Lithium Royalty Corp. (TSX: LIRC) (“LRC”) is pleased to announce that Atlas Lithium Corporation (“Atlas”) disclosed today that Atlas has fully funded Phase I of its lithium project in Brazil’s Lithium Valley, with first production of Phase I expected to start in Q4 2024. LRC invested US$20 million in Atlas in May 2023, in exchange for a 3.0% gross overriding revenue royalty (GOR). At the time, Atlas had only contemplated Phase I production of 150,000tpa of spodumene concentrate, but has since expanded its production plans to aggregate production of 300,000tpa once Phase II of its project is fully operational.
“This is a seminal milestone for Atlas Lithium, as it raised US$50 million from leading lithium converters. Despite the recent lithium market volatility, strategic interest for quality lithium supply remains robust and this further validates LRC’s focus on low-cost assets that can thrive irrespective of market conditions. This is another welcome development for the Brazilian lithium market following LRC’s first receipt of payments from its royalty with Sigma Lithium in 3Q23,” said Ernie Ortiz, President and CEO of Lithium Royalty Corp.
Atlas Highlights
- Funding Secured for Atlas Phase I Production of 150,000tpa – Atlas announced that it raised US$50 million from Chengxin Lithium and Sichuan Yahua. The funding includes a $10 million equity placement at $29.77 per share, a premium to the prevailing price of Atlas shares, and a $40 million pre-payment in exchange for the two parties receiving 80% of spodumene concentrate from Atlas’ Phase I production (estimated as 60,000tpa each, based on Atlas’ target of up to 150,000tpa of spodumene concentrate for Phase I production). The offtake agreement is for a 5-year term, with an allowance to terminate upon a change of control transaction for Atlas. Phase II targeted production of an additional 150,000tpa remains unallocated.
- Partners are Well Established Seasoned Lithium Operators – Chengxin Lithium is a US$2.8 billion lithium producer with lithium assets in China, Zimbabwe, and Argentina. Chengxin Lithium has 72,000tpa of lithium chemical capacity at present and is expecting to complete a 60,000tpa lithium chemical converter in Indonesia in 2024. Chengxin supplies lithium materials to BYD, CATL, and LG among others. Sichuan Yahua is a US$2.0 billion lithium producer with annual lithium chemical production capacity exceeding 70,000tpa and plans to expand beyond 100,000tpa by 2025. Sichuan Yahua has sourced material from Allkem’s Mt. Cattlin mine and has an offtake agreement with Core Lithium, two assets in which LRC also holds royalty interests. Sichuan Yahua supplies lithium chemicals to CATL, Tesla, and LG among others.
- Transaction Highlights Low-Cost Position and Speed to Market for Atlas – Atlas’ marquee project in the Lithium Valley of Minas Gerais, Brazil is attractively positioned as the next lithium operator in Brazil. Atlas is aiming to start Phase I production in 4Q24, with Phase II targeted to start in 2025, which in aggregate totals 300,000tpa of spodumene concentrate. Atlas has drilled in excess of 55,000 meters and is expected to release its maiden resource report and its preliminary economic assessment in 1Q24. Atlas plans to follow with a definitive feasibility study for Phase I and II, as well as a final investment decision in 2Q24. LRC provided funds to Atlas in May 2023, underscoring the attractive returns to LRC given the upsized production throughput and speed to market for Atlas’ product.
- Positive LRC Impacts – Atlas is proceeding at an accelerated pace, which LRC anticipates could allow for meaningful cashflow growth at LRC. Even at current spot prices, Phase I revenues to LRC are expected to be approximately US$7 million, with Phase II revenues expected to be approximately US$14 million. The accelerated development pace at Atlas’ lithium project is aided by the modular dense media separation (DMS) technology that Atlas is deploying in conjunction with the experienced team at Atlas. LRC looks forward to the many catalysts expected for Atlas in 2024.
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 Information
This news release contains “forward-looking information” within the meaning of applicable Canadian securities legislation, including statements with regard to the potential expected from the royalty acquired from Atlas Lithium Corporation (“Atlas”). 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 Atlas as the owner, developer and operator of any lithium project based on the mining rights underlying the royalty acquired by LRC, including with respect to mineral resources, mineral reserves, construction timelines, production estimates and other related matters; the economic viability of Atlas’ lithium project; that Atlas’ 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 Atlas’ 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. 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.
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