Anson Resources has negotiated a pioneering scaled royalty structure for its Green River Lithium Project in Utah, reducing the previous flat 5% rate to a sliding scale tied to lithium prices. This move enhances project viability and investment certainty amid evolving regulatory reforms.
- Royalty rate revised from flat 5% to scaled 1%-5% based on lithium prices
- Scaled royalty applies to lithium carbonate and lithium hydroxide products
- First-of-its-kind royalty structure in the USA, approved by Utah SITLA
- Anson played a key role in shaping Utah’s lithium regulatory framework
- New royalty supports project economics during low price periods
A Groundbreaking Royalty Agreement
Anson Resources Limited (ASX: ASN) has successfully negotiated a significant revision to the royalty terms governing its Green River Lithium Project in Utah. The Utah Schools and Institutional Trust Lands Administration (SITLA) approved a shift from a flat 5% royalty on all first marketable lithium products to a scaled royalty ranging from 1% to 5%, linked directly to lithium market prices. This innovative approach is the first of its kind in the United States and marks a milestone in aligning royalty frameworks with market realities.
Balancing Risk and Reward
The new royalty structure is designed to provide greater financial flexibility for Anson’s U.S. subsidiary, A1 Lithium. At current lithium prices, the royalty rate starts at a modest 1%, increasing incrementally as prices rise, capping at 5% when lithium prices exceed certain thresholds. This sliding scale offers downside protection during periods of lower prices while allowing the state to share in the upside when lithium markets are strong. Such a mechanism is particularly important given lithium’s price volatility and the capital-intensive nature of mining projects.
Strategic Collaboration with Utah Authorities
Anson’s role extends beyond securing favorable royalty terms. The company has been deeply involved in legislative efforts to foster a supportive regulatory environment for lithium development in Utah. Notably, A1 Lithium contributed to the passage of the Brine Conservation Act earlier this year, which establishes a robust framework for responsible lithium brine extraction. This proactive engagement underscores Anson’s commitment to balancing economic growth with environmental stewardship, positioning Utah as a leading jurisdiction for lithium mining.
Competitive Advantage in a Growing Market
Compared to other U.S. lithium projects, such as those in Arkansas where unresolved royalty demands can reach 12.5%, Anson’s scaled royalty deal provides a competitive edge. The 6,685-acre lease area under ML5440 is considered highly prospective for lithium-rich brines, and the improved royalty terms enhance the project’s economic attractiveness. Investors may view this development as a positive signal of regulatory certainty and cost management, critical factors in the race to secure domestic lithium supply chains amid global demand growth.
Looking Ahead
With regulatory hurdles addressed and a pioneering royalty framework in place, Anson Resources is well-positioned to advance its Green River Lithium Project. The company’s leadership in shaping policy and securing investor-friendly terms could serve as a blueprint for lithium development in other jurisdictions. However, the ultimate impact will hinge on lithium price trajectories and the pace of project development.
Bottom Line?
Anson’s scaled royalty deal not only lowers costs but also sets a new standard for lithium mining economics in the US.
Questions in the middle?
- How will lithium price fluctuations impact Anson’s royalty payments and project profitability?
- What are the next regulatory or environmental milestones for the Green River Lithium Project?
- Could Utah’s scaled royalty model influence lithium policy reforms in other US states?