Lithium Royalty (LIRC) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue declined 93% year-over-year, mainly due to a 74% drop in spot spodumene prices, reduced sales from Core Lithium, and negative quotational period adjustments.

• The company remains debt-free with $7.1 million in cash and a lean structure of 10 employees and minimal G&A expenses.

• Challenging market conditions persist, with many operators experiencing negative cash flow and delayed project timelines.

• Operational milestones include permits for Atlas Lithium's Das Neves, Winsome's Adina scoping study, and Sigma Lithium's Phase 2 financing.

• Rio Tinto's $6.7 billion acquisition of Arcadium Lithium upgrades royalty counterparties on key projects.

Financial highlights

• Royalty revenue for Q3 2024 was $224,000, down from $1.6 million in Q2 2024 and $3 million in Q3 2023, a 93% year-over-year decline.

• Adjusted EBITDA was minus $1.1 million, compared to $138,000 last quarter and $1.3 million in Q3 2023.

• Gross profit dropped 95% year-over-year to $130,000 for the quarter.

• Cash G&A was $836,000, down from $874,000 in Q2 2024 and $1.2 million in Q3 2023.

• Ended the quarter with $7.1 million in cash and no debt.

Outlook and guidance

• Revenue is expected to inflect higher in 2025, driven by volume growth, potential price recovery, and new assets coming online.

• Four near-term projects (Mariana, Tres Quebradas, Atlas Lithium, Sigma Lithium) are expected to add incremental revenue in 2025.

• G&A run rate is expected to remain stable, with no plans to increase headcount.

• Management expects limited supply growth in the near term, supporting a potential lithium price recovery.

• Additional catalysts include Core Lithium's restart study and potential positive impacts from Rio Tinto's project ownership.