(in thousands of U.S. dollars unless otherwise noted)
Lithium Royalty Corp. (TSX: LIRC) (“LRC” or the “Company”) is
pleased to report on the successful conclusion of its inaugural
year as a public company, following its initial public offering in
March 2023, with an update on key developments in 2023 through into
2024.
The royalty business model continues to provide a compelling
exposure to the development of the lithium commodity markets and
the fast-growing global electric vehicle and renewable power
industries. Interest in key lithium mineral assets continues to
grow from strategic participants despite the near-term volatility,
highlighted by the robust M&A activity taking place in the
industry. LRC sees a robust environment for capital allocation with
a view on creating sustainable long-term value.
“2023 was a record year for LRC marked by the largest deployment
of capital in the Company’s history. We added eight new royalties
during 2023, including six new royalties since the March IPO.
Furthermore, the existing LRC portfolio experienced strong organic
growth, with four projects unveiling maiden resource announcements
of global significance. In addition, the James Bay project operated
by Arcadium Lithium (formerly Allkem) received environmental
approval from Québec’s provincial authorities and Atlas Lithium
announced that it is fully financed for its Das Neves project in
Brazil, which is targeting to start production in 2024.
Notwithstanding lower lithium prices, the LRC portfolio progressed
substantially and is positioned to benefit from the continued
growth in the lithium sector,” stated LRC’s CEO, Ernie Ortiz.
While we are not pleased with the 48% decline in the share price
since March 2023 IPO, it is in-line with major lithium companies,
weak performance for public royalty companies and a 73% decline in
lithium prices. Our acquisition activity continued at a record pace
and we are deploying capital at superior returns. Our pipeline for
new royalties is robust, valuations are attractive and return
expectations well above average.
2024 is expected to be an inflection point for the Company as
our projects which entered commercial production in 2023 ramp up,
and several others commence commercial production for the first
time.
Lithium Market
Internal and third-party estimates suggest lithium demand
increased by approximately 27% in 2023, powered by continued growth
in electric vehicle (EV) sales which grew by approximately 35% on a
global basis. EV sales penetration (battery electric and plug-in
hybrids) was approximately 17%, up from 12% in 2022, despite higher
interest rates that impacted affordability. Looking forward to
2024, third party estimates are forecasting for EV sales to grow
between 20-25% year-on-year, which would equate to EV sales of
17-18 million units globally and represent approximately ~20% of
global automobile sales. According to forecasts, the continued rise
of EVs in combination with growing energy storage battery
installations should allow the lithium market to grow in excess of
20% in 2024 and will mark an important milestone for the industry,
as 2024 is on track to be the first year ever in which lithium
demand reaches (and exceeds) one million tonnes in LCE terms. We
expect that continued end market growth, improving battery
inventory levels, and greater consumer choice for EVs will be
important tailwinds for the sector in 2024.
2023 Events
- Two additional lithium projects commence spodumene concentrate
shipments;
- Eight additional royalties added in 2023;
- Four new maiden resource announcements within LRC’s royalty
portfolio, including key announcements for Winsome Resources’ Adina
lithium project in Québec and Delta Lithium’s Yinnetharra project
in Australia;
- Arcadium Lithium’s (formerly Allkem) provincial approval on
James Bay project, allowing the project to commence construction;
and
- Atlas Lithium announced that its Phase 1 project is fully
funded through partnerships with leading chemical converters.
Key Mineral Resource Updates
Grid Metals Donner Lake Royalty: In
July 2023, Grid Metals announced a maiden mineral resource estimate
for its Donner Lake project in Manitoba, Canada, comprising 6.81Mt
of inferred resources with a Li2O grade of 1.39%. LRC holds a 2.0%
GOR royalty on the Donner Lake lithium project.
Arcadium Lithium James Bay Royalty: In
August 2023, Arcadium Lithium (previously Allkem Limited) reported
a 173% increase in the James Bay mineral resource, which now stands
at 110.2Mt. LRC holds a 1.5% NSR royalty on part of the James Bay
lithium project.
Delta Lithium Yinnetharra Royalty: In
December 2023, Delta Lithium announced a maiden mineral resource
estimate for the Yinnetharra project in Australia, comprising 6.7Mt
of measured and indicated resources and 19.0Mt of inferred
resource, both with a Li2O grade of 1.0%. LRC holds a 1.0% GOR
royalty on the Yinnetharra lithium project.
Winsome Resources Adina Royalty: In
December 2023, Winsome Resources announced a maiden mineral
resource estimate for the Adina project in Québec, Canada,
comprising 58.5Mt of inferred resource, with a Li2O grade of 1.12%.
LRC holds a 4.0% GOR and 2% NSR royalty on the Adina lithium
project.
Green Technology Metals Root Lake
Royalty: Following up on its maiden mineral resource release at
Root Lake from April 2023, Green Technology Metals updated its
mineral resource estimate at Root to 14.6Mt at 1.21%. This brings
the global resource in combination with Seymour to 24.5Mt at 1.14%.
LRC holds a 1.0% GOR royalty on each of the Root Lake and Seymour
lithium projects.
Sayona Mining Moblan Royalty: In April
2023, Sayona Mining announced a major resource expansion at the
Moblan lithium project in Québec, Canada, growing the resource to
49.9Mt of measured and indicated mineral resource at 1.2% Li2O with
a 0.25% cut-off grade. LRC holds a 2.5% GOR royalty on the Moblan
lithium project.
Bradda Head Lithium Basin-Wikieup
Royalty: In September 2023, Bradda Head announced an updated
mineral resource estimate for its Basin project in Arizona,
reaching 1.0Mt of inferred LCE mineral resource. LRC holds a 2.0%
GOR royalty on the Basin-Wikieup lithium project.
Progress Updates on LRC Royalty Projects
Sigma Lithium Grota do Cirilo Royalty:
LRC received the first ever royalty payment from the Grota do
Cirilo project in 2023. Production at this project ramped up
quickly and reached steady state production during 2023 on a run
rate basis. In October 2023, Sigma announced that it had reached
record peak production of 890 tonnes per day, equivalent to
annualized production of 320,000 tonnes. According to Sigma’s
public disclosure, Sigma consistently shipped product on a monthly
basis during the fourth quarter. LRC holds a 0.90% NSR royalty on
the Grota do Cirilo lithium project.
Atlas Lithium Das Neves Royalty: In
December 2023, Atlas Lithium announced that it was fully funded to
develop Phase 1 of its Das Neves project, which Atlas is targeting
to produce 150,000 tpa of spodumence concentrate. Atlas Lithium
raised USD$50 million in funding through partnerships with lithium
converters Chengxin Lithium and Sichuan Yahua. Atlas has disclosed
that this capital infusion positions the Das Neves project to start
production in 2024. Please click here to access Atlas Lithium’s
press release. LRC holds a 3.0% GOR royalty on the Das Neves
lithium project.
Arcadium Lithium James Bay Royalty: In
December 2023, Arcadium Lithium (previously Allkem Limited)
announced that it was granted its Certificate of Authorisation,
which is the final step in the Environmental and Social Impact
Review Committee (COMEX) in Québec that will allow for the
development of the James Bay lithium project. This important
milestone allows Arcadium to begin construction at the site. LRC
holds a 1.5% NSR royalty on 23 claims of the James Bay lithium
project, totaling an area of approximately 1,195 ha.
Green Technology Metals Seymour Lake
Royalty: In December 2023, Green Technology Metals received a
mining lease for its Seymour Lake lithium project in Ontario. LRC
holds a 1.0% GOR royalty on each of the Root Lake and Seymour
lithium projects.
Core Lithium Finniss Royalty: On
January 5, 2024, Core Lithium announced that it was temporarily
suspending mining operations, while continuing to process
stockpiled ore (which was approximately 280,000 tonnes at December
31, 2023) to produce spodumene concentrate. During the last wet
season in the Northern Territories, Core Lithium halted production
at the Grants project in late December 2022 and resumed in late
March 2023 as per their public disclosure. Core Lithium will
continue the mine study for the BP33 project, with early works on
pause until market conditions improve. As of September 30, 2023,
Core Lithium held AUD$202.1 million of cash and no debt. LRC holds
a 2.5% GOR royalty on the Finniss lithium project.
Acquisition Activity in 2023
- During 2023, LRC acquired eight additional lithium royalties,
on six new lithium projects, in Argentina, Brazil, Québec and
Ontario, as follows:
Operator
Royalty
%
Acquisition Date
Q2 Metals
Mia – Québec, Canada
1.0% NSR
November 2023
Pinnacle Minerals
Adina East – Québec, Canada
2.0% GOR
October 2023
Zijin Mining
Tres Quebradas – Catamarca,
Argentina
0.5% GOR1
July 2023
Power Metals Corp.
Case Lake – Ontario, Canada
2.0% GOR2
May 2023
Atlas Lithium
Das Neves – Minas Gerais,
Brazil
3.0% GOR
May 2023
Arcadium Lithium
James Bay – Québec, Canada
1.5% NSR3
March 2023
Ganfeng Lithium Co. Ltd.
Mariana – Salta, Argentina
0.45% NSR
February 2023
Winsome Resources Ltd.
Adina – Québec, Canada
2.0% NSR
January 2023
Orion Resource Partners Litigation Update
LRC is pleased to announce that the Ontario Superior Court of
Justice has granted an injunction in LRC’s lawsuit against Orion
Resource Partners (“Orion”).
In August 2023, the Ontario court ruled in LRC’s favour, finding
that in January 2021 LRC entered into a binding and enforceable
contract to buy an 85% interest in the Thacker Pass royalty from
Orion for US$18.7 million total consideration. LRC has since sought
an injunction preventing Orion and its related entities from
transferring the remaining 40% interest in the Thacker Pass royalty
held by Orion.
On January 3, 2024, the Ontario court granted an injunction
restraining Orion, and any entity that employs that trade name in
its business dealings, and its employees, agents, officers,
directors and any other person acting on their behalf or in
conjunction with any of them, from any conduct, or causing any
conduct, that dissipates, transfers or encumbers that 40% interest
in the Thacker Pass royalty that would hinder the delivery up for
the Thacker Pass royalty as a remedy to LRC, pending the final
disposition of the ongoing litigation between LRC and Orion.
The Ontario court has not yet decided on the appropriate
remedies for the breach by Orion Resource Partners, which will be
addressed in a separate court hearing yet to be scheduled. Orion
Resource Partners has commenced an appeal of the Ontario court’s
August decision that found the binding and enforceable contract.
LRC does not recognize this litigation as an asset in its financial
statements and expects that resolution of this matter may be
subject to further delays. Orion Resource Partners has not asserted
any claims against LRC.
Purchases of Shares by LRC and by Insiders
During 2023, LRC re-purchased 154,500 shares under LRC’s normal
course issuer bid (NCIB), at a total cost of $1.3 million. The
current NCIB concludes on July 9, 2024.
In addition, insiders purchased 397,312 shares during 2023
(including in the IPO), bringing the total aggregate insider buying
since IPO to approximately C$6.0 million.
Due to the current absence of undisclosed material information
regarding the Company, the board of directors of LRC has granted a
temporary waiver of the Company’s regularly scheduled blackout on
trading by insiders of LRC that would otherwise currently be in
effect following the conclusion of the fourth quarter of 2023,
subject to continued compliance with all securities laws applicable
to all insiders engaging in such trades. The temporary waiver will
expire at the end of the day on January 19, 2024.
Important Dates and Events
- January 17-19, 2024 – LRC at 27th Annual CIBC Western
Institutional Conference
- January 23-25, 2024 – LRC at TD Cowen 15th Annual Global Mining
Conference
- March 27, 2024 – Q4 2023 results released
- March 28, 2024 – Q4 2023 earnings call
Shareholder Information
Lithium Royalty Corp’s Investor Presentation is available
here.
About Lithium Royalty Corp.
LRC is a lithium-focused royalty company with a globally
diversified portfolio of 34 revenue royalties on mineral properties
around the world that supply and are expected to supply raw
materials to support the electrification of transportation and
decarbonization of the global economy. Our portfolio is focused on
high-grade and low-cost mineral projects that are primarily located
in Australia, Canada, South America and the United States. LRC is a
signatory to the Principles for Responsible Investment; the
integration of ESG factors and sustainable mining are
considerations in our investment analysis and royalty
acquisitions.
Forward Looking Statements
This press release contains “forward-looking information” and
“forward-looking statements” within the meaning of applicable
Canadian securities laws, which may include, but are not limited
to, statements with respect to future events or future performance,
management’s expectations regarding LRC’s growth, results of
operations, estimated future revenues, performance guidance,
carrying value of assets and requirements for additional capital,
mineral resource and mineral reserve estimates, production
estimates, production costs and revenue, future demand for and
prices of commodities, expected mining sequences, business
prospects and opportunities, the performance and plans of third
party operators and the expected exposure for current and future
assessments and available remedies. In addition, statements
relating to resources and reserves and mine life are
forward-looking statements, as they involve implied assessment,
based on certain estimates and assumptions, and no assurance can be
given that the estimates and assumptions are accurate and that such
resources and reserves or mine life will be realized. Often, but
not always, forward-looking statements can be identified by the use
of words such as “plans”, “expects”, “is expected”, “budgets”,
“potential for”, “scheduled”, “estimates”, “forecasts”, “predicts”,
“projects”, “intends”, “targets”, “aims”, “anticipates” or
“believes” or variations (including negative variations) of such
words and phrases or may be identified by statements to the effect
that certain actions “may”, “could”, “should”, “would”, “might” or
“will” be taken, occur or be achieved. Forward-looking statements
involve known and unknown risks, uncertainties and other factors,
which may cause the actual results, performance or achievements of
LRC to be materially different from any future results, performance
or achievements expressed or implied by the forward-looking
statements. Forward-looking information is based on management’s
beliefs and assumptions and on information currently available to
management. The forward-looking statements herein are made as of
the date of this press release only and LRC does not assume any
obligation to update or revise them to reflect new information,
estimates or opinions, future events or results or otherwise,
except as required by applicable law.
A number of factors could cause actual events or results to
differ materially from any forward-looking statement, including,
without limitation: fluctuations in the prices of the primary
commodities that drive royalty revenue (including various lithium
products); fluctuations in the value of the Canadian and Australian
dollar and any other currency in which revenue is generated,
relative to the U.S. dollar; changes in national and local
government legislation, including permitting and licensing regimes
and taxation policies and the enforcement thereof; the adoption of
a global minimum tax on corporations; regulatory, political or
economic developments in any of the countries where properties in
which LRC holds a royalty or other interest are located or through
which they are held; risks related to the operators of the
properties in which LRC holds a royalty or other interest,
including changes in the ownership and control of such operators;
relinquishment or sale of mineral properties; influence of
macroeconomic developments; business opportunities that become
available to, or are pursued by LRC; reduced access to debt and
equity capital; litigation; title, permit or license disputes
related to interests on any of the properties in which LRC holds a
royalty or other interest; whether or not the Company is determined
to have “passive foreign investment company” (“PFIC”) status as
defined in Section 1297 of the United States Internal Revenue Code
of 1986, as amended; excessive cost escalation as well as
development, permitting, infrastructure, operating or technical
difficulties on any of the properties in which LRC holds a royalty
or other interest; actual mineral content may differ from the
resources and reserves contained in technical reports; rate and
timing of production differences from resource estimates, other
technical reports and mine plans; risks and hazards associated with
the business of development and mining on any of the properties in
which LRC holds a royalty or other interest, including, but not
limited to unusual or unexpected geological and metallurgical
conditions, slope failures or cave-ins, sinkholes, flooding and
other natural disasters, terrorism, civil unrest or an outbreak of
contagious disease; the impact of the COVID-19 (coronavirus)
pandemic; and the integration of acquired assets. The
forward-looking statements contained in this press release are
based upon assumptions management believes to be reasonable,
including, without limitation: the ongoing operation of the
properties in which LRC holds a royalty or other interest by the
owners or operators of such properties in a manner consistent with
past practice; the accuracy of public statements and disclosures
made by the owners or operators of such underlying properties; no
material adverse change in the market price of the commodities
(including various lithium products) that underlie the asset
portfolio; the Company’s ongoing income and assets relating to
determination of its PFIC status; no material changes to existing
tax treatment; the expected application of tax laws and regulations
by taxation authorities; no adverse development in respect of any
significant property in which LRC holds a royalty or other
interest; the accuracy of publicly disclosed expectations for the
development of underlying properties that are not yet in
production; integration of acquired assets; and the absence of any
other factors that could cause actions, events or results to differ
from those anticipated, estimated or intended. However, there can
be no assurance that forward-looking statements will prove to be
accurate, as actual results and future events could differ
materially from those anticipated in such statements. Investors are
cautioned that forward-looking statements are not guarantees of
future performance. LRC cannot assure investors that actual results
will be consistent with these forward-looking statements.
Accordingly, investors should not place undue reliance on
forward-looking statements due to the inherent uncertainty
therein.
For additional information with respect to risks, uncertainties
and assumptions, please refer to LRC’s most recent Annual
Information Form dated March 31, 2023 and filed with the Canadian
securities regulatory authorities on www.sedarplus.com. These risks
and uncertainties include, but are not limited to, those described
under “Risk Factors” in the Annual Information Form, and in
particular risks summarized under the “Risks Related to Mining
Operations” heading.
Technical and Third-Party Information
LRC does not own, develop or mine the underlying properties on
which it holds royalty interests. As a royalty holder, LRC has
limited, if any, access to properties included in its asset
portfolio. As a result, LRC is dependent on the owners or operators
of the properties and their qualified persons to provide
information to LRC or on publicly available information to prepare
disclosure pertaining to properties and operations on the
properties on which LRC holds a royalty or other similar interests.
LRC generally has limited or no ability to independently verify
such information. Although LRC does not believe that such
information is inaccurate or incomplete in any material respect,
there can be no assurance that such third-party information is
complete or accurate.
1 Altius Minerals Corporation has an indirect 10% interest in
the original 1.0% Tres Quebradas lithium royalty through its 10%
limited partnership interest in LRC LP I. LRC holds the other 90%
limited partnership interest. The additional 0.5% GOR royalty
acquired is held solely by LRC and Altius has no interest in this
additional royalty. 2 Gross Overriding Revenue (GOR) royalties are
based on the total revenue stream from the sale of production from
a property with few, if any, deductions. 3 Net Smelter Return (NSR)
royalties are based on the value of production or net proceeds
received by the operator from the smelter or refinery that treats
the operator’s mineral production. These proceeds are usually
subject to deductions or charges for transportation, insurance,
smelting and refining costs as set out in the royalty agreement,
but may also be subject to other deductions or charges.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240108892681/en/
Contact Information for Inquiries: Jonida Zaganjori
Investor Relations (647) 792-1100 jonida@lithiumroyaltycorp.com
Lithium Royalty (TSX:LIRC)
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