E3 Lithium Ltd. (ETL-X) is nearing completion of a key phase of its demonstration project near Olds, Alta., that will help determine the design and commercial viability of its planned Clearwater lithium extraction facility, the Calgary-based company says.

In late October, E3 said it was approaching the end of Phase 2 of its demonstration facility, which it calls its “most important de-risking initiative.” Phase 2 involves drilling and operating full-sized producer and injector wells to collect data for the feasibility study of its Clearwater Project.

Located between Red Deer and Calgary, Clearwater is E3’s flagship project, which is designed to produce up to 30,000 tonnes of lithium hydroxide monohydrate annually from brine. The battery-grade metal is needed for grid-scale energy storage and electric vehicles, technologies critical to the energy transition.

"E3 is designing the Clearwater Project exactly as we intend to build it,” Chris Doornbos, CEO and chair of the company, said in the announcement of progress on Phase 2. “This methodical and structured discipline reduces construction risk, protects capital, and positions Clearwater for an efficient path to commercial production."

Progress at the demonstration facility, including showcasing its direct lithium extraction (DLE) technology, is bringing E3 closer to a final investment decision on Clearwater, the company said. In a sign of its prospective value, Clearwater was highlighted in the Canada Investment Summit, the federal government’s pitch to attract billions of dollars in infrastructure investment.

Sustainable Biz Canada has reached out to E3 for comment, but did not receive a reply by time of publication.

Phase 2 and 3 of E3's demonstration facility

The first phase of the demonstration facility was commissioned in 2025, resulting in the production of battery-grade lithium carbonate using a 30-column DLE system.

Phase 2 has demonstrated sustained production from the reservoir, validated the consistency of its brine chemistry and generated data to inform the design of the commercial facility, E3 said.

E3 has outlined two main objectives for Phase 3.

First, the demonstration facility is to have its 30-column DLE system operating in Q4, with the goal of finalizing process optimization and producing battery-grade lithium carbonate.

Second, the company plans to complete the design and procurement of a commercial-scale DLE column ahead of a planned 2027 start to operations. This step would provide the data that project financiers, strategic partners and offtakers need.

Phase 3 is also where E3 can train its staff, produce lithium carbonate to support offtake agreements and continue the optimization of critical process metrics, the company said.

E3 secured up to $36.5 million in funding earlier this year for Phase 3 of the demonstration facility and the front-end engineering design of Clearwater through Natural Resources Canada's Global Partnerships Initiative . Additionally, it closed an equity financing of approximately $11.5 million in September to advance development of the commercial-level facility.

Meeting 'business drivers'

E3 has identified several “business drivers” it aims to address to strengthen the investment case for Clearwater, including demonstrating DLE operations at commercial scale.

These include progress toward securing binding offtake agreements. To date, E3 has signed non-binding memoranda of understanding for potential offtake with Epsilon CAM in India and Axens in France.

E3 also disclosed that it is exploring project financing for the construction and operation of Clearwater’s central processing facility.

E3 projects an initial capital expenditure of approximately $3.45 billion for Clearwater. According to an October corporate presentation, E3 plans to begin commissioning Clearwater in 2029, with initial production of 12,000 tonnes of lithium carbonate annually before gradually scaling up to its target capacity.