Smackover Lithium Arkansas Royalty Proposal Targets 2.5% on Technical-Grade Production

Smackover Lithium

New royalty framework aims to compensate brine owners as lithium extraction scales in Southwest Arkansas

Reynolds Unit Phase 1 application outlines total 3% equivalent compensation package under SWA project

Smackover Lithium Arkansas royalty terms have been formally proposed as the company seeks to establish a standardized payout structure for its South West Arkansas (SWA) lithium project. The U.S.-based lithium developer submitted an application to the Arkansas Oil and Gas Commission, requesting approval for a 2.5% gross royalty on lithium production, calculated quarterly.

Royalty terms include fixed brine lease fee alongside lithium pricing-based compensation

In addition to the gross royalty tied to technical-grade lithium carbonate prices and output volumes, the proposal includes a flat annual “in lieu bromine royalty” of $65.05 per acre. Combined, the package is expected to deliver around 3% total compensation to brine owners at current lithium market levels. The new royalty structure is seen as a potential benchmark for future brine-based lithium developments in Arkansas and the broader Smackover Formation.

Hearings for Reynolds Unit Phase 1 scheduled for late May 2025

The royalty application specifically pertains to the Reynolds Unit, part of Phase 1 of the SWA Project, located in Lafayette and Columbia counties. Regulatory hearings are scheduled for 28 May 2025. This move signals a critical step in aligning mineral rights, community engagement, and scalable extraction operations in a region expected to play a key role in U.S. lithium supply security.

The Metalnomist Commentary

The Smackover Lithium Arkansas royalty proposal reflects a maturing phase in domestic lithium resource development. As U.S. lithium demand intensifies, clear royalty frameworks like this help derisk investment, clarify stakeholder value, and strengthen the social license to operate in emerging lithium basins.