Lithium Royalty (LIRC) Q2 2024 earnings summary

Executive summary

• Revenue rose 85% year-over-year in Q2 2024, driven by higher production at Sigma Lithium and Core Lithium, despite a 72% drop in spodumene prices.

• Q2 2024 was the second highest revenue quarter in company history; H1 2024 revenue increased 41% year-over-year despite an 80% drop in spodumene prices.

• Three new projects (Tres Quebradas, Mariana, Das Neves) are expected to commence production in H2 2024, supporting material growth and operating leverage.

• Positive Adjusted EBITDA achieved, reflecting a lower-cost business model and stable SG&A expenses.

• The company holds 35 royalties, providing diversification and resilience against market volatility.

Financial highlights

• Royalty revenue reached $1.6 million in Q2 2024, up from $631,000 in Q1 2024 and $838,000 in Q2 2023.

• Q2 2024 royalty revenue was $1.55M, up from $0.84M in Q2 2023; gross profit increased 94% to $1.34M.

• Adjusted EBITDA was $138,000, improving from negative $662,000 in Q1 2024 and negative $700,000 in Q2 2023.

• Net income was $0.32M, reversing a $0.89M loss in Q2 2023.

• Cash at quarter end was $9.1 million, with no drawdown on the credit facility.

Outlook and guidance

• Expect continued volatility in lithium prices for the remainder of 2024, but ongoing cost pressures and demand growth should support prices.

• Q3 2024 revenue is expected to be lower year-over-year due to a high Q3 2023 comparison and potential further quotational pricing adjustments.

• Three new projects are expected to start production in H2 2024, including Zijin Mining's Tres Quebradas.

• Core Lithium is expected to sell remaining inventory in Q3 2024 before entering care and maintenance, with a potential restart in H1 2025.

• The company remains focused on cost management, targeting $5 million cash G&A annually.