CTR Q3 Update - The Rise and Rise of 'Lithium Valley'

Greetings from Imperial County,??

I am pleased to provide a snapshot of the many activities in motion?as we progress the company’s Hell’s Kitchen Lithium and Power project in Imperial County, California.??

We have been extremely active on all fronts. Our experienced team is doing an incredible job to ensure the project remains aligned and well-timed to meet this critical moment in U.S. history. So, first and foremost, I’d like to thank our team - the heart and soul of CTR, for their dedication, hard work, and absolute commitment to the task at hand.?

On the finance front, CTR and our financial advisor Goldman Sachs, are in a capital raise with a select group of potential strategic investors for equity investment. In a meeting with one of these groups I said, “What is most important to us is a fruitful, fun, 50+ year relationship,” and they agreed.?

On the engineering and operations front, our brilliant team of engineers moved the project’s optimization program to live brine operations at the site.??This program is not to determine if we can recover lithium – this has been established, but to fine tune the process for the detail engineering design stage for construction, and to set the initial plant start-up parameters.???

I am very pleased to announce that CTR appointed engineering, procurement, and construction management (EPCM) firm?Hargrove?Engineers and Constructors,?to lead the Hell’s Kitchen efforts in delivery of the lithium project. Hargrove is one of the most respected EPCM contractors in the United States and is highly experienced in delivering multi billion-dollar projects in the manufacturing, chemical, energy, and refining industries.?

Soon, we will announce agreements with large, sole-sourced vendors for delivery of specific equipment. I am also very pleased to report that Fuji Electric is about 50% complete in manufacturing our 55MW steam turbine and generator set, so we are making great progress on these long-lead items.??

On the sales and co-location front, lithium spot prices continue to break records as demand escalates beyond anyone’s expectations. CTR has signed three lithium supply agreements.??In addition to negotiating further lithium offtake agreements for CTR’s future stages, we have appointed 3rd?party specialist teams to conduct economic studies for CTR to better understand several value-add opportunities:??

• First, we are working with a large OEM to study the economic and environmental benefits of co-locating a cathode active materials (CAM) facility at Hell’s Kitchen. We know this removes shipping risks and costs, lowers C02?emissions, and removes substantial CAPEX and OPEX from bagging, logistics, and de-bagging operations.?
• Second, we have a specialist engineering group working on manganese recovery with battery-quality production. We plan to test this process on our live brine in the coming months.??Manganese is another critical battery material with strong interest from offtakers.??The quantity of manganese in CTR’s brine resource could be 5 times more than lithium and can be produced simultaneously, without compromising our lithium production schedule or delivery.?

All these moving parts are in sync with the U.S. Federal government’s announcement of the Inflation Reduction Act of 2022 (IRA).??This new law, as we understand, provides electric vehicle related tax credits for eligible vehicles and their production, and further opportunities through loans, grants, and support programs designed to spur domestic production of U.S. critical minerals and lithium-ion batteries.??Specific guidance/rules related to the application of this new law is expected later this year and in 2023.???

What has become most apparent this year is that CTR has established itself as an instrumental driver of value within the auto industry.??

We are not just ‘suppliers of lithium’.??We are working with our strategic partners to deliver solutions that support the emerging battery supply chain.

Due to the CTR strategy of an integrated power/lithium extraction process and the fact that we can provide co-location potential with renewable power and reduced capital requirements, this sets CTR apart from our competitors and aligns us with our client partners for the long term.??

Rod Colwell? Chief Executive Officer

Engineering and?Operations Update

CTR Appoints Hargrove

CTR has appointed Hargrove Engineers and Constructors to lead the project’s next phase of engineering, procurement, and construction management (EPCM).??

Hargrove has extensive experience delivering large scale industrial projects in the power and chemicals sectors. With 10,000+ successful projects in the chemicals industry and 4,000 in mid-stream and refining, the Hargrove team is involved in over 450 defense and aerospace programs and 1,500 petrochemicals projects. Hargrove boasts a team of 215?process engineers with chemicals, petrochemicals, and refining experience.??

Hargrove’s team is currently moving into detail design in preparation for construction commencement in 2023.?

CTR will open a satellite development office at Hargrove in Houston to support Hargrove in their delivery of our projects.?

Optimization Program?

CTR recently commenced the project’s optimization program onsite. The program incorporates controlled delivery of live brine to the front end of the overall lithium process for purposes of verifying control systems for the front end of the lithium extraction process, and to examine the temperature characteristics of the actual extraction itself.??This work will continue for several months in parallel with the final engineering stage of the project. After this work is complete, we plan to utilize the equipment and systems to look at recovery of other ancillary products.?

DLE Technology Update

From the outset, CTR’s approach to design is to recover lithium and other minerals first, and power second. In simple terms, we are not dealing with spent geothermal brines, so a very different approach. Most of our work is ‘upfront’ to create a clean brine stream before the Direct Lithium Extraction (DLE) process.

CTR has always taken an agnostic approach to DLE technologies, selecting the most cost-effective methods available for the various circuits that make up the entire process, including heat removal, silica and transition metals management, lithium extraction, and the conversion of extracted lithium to battery-grade products.?

Over the past several years, CTR has evaluated numerous DLE technologies, including ion exchange, adsorption, and solvent extraction, amongst others. We have evaluated each of these DLE technologies with respect to extraction efficiency, ability to reject non-lithium ions, media life, reagent demand, as well as overall capital and operating cost projections.??CTR only considers fundamental technologies with a long track record of achievement for application.??These technologies typically have long histories in a variety of applications and are well known in the chemical industry.

The analysis by CTR and our 3rd?party consultants have shown that?adsorption?technology has significant advantages over other techniques including ion exchange and solvent extraction for lithium recovery from Salton Sea geothermal brine, especially in the areas of operating temperature, filtration, and reagent usage, and therefore, better overall capital and operating cost.??

• Temperature?- operation at higher temperature requires less upstream brine cooling?
• Filtration?- higher tolerance for suspended solids requires less filtration
• Reagents?- elution with water instead of hydrochloric acid substantially reduces reagent consumption

CTR selected and is moving forward with the use of adsorption technology in our Stage 1 facility.?

Lithium Offtake Sales and Co-Location?Update

Once again, lithium spot prices have broken new records in Q3 and CTR’s offtake negotiations reflect this supply/demand cycle which is expected to extend throughout this decade and beyond.?

CTR has received supply requests from 20+ companies, including auto manufacturers, Tier 1 battery OEMs, cathode producers, and trading companies.??

CTR’s Global Director of Battery Materials, Tracy Sizemore, is working closely with select companies to identify the environmental and cost benefits of co-location. Co-location of battery companies will reduce the ultimate cost of a battery as well as improve its environmental footprint, both of which is highly sought by the auto manufacturers. CTR’s Clean Energy Campus concept supports a sustainable and secure battery supply chain that has attracted world-wide attention and interest from all corners of the globe.?

Inflation Reduction Act of 2022 (IRA)

The U.S. federal government put its full weight behind building a domestic EV battery supply chain through the recent signing of the Inflation Reduction Act into law.?

President Biden’s commitment to onshoring critical minerals supply and EV battery production is an historic achievement. While the timelines are ambitious, CTR stands ready to support our clients in the development of a sustainable battery supply chain.?

Per the Act and beginning in 2023, EVs will qualify for the tax incentives only if the vehicle’s battery meets certain conditions. The maximum potential credit is the sum of two amounts: the critical mineral amount and the battery component amount.?

• Critical Minerals ($3,750):?Starting in 2023 (and after the Treasury issues guidance on this requirement), to qualify for this portion of the credit, at least 40% of the value of the battery’s applicable critical minerals must have been extracted or processed in the United States, or in a country with which the United States has a free trade agreement or recycled in North America. The 40% amount increases to 50% in 2024, 60% in 2025, 70% in 2026, and 80% in 2027 and thereafter.?
• Battery Components ($3,750):?Starting in 2023 (and after the Treasury issues guidance on this requirement), to qualify for this portion of the credit, at least 50% of the value of the battery’s components must have been manufactured or assembled in North America. The 50% amount increases to 60% in 2024 and 2025, 70% in 2026, 80% in 2027, 90% in 2028, and 100% in 2029 and thereafter.?

CTR has seen significant interest in requests for lithium supply agreements as a result of this legislation.??CTR’s lithium extraction and production process and facilities meet the criteria listed above.??The IRA also provides for investment and production tax credits for battery raw materials which is new to the battery supply chain. Another element contained in our brine is manganese.??It also has significant interest in the battery space.??CTR has initiated a separate study for the recovery of manganese from our geothermal brine.

In addition to these encouraging federal actions, California, followed quickly by New York, has mandated all new cars sold by 2035 be free of greenhouse gas emissions, adding further upward pressure to domestic battery materials demand.

Environmental, Social,?and Governance Update?

CTR continues to gather support from the community as we strengthen our grass-roots engagement programs across the region and work closely with regional workforce and education development teams.?

CTR recently hosted a number of onsite?tours for local community groups.???Over 40 community representatives have visited our project site to discuss the future of ‘Lithium Valley’ and how we can work together to create a thriving, sustainable, and equitable environment to bring good paying jobs and genuine, long-term prosperity to Imperial County.

Connecting across the battery supply chain

CTR’s executive team were kept busy in Q3 with various invitations to attend events in Detroit, Houston, San Diego, and Washington DC, including meetings at the White House, critical minerals workshops organized by NAATBatt, LiBridge, and New Energy Nexus, and industry roundtable sessions with both CALSTART and the Wilson Center.?

The cross pollination of ideas and strategies that develop within these working groups is beginning to bear fruit. CTR will continue to encourage these discussions to promote sustainable critical minerals and clean energy solutions.?

Meet CTR's Newest Team Members!

CTR is delighted to welcome Mariela, James, Keith, Daniel, Mitch, and Kimberly to the company’s growing team.

Mariela Moran, Permitting and Regulatory Assistant

Mariela joins the team with a strong background in planning and regulations. Most recently working for the Imperial County Planning and Development Services, Mariela was responsible for reviewing and processing ministerial and discretionary permits per the provisions of CEQA. Joining the CTR team as Permitting and Regulatory Assistant, Mariela will assist in overseeing the successful permitting for Hell’s Kitchen and will be instrumental in developing environmentally related recommendations for construction and operations. Mariela has both a Bachelor of Architecture and a Master of Landscape Architecture.

James Suubam, Sr. Project Manager

James joins CTR from the mining industry with wide-ranging experience across several key international and corporate environments. Working across both technical and leadership roles, James was involved in the successful execution of two gold start up projects in Northern Nevada. James joins the team as Senior Technical Project Manager to ensure the delivery of CTR’s lithium and power optimization programs. James holds a BS in Materials Engineering and an MBA.

Keith Hovley, Operations Supervisor

Keith brings 30 years of experience across geothermal power and mineral recovery development with a strong background in technical and safety functions. Keith has a keen eye for occupational hazards and risks, helping to identify and implement safety precautions.??With previous roles at CalEnergy, Simbol Materials, and Ormat, Keith brings a deep knowledge of plant management and procedures to CTR as Operations Supervisor.

Daniel Gonzalez, Safety & Operations Training Coordinator

Daniel has 21 years’ experience in geothermal operations, specifically binary and flash plants. Daniel is a seasoned leader, managing teams in supervisory roles for the last 10 years.??Joining CTR as Safety and Operations Training Coordinator, Daniel will utilize his industry background and technical knowledge to apply safe and efficient working environments for our team.

Mitch Colwell, Battery Materials Assistant

Mitch has experience working within the community on contract acquisition and maintaining client relationships. Mitch has been involved in CTR from the very early stages, assisting in market research and prospecting. Now joining full time as Battery Materials Assistant, Mitch will assist with supply agreement contracts, contract compliance reporting, raw material market research, grant research and ESG research and reporting.

Kimberly Noriega, Administrative Assistant

An expert in customer service and administration, Kimberly has an expansive knowledge in Business Administration. Previously working for the Imperial County Planning and Development Services, Kimberly brings an in-depth understanding of project permitting administration and regulatory guidelines. Kimberly is a key member of our administration team.?

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