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.
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, 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.
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.”
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.
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.
TORONTO – Canada’s main stock index was down more than 200 points in late-morning trading, weighed down by losses in the technology, base metal and energy sectors, while U.S. stock markets also fell.
The S&P/TSX composite index was down 239.24 points at 22,749.04.
In New York, the Dow Jones industrial average was down 312.36 points at 40,443.39. The S&P 500 index was down 80.94 points at 5,422.47, while the Nasdaq composite was down 380.17 points at 16,747.49.
The Canadian dollar traded for 73.80 cents US compared with 74.00 cents US on Thursday.
The October crude oil contract was down US$1.07 at US$68.08 per barrel and the October natural gas contract was up less than a penny at US$2.26 per mmBTU.
The December gold contract was down US$2.10 at US$2,541.00 an ounce and the December copper contract was down four cents at US$4.10 a pound.
This report by The Canadian Press was first published Sept. 6, 2024.
TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in technology, financial and energy stocks, while U.S. stock markets also pushed higher.
The S&P/TSX composite index was up 171.41 points at 23,298.39.
In New York, the Dow Jones industrial average was up 278.37 points at 41,369.79. The S&P 500 index was up 38.17 points at 5,630.35, while the Nasdaq composite was up 177.15 points at 17,733.18.
The Canadian dollar traded for 74.19 cents US compared with 74.23 cents US on Wednesday.
The October crude oil contract was up US$1.75 at US$76.27 per barrel and the October natural gas contract was up less than a penny at US$2.10 per mmBTU.
The December gold contract was up US$18.70 at US$2,556.50 an ounce and the December copper contract was down less than a penny at US$4.22 a pound.
This report by The Canadian Press was first published Aug. 29, 2024.
The crypto market has recently experienced a significant downturn, mirroring broader risk asset sell-offs. Over the past week, Bitcoin’s price dropped by 24%, reaching $53,000, while Ethereum plummeted nearly a third to $2,340. Major altcoins also suffered, with Cardano down 27.7%, Solana 36.2%, Dogecoin 34.6%, XRP 23.1%, Shiba Inu 30.1%, and BNB 25.7%.
The severe downturn in the crypto market appears to be part of a broader flight to safety, triggered by disappointing economic data. A worse-than-expected unemployment report on Friday marked the beginning of a technical recession, as defined by the Sahm Rule. This rule identifies a recession when the three-month average unemployment rate rises by at least half a percentage point from its lowest point in the past year.
Friday’s figures met this threshold, signaling an abrupt economic downshift. Consequently, investors sought safer assets, leading to declines in major stock indices: the S&P 500 dropped 2%, the Nasdaq 2.5%, and the Dow 1.5%. This trend continued into Monday with further sell-offs overseas.
The crypto market’s rapid decline raises questions about its role as either a speculative asset or a hedge against inflation and recession. Despite hopes that crypto could act as a risk hedge, the recent crash suggests it remains a speculative investment.
Since the downturn, the crypto market has seen its largest three-day sell-off in nearly a year, losing over $500 billion in market value. According to CoinGlass data, this bloodbath wiped out more than $1 billion in leveraged positions within the last 24 hours, including $365 million in Bitcoin and $348 million in Ether.
Khushboo Khullar of Lightning Ventures, speaking to Bloomberg, argued that the crypto sell-off is part of a broader liquidity panic as traders rush to cover margin calls. Khullar views this as a temporary sell-off, presenting a potential buying opportunity.
Josh Gilbert, an eToro market analyst, supports Khullar’s perspective, suggesting that the expected Federal Reserve rate cuts could benefit crypto assets. “Crypto assets have sold off, but many investors will see an opportunity. We see Federal Reserve rate cuts, which are now likely to come sharper than expected, as hugely positive for crypto assets,” Gilbert told Coindesk.
Despite the recent volatility, crypto continues to make strides toward mainstream acceptance. Notably, Morgan Stanley will allow its advisors to offer Bitcoin ETFs starting Wednesday. This follows more than half a year after the introduction of the first Bitcoin ETF. The investment bank will enable over 15,000 of its financial advisors to sell BlackRock’s IBIT and Fidelity’s FBTC. This move is seen as a significant step toward the “mainstreamization” of crypto, given the lengthy regulatory and company processes in major investment banks.
The recent crypto market downturn highlights its volatility and the broader economic concerns affecting all risk assets. While some analysts see the current situation as a temporary sell-off and a buying opportunity, others caution against the speculative nature of crypto. As the market evolves, its role as a mainstream alternative asset continues to grow, marked by increasing institutional acceptance and new investment opportunities.
