Electric Royalties Ltd. [TSXV-ELEC; OTCQB-ELECF] closed the previously announced transaction to acquire a portfolio of 18 royalty agreements and 32 lithium properties in Ontario, Canada (the Ontario lithium projects or the OLP).
Pursuant to the asset purchase agreement between the company and 1544230 Ontario Inc., MK Exploration Services Inc. and Gravel Ridge Resources Ltd. (together, the vendors) dated April 8, 2024, the company has issued 2.25 million common shares of the company to the vendors and made a net cash payment of $1,689,000 (which reflects a total cash consideration of $1,875,000, less $75,000 down payment provided to the vendors in November, 2023, and $111,000 held in escrow representing cash payments and the value of shares received by the vendors after Jan. 1, 2024, pursuant to certain mineral property interests in the OLP).
Brendan Yurik, CEO, commented: :Northwestern Ontario is known for its lithium potential; thus we are very pleased to complete the acquisition of these prospective lithium royalties and optioned properties in that region. We have strategically selected these royalties and projects from an initial 126 projects, based on our assessment of their prospective geology and greater proximity to prospects with reported lithium resources and exploration activity.
“Current lithium market conditions have allowed us to acquire this portfolio at a relatively low cost, while doubling the size of our overall royalty portfolio. The acquisition represents a significant opportunity for Electric Royalties to grow in an accretive manner, as forecasts suggest lithium prices will rebound in the longer term.”
The OLP portfolio consists of 18 royalties and 32 lithium properties in Ontario. Thirty-one of the 32 properties are currently being explored by third parties pursuant to option agreements and, to the extent that the applicable option payments (yielding the company up to $2.2 million) are made over the next 2.5 years and the options are exercised, each of the properties would revert into royalty interests for Electric Royalties. Electric Royalties would retain its ownership interest in any properties that are not ultimately transferred to an optionee and would have the right to reoption, sell or relinquish such properties.
The properties cover prospective land on the same geological trends of, and surrounding, major lithium discoveries in Ontario. Six of 24 developed lithium prospects in Ontario with reported reserves or resources are located in the vicinity of these properties. Several of these properties are adjacent to the Green Technology Metals Seymour Lake lithium project (on which Electric Royalties holds a 1.5% net smelter royalty interest) that hosts the Aubry deposits. The Seymour Lake lithium project is road-accessible year-round and is envisioned as a central processing facility with the potential to add production from other deposits in the area. Green Technology Metals is currently pursuing a vertically integrated strategy with multiple mine and processing hubs supplying a central lithium conversion facility that would be built in Thunder Bay.
Currently, Canada hosts the sixth-highest lithium reserves of any country, yet 2022 production totalled an estimated 500 tonnes – an amount dwarfed by global lithium powerhouses such as Chile and Australia. The hard-rock lithium deposits in Canada are hosted in pegmatites containing a lithium-bearing mineral known as spodumene. Lithium hosted in spodumene provides producers with greater flexibility as it can be processed into either lithium hydroxide (mainly used in high-density electric vehicle (EV) batteries) or lithium carbonate.
Further to the company’s news release on April 9, 2024, it has completed the $2.5 million drawdown under its $10 million amended and restated convertible credit facility with Gleason & Sons LLC (the lender) dated February 16, 2024, for working capital and to finance the cash payment of the transaction and associated transaction costs.
Electric Royalties is a royalty company established to take advantage of the demand for a wide range of commodities (lithium, vanadium, manganese, tin, graphite, cobalt, nickel, zinc and copper) that will benefit from the drive toward electrification of a variety of consumer products: cars, rechargeable batteries, large-scale energy storage, renewable energy generation and other applications.
