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.
