Shares of E3 Lithium Ltd. jumped Monday morning following an investment announcement from the federal government, where the funds will be used to create materials for batteries, according to the company’s chief executive.

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The Government of Canada’s Innovation, Science and Economic Development’s Strategic Innovation Fund (SIF), announced a $27-million investment in the Alberta-based company on Monday.

Chris Doornbos, the president, CEO and director of E3 Lithium, said in an interview with BNN Bloomberg on Monday that the company has significant lithium brine resources in the repurposed Leduc oil field, located near Leduc County, Alta. 

The new funding will be used to create the infrastructure necessary to convert the resource into lithium hydroxide, a material used in batteries, said Doornbos.

“The funding from the federal government is supporting that as well as the technology that we've developed that enables the extraction of lithium from these brines. So it's very exciting for us today,” Doornbos said.

To begin commercial operations, Doornbos said a preliminary economic assessment outlined the need for around US$600 million in capital. The project is expected to produce roughly 20,000 tons of battery-quality lithium hydroxide each year, according to Doornbos.

“We will plan to build a production facility which will sort of break into two pieces. One will be our technology to extract the lithium from the brine. We [will] make the lithium sulphide as mentioned, and then we'll put it through the second piece of the plan which will be a conversion process to make lithium hydroxide.”

Following the investment announcement, Doornbos said the company will work to develop a production facility and complete a pre-feasibility study, which he said it aims to complete in about a year. After this time, the company can look to sign offtake customers, he said.

Doornbos said automotive companies like General Motors Co. and Stellantis are of interest.

“So from our perspective, those are the companies obviously that are here in North America. And so they're good targets for us to have conversations with,” he said.