Replies to This Discussion

Permalink Reply by Skip Peel - Mineral Consultant 11 hours ago

Lisa, I'm in the same predicament as the attorney.  I know what post production costs are deducted in O&G leases but not in Lithium.  They will not be the same and the Big 3 haven't mentioned anything of that subject in their official announcements.  You might be able to negotiate language such that no post production deductions would exceed a set percentage of your gross but what that percentage might be is unknowable based on the little we know.  Your attorney might ask some questions of SL as to whether there will be costs deduction beyond the DLE  process.  For example the lithium produced by DLE will likely be shipped to a refinery.  Will the refining costs be passed on to you?  Would transportation costs be involved?  If the gross price is based on the purchase price by an end user, would there be transportation costs deducted for shipping to the end user (battery plant)?  These deducts would be similar with the deductions in O&G leases but I have no idea if they would apply to your lithium royalties.  You should not get in any hurry and your attorney should ask these types of questions to help inform his/her amendments to the standard form SL lease.   All this no knowing is maddening.

Permalink Reply by Lisa 11 hours ago

Well, you make me feel better about not knowing!!

I think what you suggested about a percentage limit to the costs is reasonable!!

The other issue is our attorney feels strongly about the percentage being on the brine— not just the sources lithium. Brine is defined elsewhere as everything in the brine water— making all the possible minerals. That seems like a hill worth dying on.

Permalink Reply by Lisa 11 hours ago

*sourced lithium

Permalink Reply by Skip Peel - Mineral Consultant 11 hours ago

Has your attorney asked specifically about payment for other brine elements beyond lithium?

Permalink Reply by Lisa 11 hours ago

In his language, the percentage royalty would apply to everything in the brine— all minerals— and it’s quite the list!

Permalink Reply by Lisa 11 hours ago

I tried to copy in the redlined royalty section of our lease showing SL’s language— and with all his changes. But it didn’t transfer well.

Permalink Reply by Skip Peel - Mineral Consultant 11 hours ago

Has SL responded to that list?  It seems to me they owe you a few answers.

Permalink Reply by Lisa 10 hours ago

We are just getting to all these details— but we’re trying to get literate first so we do well when we have to communicate.

Permalink Reply by Skip Peel - Mineral Consultant 10 hours ago

Good luck.  Coming up with informed lithium lease language is a black box.

Permalink Reply by Lisa 9 hours ago

😭

Permalink Reply by Skip Peel - Mineral Consultant 9 hours ago

When in doubt, give up all royalty and get the highest bonus per acre for the brine rights.  Then go on your way and never look back.  And don't cry.

Permalink Reply by Lisa 3 hours ago

Awwww! Thanks for being encouraging. We’re pushing through. I’m mostly teasing about how stressful it is. They’ve already gone up waaaay higher than where we started— and they built in a minimum flat royalty per acre if the percentage royalty doesn’t beat it. That’s nice.