Lithium Royalty Corp. has announced that it has entered into an agreement to acquire a 3.0% Gross Overriding Revenue (GOR) royalty on the Das Neves Lithium Project (“Das Neves Project”) and nearby claims in Minas Gerais, Brazil. The project is 100%-owned by Atlas Lithium.
Ernie Ortiz, President and CEO of Lithium Royalty Corp. , commented: “This transaction adds our 31st royalty to the LRC portfolio and is our second since our March 15th, 2023 IPO transaction. On the back of Sigma Lithium entering production (LRC holds a 1% royalty on all Sigma claims and production), LRC is pleased to expand its presence in Brazil through our partnership with Atlas Lithium. The Das Neves project exhibits high grade coarse grain spodumene ore that should lend itself to simple processing. Brazil is quickly developing into an important and environmentally friendly lithium jurisdiction, and we are excited to support Atlas Lithium on its accelerated path to production.”
Investment Highlights
- Das Neves Underpins Mineral Resource Potential: Atlas Lithium is actively exploring the Das Neves property as part of its 40,000-metre drill campaign. At Das Neves, the company has outlined an important discovery at Anitta which has a strike length of at least 1.1 km while being open along strike and at depth. In February, the company estimated widths at Anitta of approximately 20 meters and commented in April that its best hole had widths over 25 meters close to surface. At Anitta, the company reported an intersection of 4.4% lithium oxide which is one of the highest grades reported at a spodumene deposit in Minas Gerais’ Lithium Valley.
- Funding to Support Accelerated Timetable: Atlas Lithium anticipates releasing its maiden Mineral Resource in mid-2023 to be followed up by a Preliminary Economic Assessment (PEA) approximately two months following the resource report. The resource will support plans that are already in motion to mine and build/operate a 100%-owned plant to produce 150,000 tonnes per annum (tpa) of spodumene concentrate.
- Strong Financial Backing: Atlas Lithium has signed a non-binding Memorandum of Understanding with Mitsui & Co., Ltd. for a funding arrangement of up to US$65 million, to support the capital expenditure of the 150,000 tpa plant.
- Focused and Experienced Management Team: The company has formed a well-regarded team with several geologists with expertise in the Brazilian spodumene industry. Furthermore, the Founder and CEO of the company owns a substantial portion of the company’s equity, supporting aligned incentives for all stakeholders. In addition, his educational pedigree speaks to the results-oriented approach for the company and management. The same domestic team that led an Atlas subsidiary to receive its operational permit successfully and expeditiously for a quartzite project will oversee the permitting for the Das Neves project.
- Favourable ESG Characteristics: Atlas Lithium will have access to 100% renewable hydro power for electricity. Furthermore, metallurgical testing from SGS Canada Inc. suggests that the company was able to produce commercial-grade spodumene concentrate using standard Dense Media Separation (“DMS”), a gravity-based approach which limits the use of harmful chemicals or flotation.
- Exploration Potential: While the royalty covers the core Das Neves property, the royalty area covers over 104 km2, presenting considerable optionality especially given the proximity of these claims to Sigma Lithium’s nearby Grota do Cirilo project.
Transaction Details
- LRC to acquire a 3.0% GOR royalty from Atlas Lithium for US$20 million on the key Das Neves claims and other associated claims totaling ~ 104 km2.
- LRC also acquired an option for a 3.0% GOR royalty on other non-associated and non-contiguous claims for a period of 12 months for an exercise price of US$5 million. The optioned claims are in Minas Gerais, Brazil to the west of the Das Neves and Sigma Lithium claims.
- The royalty is a perpetual royalty with no deductions or buyback provisions and is to be paid to LRC in US Dollars.
- At prevailing market prices for spodumene concentrate, estimated annual royalty cash flows to LRC from Atlas’ 150,000tpa production plan would approximate USD$20 million.