What happened

Shares of Standard Lithium (SLI 15.34%) surged 10.9% early Monday after the lithium company announced high lithium brine grades from its latest drilling program. This isn't the first time Standard Lithium has claimed to have found such high-grade lithium in its lithium wells.

So what

Standard Lithium is an early-stage lithium company with three projects in the exploration and development stage. The company doesn't mine lithium directly but has developed a start-to-finish direct lithium extraction (DLE) process that can extract lithium from brine deposits to produce battery-grade lithium chemicals. While a couple of Standard Lithium's flagship projects are located in the Smackover Formation in Arkansas, it has also identified high-potential brine resources in the Smackover Formation in East Texas.

Yesterday, Standard Lithium said it had drilled and sampled a new "highest-confirmed lithium grade brine in North America" from a well at its East Texas exploration site, returning 663 ml/L (milligrams per liter). Earlier in the year, Standard Lithium found lithium with a grade of 634 m/L in East Texas.

CEO Andy Robinson claimed that with its latest sample, Standard Lithium is securing "the highest-grade lithium brine resource" outside of Chile and Argentina.

Now what

The grade of lithium brine is important for Standard Lithium since high brine grades have the potential to lower DLE costs for the company. Standard Lithium believes East Texas will become a substantially large contributor of high-grade brine for future production.

Going by the company's latest updates, Standard Lithium expects to start producing its first lithium at an Arkansas project in 2026, while Texas could start production in 2028.

So although Standard Lithium is still years away from its first production, volatility is inherent in small-cap stocks, and it is typical for such stocks of young companies to rise on any positive update from the company.