Blue Orca Capital said production records filed by Standard Lithium with the Arkansas regulator indicated actual recovery rates were far lower than projected.

"Standard Lithium's absurd valuation rests solely on the viability of this demonstration plant, making this data, in our opinion, near fatal to the Company's NPV projections and therefore its stock price," Blue Orca said last week.

It also pointed to Albemarle choosing not to pursue its direct lithium extraction project in Smackover, Arkansas, saying if the leading lithium producer was "unable to achieve economically viable lithium extraction in southern Arkansas in 10 years of trying, despite deeper technical expertise and a balance sheet 100x the size of the company, we think it is highly unlikely that Standard Lithium has much more success".

However Standard Lithium said the report contained "numerous important inaccuracies" and had misunderstood the scope of the data reported to the Arkansas Oil and Gas Commission (AOGC).

"To be clear, the only data reported to the AOGC, in compliance with the requirements of the AOGC, were those volumes of lithium chloride solution that were temporarily stored on Standard Lithium's site and these have no correlation with actual lithium recovery rates observed in the plant," Standard Lithium said.

"The company is confident in its lithium extraction technology and demonstration plant and will maintain its focus on executing its strategic plans and progressing towards definitive feasibility and commercialisation at the Lanxess facility."

It had released a preliminary economic assessment in October based on its project in south west Arkansas, with extraction based on its proprietary LiSTR technology, outlining production of 30,000 tonnes per year of battery-grade lithium monohydrate for 20 years.

Its shares (TSXV: SLI), which were trading below C$3 a year ago, closed up more than 16% on Friday to C$11.80 to regain most of the previous day's losses, valuing it at $1.7 billion (US$1.3 billion).