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.

• LRC remains debt-free with $7.1 million in cash and minimal G&A expenses, maintaining a low-cost royalty model with only 10 employees.

• Several royalty projects, including Adina, Moblan, Ganfeng's Mariana, and Sigma Lithium, are progressing despite the weak macro environment.

• M&A activity is increasing, highlighted by Rio Tinto's $6.7 billion acquisition of Arcadium Lithium and Pilbara Minerals' acquisition of Latin Resources, upgrading LRC's royalty counterparties.

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

Financial highlights

• Q3 2024 royalty revenue was $224,000, down from $1.6 million in Q2 2024 and $3 million in Q3 2023, representing 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.

• General and administrative expenses were $1.3 million, with cash G&A at $836,000 for the quarter, down 38% year-over-year.

• Net loss for Q3 2024 was $1.7 million, slightly higher than Q3 2023.

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

Outlook and guidance

• 2025 is expected to be more favorable, with revenue inflection driven by volume growth, new assets coming online, and potentially higher prices.

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

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

• Additional catalysts include Core Lithium's restart study and positive impacts from Rio Tinto's ownership of key projects.

• LRC remains selective in acquisitions, prioritizing assets with near-term cash flow or strategic value.