Morella Corporation Limited provided an update on the Direct Lithium Extraction (DLE) study being completed by Recion Technologies ("Recion") at Recion's laboratory in Edmonton, Canada. The study is aimed at providing a preliminary assessment of lithium extraction and underlying economics using Recion's technology solution and Fish Lake Valley (FLV) brine. An interim progress report from Recion has provided positive early-stage indications of successful lithium concentration using Recion's ion exchange media (Media) process and FLV brine.

The brine sample was obtained from near surface of the playa at FLV and was expected to be highly diluted from surface water, however the testing process focussed on lithium extraction from the brine type or signature of the brine. As part of the next phase of DLE testing Morella will provide brine samples from reservoirs identified in the Passive Seismic and MT surveys completed earlier in 2022. The report has identified that two hours of absorption is sufficient to extract lithium from the brine with extraction efficiency up to 95% using an absorption column configuration.

Absorption column configuration has been used in water treatment operations and is known to be scalable using standard/commercially available equipment. Extended testing saw high lithium recoveries, resulting in lithium concentration levels over 600%. Morella provided a 20 litre brine sample to Recion in June 2022, initial testing was conducted at benchtop scale, focusing on understanding how Recion's Media process performed with the FLV brine.

To test the lithium extraction rate, a prescribed amount of Media was packed into a column, a prescribed amount of brine then flowed through the column at a prescribed flowrate. Lithium was then desorbed from the column by using acid1 at a prescribed flow rate. Concentrate samples were taken every 30 minutes and analysed for lithium concentration.

Recion has identified two hours as the optimal cycle time and ran a set of extended series repeat tests varying Media quantity, flow rates and total brine volume flowing through the column. The results continue to build a body of knowledge on processing options for larger scale testing. Recion also conducted a series of tests to assess the performance of the Media process for extended cycles of lithium absorption and desorption.

Observations identified that the Media process performed consistently achieving 80-95% lithium extraction over more than 2 months of operation. Recion also tested Media which had been used for more than 8 months and achieved a high lithium extraction rate. The performance of the process over repeat cycles is a key area of interest to support developing an economic model around the use of DLE technology to underpin the FLV Project.

Media performance testing is ongoing. The Recion testwork on the FLV brine has determined the following conclusions: 2 hours was sufficient timeframe to extract lithium from the provided brine sample with an extraction efficiency up to 95% using an absorption column configuration; Processing of the brine in the column results in a high lithium recovery and lithium can be concentrated by a factor of 7-9 up to ~400-500 ppm depending on recovery; Desorption can be completed in 1-2 hours; however, 2 hours is recommended to ensure full recovery of lithium from the sorbent; The absorption column configuration is a well-known modular configuration which has been used in water treatment for decades and can be scaled up using standard equipment; and Preliminary economics have been determined and will be refined following the provision of more representative deeper reservoir samples from the upcoming drill program. The DLE study will continue with Morella recently providing additional brine material to Recion.

A primary objective of the next phase of testing is to generate enough concentrated lithium in solution to allow for continued processing at benchtop scale and production of lithium chemicals from the FLV brine. Morella is currently in the final stages of permitting and a drill contract has been awarded for a drill program aimed at providing brine samples from depth at the FLV project. The Company expects that drilling will commence in the latter part of fourth quarter 2022 once all regulatory approvals have been received.

Morella has also commenced initial discussions on using Recion's recently built field prototype and potential field pilot and will advise the market in due course.