Juniors test lithium waters in Arizona, New Mexico  

Beyond some higher-profile projects in Nevada, juniors in Arizona and New Mexico are quietly advancing early-stage lithium plays from claystones and oilfield brines.  
 
The battery metal is emerging as a critical focus for the United States as it works to build secure domestic supply chains for electric vehicles and cut dependence on imports from China and South America. The Southwest – spanning Nevada, Arizona, New Mexico, Utah and Texas – hosts a mix of claystone, brine and geothermal-linked deposits that rank among the nation’s most promising undeveloped resources.   

Favourable state policies, access to new battery manufacturing hubs, and a range of deposit types are drawing heightened exploration interest to the region. The big barrier is capital expenditures, Federico Gay, principal analyst of lithium at Benchmark Mineral Intelligence, said from London.  

“Depending on how deep the resources are located, it’s expensive, even at an exploratory level, to develop these projects,” he told The Northern Miner by email. “At current prices, it’s tough to get the necessary funds.”  

Big Sandy

High capital expenditures, permitting delays and weak prices are taking a toll. In August, Australian junior Arizona Lithium (ASX: AZL) announced it was exiting its namesake state through the sale of its Big Sandy lithium project and Lithium Research Center to project partner Navajo Transitional Energy for US$5 million (A$8 million).  
“We are now focused on our near-term production project – the Prairie lithium brine project in Canada,” Paul Lloyd, managing director of Arizona Lithium, said in an interview by email.  

 Last August, a federal judge granted a temporary restraining order that froze exploration drilling at the Big Sandy site after the Hualapai Tribe challenged the Bureau of Land Management (BLM)’s approval. This February, the company withdrew its approved stage three exploration plan to address stakeholder objections before deciding to sell the project altogether.

Direct extraction

Deep brine deposits demand costly drilling and pump testing, while most projects will require capital-intensive plants for direct lithium extraction (DLE). This process collects lithium ions from brine more efficiently and less resource-intensively than current mining and evaporation pond methods.  

Add in remote-site infrastructure needs and protracted permitting timelines, and early-stage developers can face tens of millions of dollars in costs before proving up a resource. 

There have also been pricing headwinds. Battery-grade lithium carbonate hit a record high of about $86,000 per tonne in late 2022 but dropped to around $8,300 in June. August saw a moderate rebound to $10,525 per tonne near press time.  

“At the moment, the situation in the U.S. is more optimistic for large projects,” Gay said. “Smaller projects might find it tough to get the funds to secure moving these projects forward.” 

Smackover

Whether Arizona and New Mexico become the next lithium hotbeds may depend less on geology than on what happens 1,500 km east in Arkansas’s Smackover Formation. A joint venture between Standard Lithium (TSXV, NYSE‑A: SLI) and Norwegian state oil company Equinor is operating a field pilot to produce battery‑grade lithium carbonate on-site.  

“I think it will depend on the success of the Smackover,” Gay said. “If it happens, Arizona is likely one of the next top targets.” 

Arizona 

Despite Arizona Lithium’s exit, the state is promising, Gay said. Arizona’s lithium-rich clays and brines, shallow deposits and arid climate make it a strong candidate for DLE.  

“The Big Sandy deposit is an interesting one, with lithium content of roughly 98 parts per million, which is decent for a project of the characteristics,” he said. “It is highly likely we won’t see lithium commercial production from Arizona this decade, but there are deposits and conditions — infrastructure, O&G developments, etc — that can considerably raise the interest of developing lithium projects in the state.” 

Last January, Vancouver-based junior Ameriwest Lithium (CSE: AWLI) cleared a major hurdle in acquiring approvals necessary for a first-stage drilling program at its Thompson Valley lithium project in Arizona. However, it is still in the permitting stage.

New Mexico 

New Mexico’s lithium potential is anchored in salt flat basins such as the Alkali Flat–Lordsburg system, where brine targets lie near highway, rail and geothermal infrastructure. The state also straddles the Permian Basin, a major source of oilfield-produced water that the U.S. Department of Energy says could yield recoverable lithium and other critical minerals.  

With DOE-backed research at New Mexico Tech, formally known as the New Mexico Institute of Mining and Technology, and access to both brine and geothermal resources, the state is emerging as another test bed for direct lithium extraction. 

On the ground, Vancouver-based Lancaster Resources (CSE: LCR) controls the 21-sq.-km Alkali Flat lithium-brine project near Lordsburg and secured key permits last year, including a drill permit from New Mexico and BLM approval for its first stage plan of operations. 

Arizona Lithium holds 291 BLM claims, covering 25 sq. km at its Lordsburg project in New Mexico. The basin features layers of clays, silts and sands, mirroring the sedimentary profile of Nevada’s Clayton Valley, one of the U.S.’s most prolific lithium-producing basins and a benchmark for brine extraction.  

Untapped potential

“Apart from exploratory results, we do not know much about these projects,” Gay said.  

He points out that early-stage players are targeting deposits near known projects.  

“They are likely going to gain knowledge about these deposits, hoping for a sale,” Gay said. “In some cases, they are successful, but it is unlikely, short to mid-term, that they will develop the projects themselves.”