Lithium Royalty has announced a definitive agreement to sell a 0.5% gross overriding revenue royalty over the Tres Quebradas lithium brine project in Catamarca, Argentina, to Triple Flag Precious Metals.
The transaction, valued at $28m, will leave Lithium Royalty with a net aggregate 0.9% royalty over the project, enhancing its financial position.
This deal crystallises value for Lithium Royalty at a significant premium, highlighting a disconnect between public market valuations of lithium assets and their intrinsic value.
The transaction also validates the company’s strategy and the progress of the Tres Quebradas project.
As a low-cost royalty company, Lithium Royalty is well-positioned to navigate the current lithium downturn.
The proceeds from the transaction will inject further liquidity and enable future acquisitions or share repurchases. The company maintains zero debt and anticipates after-tax proceeds to be approximately equal to the transaction value.
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By GlobalData
Stikeman Elliott acted as legal counsel for Lithium Royalty and the transaction did not involve a financial advisor.
Considered to be one of the largest and highest-grade lithium brine projects globally, the Tres Quebradas project is located in South America’s renowned ‘lithium triangle’.
The concession encompasses the entire salar surface and brine lake, which are rich in resources.
Due to its favourable resource endowment, the project offers promising exploration opportunities and substantial potential for further discoveries and production growth.
In October 2024, Zijin announced it would postpone production commencement at Tres Quebradas until 2025.
Lithium Royalty expects revenue from the project no earlier than the second half of 2025. Zijin plans to optimise production techniques and reduce costs to improve the project’s resilience to price fluctuations.
Zijin Mining is investing in a solar plant at the chemical facility to reduce power costs and is evaluating participation in Argentina’s RIGI investment regime for tax and infrastructure benefits.
Both Lithium Royalty and Triple Flag teams visited the Tres Quebradas site in November 2024, confirming its advanced status and near-term revenue potential.
