Lithium Royalty Corp. Increases Exposure to the Tres Quebradas Lithium Project in Argentina
- LRC has agreed to acquire an additional 0.5% GOR perpetual USD-based royalty, to supplement LRC’s existing 1.0% GOR royalty on the Tres Quebradas Lithium Project, for US$25 million in cash, and 207,844 common shares of LRC.
- At current market prices of lithium carbonate as reported by S&P Platts and based on production estimates disclosed by the project operator, the expected annual gross revenue from this incremental royalty would be approximately US$4.3 million under Phase I and US$10.7 million under Phase II.
TORONTO–(BUSINESS WIRE)–$LIRC #batterymetals–Lithium Royalty Corp. (TSX: LIRC) (“LRC”) is pleased to increase its exposure to the high grade and long-life Tres Quebradas lithium project in Catamarca, Argentina with an agreement to acquire an additional 0.5% gross overriding revenue (“GOR”) royalty in addition to LRC’s existing 1.0%1 royalty on the project. LRC will pay US$25 million in cash and issue 207,844 common shares to the sellers at closing. Closing is subject to customary conditions and is expected to occur in late July 2023.
Ernie Ortiz, President and CEO of Lithium Royalty Corp. commented, “This transaction will increase LRC’s exposure to an asset that is actively in construction, expected to generate near-term cash flow, and greatly enhances the portfolio’s value. This deal will mark the sixth transaction for LRC in 2023 and the fourth since the initial public offering in March 2023, setting up the portfolio well for significant free cash flow growth.” With the completion of this transaction, LRC will hold an aggregate net 1.4% GOR royalty on the Tres Quebradas lithium project.
Investment Highlights
High Grade, Large Scale, In Construction Asset – Zijin Mining Group Co, a publicly traded company with a market capitalization of US$42.5 billion, has reported a Mineral Resource at Tres Quebradas of 7.63 million tonnes (“Mt”) of lithium carbonate equivalent (“LCE”), making it one of the largest salars in the world. Phase I of the project has an anticipated output of 20,000 tonnes per annum (“tpa”) of battery grade lithium carbonate as reported by Zijin. Zijin Mining has disclosed that it expects construction and production commencement is expected by the end of 2023. Zijin Mining is contemplating increasing the output of the salar to 40,000-60,000tpa of LCE under Phase II. According to the last publicly available Feasibility Study2 (FS) on the asset, the Proven and Probable Mineral Reserve stands at 1.671Mt LCE at a grade of 786 mg/L lithium using a 400mg/L lithium cut-off. Proven and Probable Reserves represent 31% of the Measured and Indicated Resource.
Argentine Investment Promotion Regime-Qualified – Zijin’s Argentine subsidiary, LIEX S.A qualifies for Decree 2343, a government initiative aimed at encouraging investments and streamlining international transactions. This demonstrates Argentina’s openness towards foreign investors in the lithium sector. Under this program, LIEX S.A can retain 20% – 60% of its revenue abroad for various purposes such as debt payments, royalties, and overseas financial obligations. Zijin’s Argentine subsidiary has been approved for the program, providing options to Zijin to fund foreign obligations.
Expands Exposure to Top Lithium Geography – Argentina ranks second globally in terms of its resource base (106.5 Mt LCE) and is the fourth largest lithium producer worldwide, according to the Argentine Mining Ministry. The lithium region in Argentina includes the three key provinces of Catamarca, Salta, and Jujuy. The Tres Quebradas lithium project is located in Catamarca, the same province where Livent Corp. operates its Fenix lithium mine as part of the Salar del Hombre Muerto that has been in operation for 25 years. On June 28, 2023, Posco Holdings announced a further US$800 million of investment in the Catamarca and Salta provinces to expand output at its Sal de Oro deposit, highlighting the Argentinean region as a top lithium investment destination for global strategics. As of February 2023, the Argentine government statistics report that mining accounted for 6.0% of private sector jobs in Catamarca, with lithium extraction making up around 40% of the mining workforce4.
Important Dates and Events
- August 14, 2023 – Lithium Royalty Corp. Releases Q2 Results
- August 15, 2023 – Lithium Royalty Corp. Earnings Call
Qualified Persons
The technical and scientific information contained in this news release relating to the Tres Quebradas project was reviewed and approved in accordance with NI 43-101 by Don Hains, P. Geo. of the Hains Engineering Company Limited, a “qualified person” as defined in NI 43-101.
About Lithium Royalty Corp.
LRC is a lithium-focused royalty company with a globally diversified portfolio of 32 high-grade 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 Information
This news release contains “forward-looking information” within the meaning of applicable Canadian securities legislation, including statements with regard to the mineral reserves, mineral resources and lithium production expected at the Tres Quebradas lithium project. Forward-looking information involves known and unknown risks and uncertainties, many of which are beyond our control, that could cause actual results to differ materially from those that are disclosed in or implied by such forward-looking information. These risks and uncertainties include, but are not limited to, those described under “Risk Factors” in LRC’s Annual Information Form dated March 31, 2023, and in particular risks summarized under the “Risks Related to Mining Operations” heading.
Forward-looking information is based on management’s beliefs and assumptions and on information currently available to management. These assumptions include, but are not limited to, the following: estimates of commodity prices, particularly lithium-related products; the accuracy of public statements and disclosures made by Zijin Mining as the owner, developer and operator of the Tres Quebradas lithium project, including with respect to mineral resources, mineral reserves, construction timelines, production estimates and other related matters; the economic viability of the Tres Quebradas lithium project; that the Tres Quebradas lithium project will be developed, transitioned into production and successfully achieve production ramp up, in each case, in accordance with expectations; no adverse development relating to the Tres Quebradas lithium project; and the absence of any other factors that could cause actions, events or results to differ from those anticipated, estimated, intended or implied.
Although the forward-looking information contained in this news release is based upon what management believes are reasonable assumptions, you are cautioned against placing undue reliance on this information since actual results may vary from the forward-looking information. Certain of the information included in this press release has been derived from public disclosure made by the operators of the Tres Quebradas lithium project, but that has not been independently verified by LRC. Investors are cautioned not to put undue reliance on that public disclosure, including on information derived from that public disclosure that is included in this press release.
Unless otherwise noted or the context otherwise indicates, the forward-looking information contained in this news release is provided as of the date of this news release, and we do not undertake to update or amend such forward-looking information whether as a result of new information, future events or otherwise, except as may be required by applicable law.
1 Altius Minerals Corporation has an indirect 10% interest in the 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 being acquired will be held solely by LRC and Altius will have no interest in this additional royalty.
2 King, Mark, and Mark Dworzanowski. GWI & Worley, 2021, Neo Lithium Corp: Feasibility Study – 3Q Project, https://www.sedar.com/DisplayProfile.do?lang=EN&issuerType=03&issuerNo=00036348.
3 “Boletin Oficial Republica Argentina – Régimen de Fomento de Inversión Para Las Exportaciones – Decreto 234/2021.” Brand, www.boletinoficial.gob.ar/detalleAviso/primera/242705/20210407.
4 Informe Mensual: Empleo Por Provincia de La Mineria Argentina, Secretaria de Mineria, June 2023. https://www.argentina.gob.ar/sites/default/files/2023.06_empleo_por_provincia_de_la_mineria_argentina_0.pdf.
Contacts
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Jonida Zaganjori
Investor Relations
(647) 792-1100
