindenburg nothing burgers go on and on. I could continue to break this down but frankly it is a waste of my time and your time to continue down this nothing burger hole concerning the CEO.

Land Deals

While Hindenburg goes down a land rabbit hole the real question here is simply this: Does Standard Lithium hold rights to the land claims in Arkansas and to a lesser importance in California? The answer is yes.

Reverse Merger

Why Hindenburg even included this one is a mystery. This one is easy. Shell companies that have a ticker symbol have value. This is Finance 101. Much easier to do a reverse merger than start afresh. Now it is time to shift the article back to reality and look at what the company is actually doing.
Financials Misconstrued

It is not hard to misconstrue financial statements. Now I will not venture if this was a deliberate act or not on the part of Hindenburg. I will leave that to the readers to decide. However per Standard Lithium we can see they made a rather obvious goof up when looking at the math. Per Standard Lithium:
It is claimed in the report that only approximately CDN $ 1.7 mm has been spent on research and development. This figure is incorrect and does not include either the CDN $ 29,409,930 spent on the various pilot and demonstration plants that has been capitalized, or the CDN $ 6,932,598 spent on operating expenses at our pilot and demonstration plant, both of which constitute our ongoing R&D program, and are disclosed as of September 30, 2021 in the Company’s most recent financial statement and the end of year statement as at June 30, 2021.

(Source: Standard Lithium)
$100 Million Dollars Invested by Koch

Now let's get to the good part. I'm talking about the part where you can tell Hindenburg just threw in the towel and almost quipped "missed red flags and failed in its due diligence in its haste to deploy capital." and yet they do not tell us what red flags they missed or what due diligence they failed to carry out. The translation is they do not know and are unable to counter this point.

$100 million was injected into the company via Koch via a direct investment at $7.42 USD a share. Does anyone honestly think a company is going to invest one hundred million dollars without having a thorough understanding of every nut and bolt at a company?

Now the first response the short sellers will offer is to look at project X that Koch put money into and it went down. Yes, this happens to any investor or investing firm. I've had my fair share of companies that I entered too early and lost money (SSD hard drives come to mind ten years ago or GPGPU on graphics cards back in 2006). Point is, I'll bet that the boys at Koch kicked the tires quite a bit before investing $100 million and this does not look like their first foray into the lithium sector.

Koch invests $100 million in Li-Cycle

Koch forms a 50/50 partnership for a battery company w/ FREYR.

Koch invests in charging solutions.

And Koch stands by the due diligence and Standard Lithium via:
Koch responded with this statement: “As with all of our investments, Koch has conducted extensive due diligence and found Standard Lithium’s technology a promising bright spot on the path towards lithium production here in the U.S. We remain excited to continue fostering innovation and growing the battery value chain across the Koch enterprise.”

Conclusion & Musings

Short sellers have a role in the market and that is to shed light upon the darkness. Short sellers can uncover financial games and trickery. However one must question the motivations of some short sellers at times when presented with facts. This is one such case in my opinion. Could I be incorrect? Absolutely and that is why you need to trust but verify. Do your own research, read those 43-101 reports and question them too. This way you are educated and when Mr. Market goes loco you will have the knowledge to either roll the dice on options (be it long or short) or even step out for the day. My takeaway is yesterdays sell off is an unjustified reaction to a bogus nothing burger. With time the stock should recover as investors realize this. Hence Mr. Market might be presenting us with an opportunity if our assessment is correct.