Atlas Lithium Achieves Fully Funded Status with First Production Expected in 2024
December 04 2023 - 5:27PM
Business Wire
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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version on businesswire.com: https://www.businesswire.com/news/home/20231204758535/en/
Jonida Zaganjori Investor Relations (647) 792-1100
jonida@lithiumroyaltycorp.com
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