2/24/23, 10:28 AM Lithium Royalty Corp.

plans $150-million IPO to boost investment in mines - The Globe and Mail

Lithium Royalty Corp. plans $150-million IPO to

boost investment in mines
ANDREW WILLIS
PUBLISHED FEBRUARY 22, 2023
UPDATED YESTERDAY
FOR SUBSCRIBERS

Lithium Royalty filed the paperwork on Wednesday for an initial public offering on the Toronto Stock
Exchange, after tapping institutional investors for approximately $130-million and profitably investing in
27 projects.
MARK BLINCH/REUTERS

Five-year-old Lithium Royalty Corp. is going public with a planned $150-million-plus

stock sale, raising money to fund the mines that feed a rapidly growing battery
industry.

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2/24/23, 10:28 AM Lithium Royalty Corp. plans $150-million IPO to boost investment in mines - The Globe and Mail

Lithium Royalty filed the paperwork on Wednesday for an initial public offering on
the Toronto Stock Exchange, after tapping institutional investors for approximately
$130-million and profitably investing in 27 projects.

Despite a recent selloff in lithium stocks, driven by falling prices, Lithium Royalty
expects to raise at least $150-million, according to investment banking sources. The
Globe and Mail agreed not to name these sources because they are not authorized to
speak at this stage in the IPO process. The offering would qualify as one of the five
largest IPOs on the TSX in the past year, a dry period for public market debuts.

Royalty companies finance mining or oil and gas projects in return for a share of
future revenue. The concept has proven its merits across economic cycles, creating
public companies such as Franco-Nevada Corp.
FNV-T (/investing/markets/stocks/FNV-T/) +0.01%  , which was launched in
1983 and has a $33.5-billion market capitalization, and the oil patch’s PrairieSky
Royalty Ltd., valued at $5.3-billion and founded 10 years ago.

Toronto-based Lithium Royalty plans to use cash from its IPO to increase the size
and pace of its investments in lithium mines, according to its prospectus. Right now,
the company holds royalty agreements on 27 projects in seven countries, investing
an average of $4.5-million in each mine.

Two Lithium Royalty mines, both in Australia, are producing. Four properties, in
Argentina, Brazil and British Columbia, are under construction. The remaining
projects are still in the development stage. Royalties typically continue after a mine
changes hands, a critical factor in a consolidating sector. Lithium Royalty helped
fund a Neo Lithium Corp. project in Argentina and will still collect payments after
China’s Zijin Mining Group Ltd. acquired the company.

Lithium Royalty earned net income of $10.2-million on its investments in the first
nine months of 2022, compared with $5-million in the same period the previous
year.

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2/24/23, 10:28 AM Lithium Royalty Corp. plans $150-million IPO to boost investment in mines - The Globe and Mail

The company plans to focus on investing in North American hard-rock lithium

mines, including projects in Quebec, to meet automakers’ demands for shorter,
reliable supply chains. Chinese producers dominate the lithium market. In its
regulatory filings, the company said: “Battery supply chains are growing increasingly
localized and we believe that battery metal resources in North America will grow in
strategic importance.”

Ottawa approves new Quebec lithium mine, as Canada doubles down on efforts to
challenge Chinese dominance

In January, General Motors Co. invested US$650-million in TSX-listed Lithium

Americas Corp. to help develop a US$2-billion mine in Nevada. Last year, Stellantis
NV, another major global automaker, took an equity stake in an Australian lithium
producer.

Lithium prices have been volatile over the past 12 months, down approximately 30
per cent since peaking in November, in part on concerns about demand from
Chinese battery makers. However, analysts say the sector’s long-term growth
prospects are strong, owing to demand for batteries that power electric vehicles and
renewable power storage facilities.

“The year ahead could be sloppy for the spot lithium market,” analyst Ben Isaacson
at Bank of Nova Scotia said in a recent report. “Beyond 2024, we are stumped as to
where supply will come from to satisfy demand.”

The International Energy Agency forecast demand for lithium will grow by 30 per
cent annually over the next decade, outstripping growth in the market for other
minerals critical to a decarbonized economy, such as nickel and copper.

The founders of Lithium Royalty have more than a decade of experience and
relationships in the sector. Chief executive officer Ernie Ortiz oversaw investments in
lithium and battery technologies for fund manager Tide Point Capital Management
in Greenwich, Conn., prior to launching the company in 2018. He is a member of the
London Metal Exchange’s lithium advisory committee.

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2/24/23, 10:28 AM Lithium Royalty Corp. plans $150-million IPO to boost investment in mines - The Globe and Mail

Toronto-based Waratah Capital Advisors CEO Blair Levinsky and former GMP
Securities LP mining banker Mark Welling co-founded Lithium Royalty, along with
Mr. Ortiz. Waratan oversees $4-billion in client assets and Mr. Levinsky runs the
firm’s global electrification and decarbonization fund.

St. John’s-based Altius Minerals Corp., which also owns mine royalties, was also an
early backer. In 2021, Lithium Royalty raised US$71-million from institutions,
including New York-based private equity fund Riverstone Holdings LLC.

Investment banks Canaccord Genuity Corp. and Citigroup are leading Lithium
Royalty’s IPO, along with TD Securities Inc., Cormark Securities Inc., National Bank
Financial Inc., BMO Nesbitt Burns Inc., Scotia Capital Inc., Raymond James Ltd. and
Red Cloud Securities Inc. Law firm Davies Ward Phillips & Vineberg LLP is advising
the company, while Blake, Cassels & Graydon LLP is the investment banks’ counsel.

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