Lithium Royalty Corp. (OTCQX:LITRF) Q4 2023 Earnings Conference Call March 28, 2024 9:00 AM ET
Company Participants
Jonida Zaganjori – Vice President-Investor Relations
Ernie Ortiz – President and Chief Executive Officer
Dominique Barker – Chief Financial Officer and Head-Sustainability
Conference Call Participants
Eric Zhang – Citi
Ben Isaacson – Scotiabank
David Deckelbaum – TD Cowen
Mac Whale – Cormar Securities
Brian MacArthur – Raymond James
Operator
Good morning, ladies and gentlemen. Welcome to the Lithium Royalty Corp. Fourth Quarter 2023 Results Conference Call. At this time, all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session. [Operator Instructions] This call is being recorded on Thursday, March 28, 2024.
I would now like to turn the conference over to you, Jonida Zaganjori, Vice President of Investor Relations at Lithium Royalty Corp. Please go ahead.
Jonida Zaganjori
Good morning, everyone. Welcome to Lithium Royalty Corp.’s fourth quarter and full year 2023 earnings call. Please note that our complete financial results are available on our website, lithiumroyaltycorp.com under the Investors tab and also accessible on SEDAR+.
This event is being webcast live. A replay of this call and transcript will be available on our website. Joining us today are Ernie Ortiz, President and CEO of Lithium Royalty Corp.; and Dominique Barker, Chief Financial Officer and Head of Sustainability at LRC.
Ernie will begin with introductory remarks, followed by Dominique, who will provide an overview of our financial results. After the presentation, we will transition to a Q&A session, where our executive team will respond to your question.
We would like to remind participants that today’s commentaries may contain forward-looking information. For more details, please refer to our forward-looking information statement in our press release dated March 27, 2024, available on our website and on SEDAR+. Please note that all figures referred to on today’s call are in U.S. dollars, unless otherwise noted.
Also, Sigma Lithium has not yet reported earnings for 2023, so we will be limiting our discussion on our royalty with Sigma.
I will now turn the call over to Ernie Ortiz.
Ernie Ortiz
Thank you, Jonida, and good morning everyone. We are pleased to present our fourth quarter and 2023 earnings call, our first annual results as a public company. We grew revenue by 200% for the quarter compared to the same period in 2022. Revenue declined by approximately 66% from Q3 2023 due to a 54% decline in spodumene prices. Revenue was further impacted by provisional pricing adjustments to price from our operating partners.
Dominique will discuss further in the financial overview. Full year revenue increased by 228% year-over-year to $5.5 million with adjusted EBITDA at a $300,000 loss for the full year. Putting these results into context, LRC only benefited from the partial ramp up of Sigma Lithium and Core Lithium during the year. For example, our 2023 annual results only incorporate two quarters worth of Sigma Lithium royalty revenue. In 2023, we invested further in our team, and we were able to invest significantly in human capital and our public company infrastructure.
This positions us well to take advantage of future growth without the need for additional costs. We expect additional projects to enter commercial production in 2024 and to generate incremental revenue for the company that should demonstrate the operating leverage of our business model. 2024 will also mark a full year of calendar operations for LRC as a public company without the presence of pre-IPO reorganization activities.
Our 2023 accomplishments came despite a challenging backdrop for the sector as lithium prices declined by more than 80% during the year. That said, the industry has seen this type of volatility before, with the price decline from the 2017 peak to the trough in 2020 being quite similar at an approximate 78% decline. We note that prices appear to have bottomed in 2024 at levels that are 2.5x to 3x prior cycle lows, while prices on a five-year time horizon are up more than 150%.
Going forward, we expect higher prices over time due to a steepening marginal cost curve and higher CapEx intensity across the industry. While demand from electric vehicles and energy storage remain robust. Notably, the LRC go public transaction was the only IPO in Canada in 2023, highlighting both the challenging equity capital market conditions, but also the excitement and robust business model that LRC exhibits.
LRC completed eight royalty transactions in 2023, with six transactions following the IPO, which is in line with the leading public royalty companies in the world. Of the eight royalties we added in the year, over 85% of the capital deployed was directed towards assets that were either in construction or fully funded by the end of 2023. This fits our strategy of prioritizing royalties with near-term capital potential while also utilizing our competitive advantage in uncovering attractive exploration and development stage royalties.
Additionally, the eight royalty transactions completed in 2023 cemented LRC as one of the most active royalty companies globally, as we believe we completed the greatest number of transactions in the last three years among royalty companies. We continue to see a strong pipeline of opportunities available to us which will provide meaningful growth if they meet our targets for accretion on both a financial and qualitative basis.
LRC now holds 35 globally diverse royalties following the recent acquisition in March with a private Brazilian company M4E. M4E controls one of the largest lithium landholdings in Brazil, with over 100 pegmatites mapped within its boundaries.
Of the 35 royalties, three are currently in production. At least three are expected to enter production in 2024 as per each company’s public guidance, and many more continue their development. The 2023 decline in lithium prices has led to several supply disruptions across the industry.
Marquee projects such as Greenbushes, Wodgina and Kathleen Valley have either curtailed output or slowed expansion. The LRC portfolio has also been impacted as Core Lithium has temporarily suspended mining at Finnis, although it continues to produce spodumene concentrate through mid-2024 as for the latest guidance. Arcadium at Mount Cattlin has guided 37% lower spodumene concentrate output in 2024. At Mount Cattlin, it’s important to note that LRC has already recouped its investment from this 2018 transaction. And the latest reserve update from prior owner Allkem disclosed that open pit mining methods could continue through 2027 to 2028, while underground operations would be studied further.
We are optimistic that these combined impacts on the company will be more than offset in 2024 by increased volumes elsewhere in our portfolio, products commencing commercial production and a recovery in lithium prices. As we mentioned in the IPO, the diversity of our asset base is a key strength as no single asset will drive our results.
Just to highlight this diversity one more time, LRC now holds 35 royalties and the number of royalties in production is set to double. The embedded optionality within the LRC portfolio represents a huge opportunity to investors. Even without any additional acquisitions, the near-term organic growth profile at LRC is best-in-class, with at least three assets expected to start production.
Most of the key development assets in the portfolio are well funded and we expect continued mineral resource growth within the portfolio. Additionally, should lithium prices continue to recover, Core Lithium’s grant open pit operation could restart and Mount Cattlin output could expand. I will now provide an abbreviated update on the key portfolio events of 2023.
Sigma Lithium entered production with LRC now receiving consecutive royalty payments from the leading lithium producer in Brazil. Following the year-end, Sigma announced that it increased mineral resource to 109 million tons with guidance to increase it further to 150 million tons, cementing it as one of the best hard rock orebodies globally. Ultimately, this is a royalty that is nearly impossible to replicate today and highlights our ability to act opportunistically.
Core Lithium began DSO and spodumene concentrate operations in 2023 from the grant open pit. LRC has already received back more than 50% of its acquisition purchase price from Core Lithium. Also, it is important to note that the grants open pit was a starter operation for Core and only represents 10% of its mineral resource at Finnis. The next scheduled deposit, BP33 is more than three times the size of the mineral resource at grant, which should benefit from greater economies of scale.
Core Lithium holds a 31.1 million ton resource, has no debt and has already invested significant capital and infrastructure, which positions LRC well to continue to benefit from future royalty payments as market conditions improve.
LRC acquired a 3% score on Atlas Lithium in Brazil for $20 million. LRC underwrote this transaction at 150,000 tons per year of production. Atlas has since updated their production throughput to 300,000 tons per year. Additionally, Atlas has announced that they are fully funded for Phase 1 via $50 million investment from Chengxin and Yahua. Both of these customers also recently signed off big deal with industry leader Pilbara Minerals. And just this morning, Atlas Lithium announced a $30 million investment from Mitsui. Atlas is guiding for production to commence in 4Q 2024 or approximately 18 months from our initial investment.
Four companies in the LRC portfolio announced the maiden mineral resource, including Winsome Resources, Delta Lithium at Yinnetharra, Green Technology Metals and Grid Metals. Winsome announced a mineral resource of 59 million tons at of Adina, which ranks as the top five asset in North America. This is extremely important for LRC as we hold a 4% GOR and an additional 2% NSR on the core Adina ore body. At Yinnetharra, Delta delivered a maiden resource estimate of 25 million tons, making it just the 15,000 in Australia with the Mineral Resource and the 10,000 in Australia to be above 20 million tons.
Turning specifically to 2024. Based on guidance from our operators, we expect Zijin Mining’s Tres Quebradas project to begin production Ganfeng and Lithium’s Mariana project to contribute revenue to LRC in second half 2024 and Atlas Lithium’s Das Neves project to start production in 4Q 2024. Additional near-term organic growth should come from Sigma Lithium’s Phase 2 plant, which is expected to add 240,000 tons of SCETs to the current plant, Atlas Lithium, which is guiding to its Phase 2 plant, adding 150,000 tons of additional production by May 2025, and Sayona Mining’s Moblan deposit that Sayona recently released their definitive feasibility study on the asset.
In addition, many of our development partners maintain aggressive exploration programs, with Winsome expected to drill another 50,000 meters in 2024 to support enhanced resource upgrades. Furthermore, Delta Lithium is well capitalized, with cash on hand of $116 million and expected to drill over 150,000 meters at Yinnetharra.
The significant accomplishments and progress of these companies highlight the power of our business model. Within the LRC portfolio, there are many hundreds of millions of dollars being spent by our royalty partners that should continue to deliver attractive organic growth to our shareholders. Whether it’s new asset ramp up, production expansions or additional resource growth, we expect 2024 to be marked by several positive portfolio company updates that should de-risk LRC’s operating position and set the company up for continued revenue and cash flow growth.
While LRC will remain acquisitive in 2024, we have already been one of the busiest royalty companies in the world since our IPO. We’ll continue to add high quality assets to the portfolio that offer strong financial accretion to our shareholders. The vast opportunity set, coupled with a sizable embedded optionality in the LRC portfolio, keep us excited for the years ahead.
I will now pass to Dominique who will discuss our financial results.
Dominique Barker
Thank you, Ernie. Our royalty revenue this quarter was $1 million compared to $3 million in the previous quarter, and up from 0.3% million in the same period last year. There are two main reasons for the decline. First, despite volumes increasing in the quarter, there was a negative impact from the lithium price decline. And second, a true up took place in Q4 that relates to volume shipped in Q3, but subject to subsequent price adjustments.
In essence, the true up is related to the time it takes for our operators to close out their contracts with their buyers, which can take as long as three months. Our operators forecast as accurately as possible. But with the abrupt changes in the price of lithium over the course of the last month of 2023, revisions were made downward after the end of Q3 and that downward revision impacted Q4. This should work in reverse in a rising price environment.
Let me take a step back and describe our revenue recognition policy. We recognized revenue in the quarter based on best available information at the time. The two inputs are volume and price. The volume typically does not change following the close of the quarter, unless of course, there’s a change on the quality of the product once assays are completed by the purchaser. The other input is price. In some cases, our operators collect revenue based on the best available information at the time or what is known as provisional pricing. That information is typically a mix of China, Japan, South Korea market pricing. Given the time to close out a contract, which again takes about two to three months, any change in pricing results in a true up to reflect the actual result.
G&A or general and admin expenses was $2.3 million in the quarter, which is the same as the previous quarter. Excluding non-cash stock-based compensation, cash G&A was $1.5 million in the quarter compared to $1.4 million in the previous quarter. LRC’s adjusted EBITDA declined to negative $695,000 in the quarter compared to negative $390,000 in the same period last year, and compared to a positive EBITDA of approximately $1.3 million in the previous quarter. And that’s due to lower lithium prices, which were partially offset by the volume increases at two of our projects as previously discussed.
On taxes, we paid cash taxes of approximately $1 million in 2023, of which $500,000 was attributed to the fourth quarter. Three of the eight acquisitions we made in 2023 are currently under construction and expected to enter commercial production in 2024 and start paying us royalties. Those are Tres Quebradas, Das Neves and Mariana. This compares favorably with 2023, when we only had two royalties commence production.
So just want to take a step back compared to one year ago when we had one of 29 producing royalties or 3% of our royalties producing, today we have three of 35 producing royalties or 9%, and that number should increase over time. As our projects progress from exploration to construction and commence commercial production, we begin to receive royalty payments without any associated financial obligations. As the projects increase production volumes, so do our royalty payments increase, subject to the positive or negative impact of price movements.
Adjacent to this, we expect to continue to experience meaningful resource growth from several of our pre-production royalty companies, which set them up to commence construction and then production in the next 12 to 36 months, which will further add to our royalty revenues and accrete to our net asset value. In other finance related events, our current liquidity position is strong. We have $11.7 million of cash at quarter end and zero drawdown on our credit facility.
In summary, we are optimistic in 2024 that the combination of recovering commodity prices, the ramp up of producing projects, and new projects commencing production will add meaningfully to our revenue and EBITDA. As these things happen, we expect our NAV to grow as producing an exploration assets are de-risked and we add to new royalties.
Back to you, Ernie.
Ernie Ortiz
Thank you, Dominique. I’ll briefly discuss our view on the market dynamics for lithium before moving to Q&A. LRC estimates that lithium demand grew by approximately 28% in 2023, driven by the continued adoption of electric vehicles. Electric vehicle penetration was in the high teens for 2023, with EV sales growing by 31% year-on-year. Despite moderating growth rates from prior years, the 31% growth rate was still very robust and supportive of strong aggregate demand for electric vehicles.
There are a number of cross-currents underway in both the electric vehicle market and, by consequence, the lithium market. In the EV market, we are witnessing fierce competition among several OEMs that is pressuring margins at the OEM level, but at the same time improving customer affordability.
Furthermore, the EV rollout on a global basis remains strong with 631 EV models expected in 2024, which is up from 482 in 2023. In China alone, some estimates call for over 200 new models to be introduced in 2024, showing the continued investment into the EV ecosystem. For 2024 many third party estimates believe that EV sales should go between 20% and 25% year-on-year.
A few other anecdotes worth mentioning include LG Energy Solutions, Korea’s largest battery manufacturer is guiding to mid 20% growth for EV’s in 2024, with a ramp up to low 30% growth in 2025. They estimate North America will be the fastest growing region. Stellantis recently commented that they will not be slowing down their EV offensive and answer that they will keep it flat out as they introduce 18 new EV models for a total of 48 in 2024.
In the energy storage sector, SMM notes that the global shipments for LFP cells, with LFP being the predominant chemistry in the EFS sector, grew by 49% year-on-year, with energy storage now growing to one seventh of global lithium demand in 2023. Meanwhile, Samsung SDI commented that they expect growth of at least 18% in energy storage in 2024.
As mentioned previously, 2023 was a challenging year given the lithium pricing backdrop and the elevated level of global interest rates. LRC was able to capitalize on the weakness in the lithium market with eight royalties added in 2023 with six following the IPO. Again, over 85% of the capital deployed following the IPO was directed towards assets that are expected to start production in 2024, highlighting the strong focus at LRC on organic growth and cash flow generation.
While recent lithium pricing activity has been encouraging, as positive [ph] prices have already rallied by 30% to 40% from the recent lows, LRC will remain focused on what it can control and stay focused on execution and credit management of our balance sheet. Lithium prices are likely to remain volatile, but should improve over time, giving challenging returns from many projects at current market conditions. As battery inventory levels continue to improve and as energy storage growth rates accelerate. LRC is very well positioned to benefit from the rise in prices and an eventual lithium recovery.
Overall, LRC has royalties on many of the best mineral endowments within the lithium sector, and as the industry grows for approximately 1 million tons in 2023 to potentially over 3 million tons in 2030, our portfolio will become increasingly strategic and unique to investors globally. We are excited by the year ahead and we look forward to the many catalysts the portfolio has to deliver in 2024.
I will now pass back to Jonida to open the question and answer portion of the call.
Jonida Zaganjori
Operator, we’re now ready to answer questions. Can we open up deadlines for Q&A?
Question-and-Answer Session
Operator
Thank you. And, ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] And your first question comes from the line of Patrick Cunningham from Citi. Your line is open.
Eric Zhang
Hi, good morning. This is Eric Zhang on for Patrick. My first question is, have you seen the royalty pipeline accelerate as a result of weaker financing environment? And what is the potential for larger check sizes to bridge some financing for larger development stage assets?
Ernie Ortiz
Sure. So we have seen the royalty pipeline continue to grow. At the time of the IPO, we mentioned there was roughly $130 million to $150 million near term opportunities in the next 18 months. We did complete over $60 million in 2023. That pipeline is still robust and continues to grow. We’re in active conversations with many parties. At the same time, we are looking to make sure that the portfolio is best-in-class and only if those transactions meet our objectives when it comes to financial and qualitative accretion. And by that, I mean high grade, low cost, low technical complexity will we transact.
But we do still see a robust pipeline. We do still see deals on the horizon in 2024 for LRC. But it’s all obviously very asset dependent and negotiation dependent. And as far as larger check sizes, we don’t feel constrained. I think there’s a lot of opportunity to continue to grow in various types of check sizes, whether it’s small, medium or large. But overall, we still see a strong opportunity and pipeline ahead.
Eric Zhang
Got it. Thank you. And my last question is, can you walk us through what you’re seeing in regards to near term cash flows from producing assets, and is weaker cash flow potentially impending your ability to execute on attractive royalty acquisitions at the bottom of the cycle? Thank you.
Ernie Ortiz
Sure. So I think I can start, Dominique and I would love to for additional commentary, but as far as cash, you’ve seen our report. We did see good results from Core and Sigma in the quarter, and we do expect additional revenue to come from Mariana and Atlas in the second half. And when it comes to Tres Quebradas, we did highlight some of the commentary that they had from their annual report, in which, essentially, Phase 1 construction for Tres Quebradas is basically complete.
Now, it’s important to note that going up from construction completion to production to shipment is very important for us because we get paid on shipment. Last year, in 2023, for example, Sigma started production in the second quarter, but our first royalty payment ended up coming in the third quarter. So that’s something that we are monitoring quite closely, and it is something that is going to be worth monitoring for everyone. But we don’t feel constrained. We think there’s a lot of opportunities for us to grow the business.
Our second to last deal, we actually use shares, and it is a substantial premium to where we’re trading at now. So that’s just one example of creative ways that we can continue to grow. But I’ll let Dominique continue to answer this question.
Dominique Barker
Actually you took my point. We have ample liquidity between our current cash and our facility and all the expected royalty payments that we’ll have in 2024. But as Ernie mentioned, we can really be creative and you saw that in 2023 when we issued stock to vendors. And so we could potentially be creative in doing that. And as Ernie noted, those – the stock was issued at a premium to where it is. So I’ll leave it there.
Eric Zhang
Great. Thank you.
Operator
And your next question comes from the line of Ben Isaacson from Scotiabank. Your line is open.
Ben Isaacson
Thank you very much, and good morning, everyone. My first question is for Dominique. Can you, I mean, now that we’re at the end of Q1, can you talk about the direction that the true up [ph] will be for this quarter?
Dominique Barker
Hey, Ben. Really appreciate the question. But I think that would be considered forward-looking information. The only thing I would say is that we’ve seen some constructive movement in the price of lithium. You would have seen a couple of private auctions that have happened. I think there was an announcement from Sigma yesterday with regards to some pricing that they’ve secured on a shipment. So as the price increases, we can expect that the opposite would happen on true ups.
Ben Isaacson
That’s helpful. Thank you for that. Ernie, can you talk about why you’ve been unable to receive technical data on Finnis?
Ernie Ortiz
I think, there’s no hindrance in us being able to receive technical data. We get…
Ben Isaacson
We get that in the report.
Ernie Ortiz
Yeah. Every quarter we receive data from the company by operations report, and we do have rights to attend the site and different information rights. So – and there is a published DFS that we can report to. So – and on top of that, we do have our third party geo that reviews kind of all their filings and so forth. But, yes, as far as kind of any, if we haven’t really gone to any time that we’ve requested, I think Core has always been very amenable. But, yes, there hasn’t been a problem for us.
Ben Isaacson
Sorry. Sorry. Ernie, I’m just reading the report that you published yesterday. It says the company requested, but has not received access to technical data on the project from Core Lithium.
Dominique Barker
Ernie, I’m going to – Phil Panet is in the room and he’s our legal counsel. I’m going to ask him to answer the question and Phil…
Ben Isaacson
Thank you.
Philip Panet
This is just as part of preparing a technical report. I mean, we have to do this wrap around technical report, but basically just done off, of course, work. So in the course of preparing it, we requested to Core for information. I think given where they are, they’re busy and in their situation, there wasn’t time for them to give us the information, so we proceeded with a technical report on that basis. I think the technical report you’ll see is consistent with the one that we released last year. And with their report, I don’t think there’s really any new information in the technical report. I don’t think there aren’t any issues in the relationship with Core. I think it’s more just a function of how busy they are and what’s going on then that they just weren’t able to support the request.
Ben Isaacson
Great. Thank you. And just last question back to Dominique. So you have 11 million or 12 million of cash on hand, and I think you have a $25 million credit facility, presumably you said, I think 1.5 million of SG&A cash burn in Q4. Is that a fair assumption in terms of cash burn for SG&A going forward per quarter, or are you looking, do you think that’ll grow or shrink over time?
Dominique Barker
I think in the short term, it’s fair to say that our cash G&A will be 5 million to 6 million. And as we grow, and I would put that in the more medium to longer term, one would expect the G&A to increase. And I would just note that for those who don’t follow royalty models, the largest royalty company has on the order of 35 employees, which is not a lot. We’re currently at 10. Thanks.
Ben Isaacson
Great. Thanks so much. Appreciate the questions.
Operator
And your next question comes from the line of David Deckelbaum from TD Cowen. Your line is open.
David Deckelbaum
Thanks, everyone. Thanks, Ernie and Dominique. My question, Ernie, first one is just regarding pricing, we talked about the true ups and obviously the M+1 impact that’s been happening, especially in the spodumene concentrate side. I’m curious, as you’ve observing, obviously you have a significant royalty, obviously in Sigma and then Das Neves is one of the largest in your portfolio. We’ve seen, I think some recent measures taken by some companies to do auction or look for different price indications. I’d be interested in your comments on how you see pricing evolving, especially for a lot of these western hemispheric hard-rock projects. And if you think that we’re seeing an earnest movement away from China price indices that would otherwise obviously benefit you with perhaps more premium pricing.
Ernie Ortiz
Yes. So we do think, and we’re big proponents of price transparency and we are seeing the market evolve real time. A cycle ago, many companies were using fixed pricing and that transitioned afterwards to pricing that had a quarter or two lag in index pricing. And as you pointed out, now it’s M+1 or M+2. And with this new options that we’ve seen in the last few months from the likes of mineral resources, all of October and a few others.
We think it does provide more transparency to the sector, especially with recent reported prices that have been anywhere 20%, 25% higher than some of the price reporting agencies. I think it is very important to us and certainly a positive, since there is such a large price discrepancy that is very positive to our portfolio that will continue to generate positive and growing cash flow with this kind of growing premium pricing that our customers are reporting. So we recommend Sigma in our portfolio for announcing that result yesterday. It was a great result.
But ultimately we do think the price transparency is a positive for the sector. I think it does allow for investors to make more educated decisions. And like I said, if there’s a 20% difference between price reporting agencies and the recent pricing that we’ve announced, that is a significant delta and it’s sort of positive for the LRC portfolio.
David Deckelbaum
Appreciate the color there. And I’d also would like to ask a follow-up question on just the M&A pipeline. Obviously, you have a number of projects coming online in 2024 and then 2025. With the recent move in pricing, are you seeing any more project or opportunities or investment opportunities that would otherwise be attractive, that would have perhaps near-term production timelines in the next couple of years? Or are most of the opportunities still described as opportunities that would be sort of later in the decade?
Ernie Ortiz
I would say it’s varied, I would say it’s probably above. But we are still prioritizing near-term cash flow opportunities. As we mentioned in the prepared remarks, the majority of our capital was directed towards assets that essentially were going to start production in the next 12 months to 18 months. So I think we still have that mindset in mind where we’re going to look to deploy capital with near-term cash flow potential. And we are in discussions with several opportunities that either are cash flowing now or also share those similar attributes of near-term cash flow.
So, yes, I would expect for us to continue to deploy the majority of our dollars towards near term cash flow, but we do feel that we have a competitive advantage in the sector. So we will also transact in exploration royalties where we think we can uncover hidden gems, and they provide a lot of value for us down the line.
David Deckelbaum
Thanks, Ernie. Good luck, guys.
Operator
And your next question comes from the line of Mac Whale from Cormark Securities. Your line is open.
Mac Whale
Hi, good morning. Ernie, I’m wondering if you could give us an update on just the competitive landscape given the point we are in the market. Are you seeing new players come in and sort of add to the competition or change the pricing that you kind of have to assume when you’re looking at opportunities?
Ernie Ortiz
Sure. So, as far as competition, we think the main competitors, particularly on the secondary royalty side, tend to be the actual operator themselves. There’s been a few opportunities where that particular operator wants to buy back the royalty. So that I would say for the secondary royalties is something that we’ve seen, but I wouldn’t say that’s increased in the last few months. I think that’s just something that we’ve seen throughout our history in the last five or six years.
As far as for new royalties, we have seen there’s other kind of royalty companies that have openly spoken about lithium, but at the same time, we haven’t seen too many transactions from other players in lithium, and there’s no other a major royalty company that is fully dedicated on lithium full time. So we haven’t seen kind of any major competition on that side. But at the same time, we’re always vigilant to protect our industry leading IP and so forth.
And I would say the bigger, probably competition outside of the royalty space likely comes from strategics, and that would be large mining players that want to get involved in either exploration or development stage royalties. But there again, we’re also very encouraged that we’re still a nimble and lithium focus where we can act much faster and much earlier than a lot of those companies can. So in many cases, we’re the ones that are putting many companies on the radar, and Allkem is a good example there, where after we invested, Martin Rowley, the prior Chairman of Allkem, came on board. And then just this morning, Mitsui announced a deal with Atlas, in December Yaeher in Shenzhen. So we’re still winning business, and we’re still seeing a competitive advantage on that front.
Mac Whale
Okay. When you look around the world, the various regions, has there been a shift at all in your focus like or your view as to which areas are more maybe over the course of the year? I’m trying to get an idea of the change. Some areas that look more interesting to you now than, say a quarter or two quarters ago? Or is it – or do you still look at the regions in the same way you would when the pricing was higher?
Ernie Ortiz
Sure, our thinking has certainly evolved, but it’s not necessarily due to price. I think it has been more out of just seeing the speed to market for a lot of different countries. So there’s no shift on our region. We’ve always prioritized stable jurisdictions, pro-business, pro-mining, and pro-lithium. So there’s no shift on where we would invest. But there has been a new prioritization of which regions we want to continue to pursue and grow in.
One thing that we’ve been commenting to investors in the last six months is our ABCs of hard rock lithium that would be Australia, Brazil, and Canada. We want to continue to grow in these particular regions. Brazil specifically, we see there’s a lot of promise in the country. We’ve been a leader there through our investment in 2018 with Sigma than last year on Atlas, and we just completed one this month with a private company called M4E. And we think Brazil is going to be a powerhouse in hard rock lithium production just very, a lot of benefits from Brazil, whether it’s kind of consistent, coarse-grained ore bodies, that generally high grade, very supportive environment, and, of course, the fast and robust permitting regime is something that we think is highly attractive. So, yes, I would say the regions itself haven’t necessarily evolved, but we certainly are prioritizing those ABCs of hard rock lithium.
Mac Whale
Okay, and then the last question I just wanted to ask about if there’s any update to be had on the Orion case on the Thacker Pass royalty?
Ernie Ortiz
No major update beyond what we put in the release yesterday. We’re awaiting to schedule a damages trial, so that’ll be the next key event in this particular trial. We expect that to occur in the second half of the year, although it could go into the first half of 2025. But we’ll continue to communicate to the market as we learn more and to the extent that we can. But we’re just awaiting the scheduling of that damages trial as the next key event.
Mac Whale
Okay, great. Thanks, guys.
Operator
And your next question comes from the line of Brian MacArthur from Raymond James. Your line is open.
Brian MacArthur
Hi, good morning. Sorry, a lot of my questions have been answered, but could you just give us an update on Horse Creek and what’s going on there, timing silicon market?
Ernie Ortiz
Sure. So on Horse Creek, there are private companies, so we’re so limited in some ways of what we can discuss. But they are working on a multi $100 million financing at this time with leading investment banks. And once that financing is completed, which they expect that to occur this year to essentially vertically integrate their smelter in Tennessee with the mine, which is fully permitted in British Columbia, then production will start in earnest.
The latest commentary that we’ve received from the company is that they expect the mine to start at some point in 2025, subject to financing, of course, but that’s the latest communication, and they expect that to start in 2025.
Brian MacArthur
Great. That’s very helpful, because I know originally it was going to be earlier, so I just not quite as familiar with it. Thanks very much, Ernie. That’s helpful on the timing.
Operator
Thank you. And there are no further questions at this time. I would like to turn it back to Jonida Zaganjori for closing comments.
Jonida Zaganjori
Thank you to everyone who joined us today. This concludes our fourth quarter and full year 2023 results conference call and webcast. We expect to release our first quarter 2024 results after market close on May 13, 2024, with a conference call held on May 14 at 9:00 a.m. Thank you for your interest in Lithium Royalty Corp. Goodbye.
Operator
Thank you, presenters, and ladies and gentlemen, this concludes today’s conference call. Thank you for participating. You may now disconnect.
