Earnings call transcript: Lithium Royalty Corp sees strong Q3 2025 growth

Lithium Royalty Corp (LRC) reported a robust performance for Q3 2025, marked by an 86% year-over-year increase in revenue, reaching $417,000. Despite a consistent adjusted EBITDA loss of $1.1 million, the company maintains a strong cash position of $27.5 million with no debt. The stock price showed a slight decline of 0.42%, closing at $7.07, reflecting a modest market reaction.

Key Takeaways

• Revenue surged 86% year-over-year in Q3 2025.
• Maintained a strong cash balance of $27.5 million with no debt.
• Continued focus on expanding royalty portfolio, adding a 36th royalty.
• Energy storage anticipated as a key driver of future lithium demand.

Company Performance

Lithium Royalty Corp demonstrated significant growth in Q3 2025, with revenue increasing by 86% compared to the same period last year. The company’s strategic focus on high-grade, low-cost assets has bolstered its competitive position in the lithium market. The acquisition of new royalties and the expansion of its portfolio to include diverse minerals like tungsten and cesium highlight its commitment to growth.

Financial Highlights

• Revenue: $417,000, up 86% year-over-year.
• Adjusted EBITDA loss: $1.1 million, consistent with the previous quarter.
• Cash balance: $27.5 million, with no debt.
• Share buybacks: 4,400 shares at an average price of $5.90.

Outlook & Guidance

Looking ahead, Lithium Royalty Corp anticipates increased royalty revenue in 2026, driven by strong demand in the lithium sector. The company remains optimistic about the energy storage market, which is expected to significantly contribute to future growth. The strategic focus on expanding its royalty portfolio and investing in critical minerals positions LRC well for sustained growth.

Executive Commentary

Ernie Ortiz, CEO of Lithium Royalty Corp, remarked, "LRC is well positioned to thrive in the quarters and years ahead." He emphasized the importance of the energy storage market, stating, "The energy storage market is one of the fastest growing end markets within the lithium industry." Ortiz also expressed confidence in the sector’s resilience, noting, "We are encouraged by the resilient demand in the lithium sector."

Risks and Challenges

• Market volatility: Fluctuations in lithium prices could impact revenue.
• Supply chain constraints: Potential disruptions in mineral supply could affect operations.
• Regulatory changes: New regulations in key markets might pose challenges.
• Competition: Increasing competition from other lithium producers could pressure margins.

Q&A

During the earnings call, analysts inquired about the company’s tungsten acquisition strategy and the potential revenue timing for new projects. Executives confirmed a stable long-term lithium price outlook and highlighted energy storage as a crucial demand driver.

Full transcript - Lithium Royalty Corp (LIRC) Q3 2025:

Conference Operator: Ladies and gentlemen, thank you for joining us, and welcome to Lithium Royalty Corp’s Third Quarter twenty twenty five Results Conference Call. This call is being recorded on Tuesday, 11/04/2025. After today’s prepared remarks, we will host a question and answer session. I would now like to turn the conference over to Yunita Zaganore, Vice President of Investor Relations at Lithium Royalty Corp. Please go ahead.

Yunita Zaganore, Vice President of Investor Relations, Lithium Royalty Corp: Good morning, and welcome to Lithium Royalty Corp’s Third Quarter twenty twenty five Results Call. Please note that our complete financial results are available on our website, lithiumroyaltycorp.com, under the Investors tab and on SEDAR plus This event is being webcast live. A replay of this call 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 at LRC.

Ernie will begin with introductory remarks, followed by Dominique, who will provide an overview of our financial results. After the presentations, we will transition to a Q and A session, where our executive team will respond to your questions. We would like to remind participants that today’s commentaries may contain forward looking information. For more details and other important notices, please refer to our press release dated 11/03/2025, available on our website and on SEDAR plus Please note that all figures referred to on today’s call are in U. S.

Dollars unless otherwise noted. I will now turn the call over to Ernie.

Ernie Ortiz, President and CEO, Lithium Royalty Corp: Thank you, Yonita, and good morning, everyone. Revenue in the quarter was $417,000 This figure increased by 86% compared to the year ago figure. The increase in revenue was driven by the tailwind from positive quotational pricing adjustments that had previously been subtractions to revenue. Similarly, the quarter benefited from easier year over year comparisons as Core Lithium’s last shipment occurred in the 2024 and are no longer factored in the year over year figure. Pricing was a headwind with SMM reporting a year on year price decline of 6% despite a 14% sequential increase for spodumene concentrate.

Spodumene prices were volatile in the quarter with a range of $620 per ton at the lows to a peak of $1,000 per ton. The quarter exited with prices at approximately $850 per ton and are currently trading near $950 per ton. In a sign of the magnitude of the recent downturn, if spot prices hold at the current levels for the remainder of the year, then the 2025 would be the first quarter in which the sector sees year on year price increases since the 2023 or since LRC became a public company. LRC has witnessed portfolio maturation that positions the company well to deliver revenue growth in the years ahead, irrespective of the pricing environment. In this vein, LRC is pleased to congratulate ZJ Mining on their startup of the Tres Cabratas lithium project in Argentina during the 2025.

ZJ started production of this large scale asset and is actively ramping up production that should see more meaningful contribution in 2026. The company was able to complete one small shipment during the quarter that translated into LRC recording its first ever revenue from the Tres Cabratas project. Zijin is actively working to increase output as it ramps to nameplate capacity for its Phase one project of 20,000 tons per year. As part of Zijin’s startup commentary, Zijin also disclosed that its Phase two production profile is now 40,000 tons per year compared to the prior guidance of 30,000 tons per year. This startup complements the inauguration of Gangfeng Lithium’s Mariana lithium project in Salta, Argentina earlier this year, which continues to derisk with first revenue expected for LRC in the near term.

Also in the quarter, Sunnova Global started production at its Horse Creek mine in British Columbia. Sunnova Global started production mainly to test the capabilities of the mine and near term production could be sporadic. Although we expect first revenue from the Hordes Creek mine in 2026 from the recent production. Atlas Lithium continues to advance the Das Neves asset in Brazil. Atlas has a DMS facility in Belarizonte is awaiting additional environmental permitting to progress to construction.

The company is well advanced in its development and could be one of the earliest greenfield mines to enter production in the next cycle. Core lithium remains a high quality asset for LRC. The company completed a $50,000,000 equity raise to accelerate the restart of the finished lithium project and to expedite the d p 33 box cut and decline development. LRC visited the site in October and can attest to the high quality DMS plant on-site, the solid infrastructure it has with proximity to port, and the unencumbered material it has from its 205,000 tons s c six nameplate capacity. Core is advancing the project towards a final investment decision to restart the mine.

In the quarter, we were active on our NCIB program. We acquired 4,400 shares at an average price of $5.9 per share. This brings our buybacks for the year to almost 716,000 shares at a price of $5.63 In addition, we were able to acquire our thirty sixth royalty of the quarter on the Fox Tungsten asset that is owned by Happy Creek Minerals. LRC acquired a 1.25% net smelter return royalty for approximately $260,000 The Fox tungsten asset holds a mineral resource of 1,150,000 tons and 1.231% tungsten trioxide. The company announced a 100 hole, 10,000 meter drill campaign in September to enlarge the resource.

Tungsten is a critical mineral in several countries, including Canada, The United States, and the European Union. Approximately 85% of global production emanates from China, Russia, and North Korea, high in the strategic nature of the Fox tungsten asset given its high grade ore body located in British Columbia. Tungsten has a high melting point and extreme durability with applications in the defense industry, semiconductors, robotics, and electric vehicles. It is a very complementary acquisition for LRC and that it is a small cash outlay and leverages a strong intellectual property the LRC team holds in Critical Minerals as an extension of our very strong position in the lithium sector. With this acquisition, LRC’s portfolio is mainly exposed to lithium, but now benefits from other key exposures including silica quartz, cesium, and tungsten.

Our focus remains to grow the acquisitions of additional lithium royalties. But to the extent there are tactical opportunities in Critical Minerals that are relatively small in capital outlay, yet benefit from our IP within the sectors of electric vehicles, energy storage, robotics and eVTOL, they will continue to evaluate opportunities as they arise. In this vein, our pipeline continues to grow and improve. Our preference remains to acquire royalties on cash flowing or near term cash flowing assets, and we feel that we can be selective given the stage of the cycle. Our pipeline is robust, and we are optimistic about potential royalty acquisitions in the quarters ahead.

As we’ve mentioned previously, given that we have royalties in some of the best assets globally, we will remain prudent on when to deploy additional capital. I will now pass to Dominique who will discuss our financial results.

Dominique Barker, Chief Financial Officer, Lithium Royalty Corp: Thank you, Ernie. Our royalty revenue this quarter was $417,000 up from $224,000 in the same period last year and up from $127,000 last quarter. The price of lithium is up quarter on quarter for the first time since our IPO, coming off the bottom of approximately $600 per tonne for spodumene in June 2025. That and QP adjustments upwards, both quarter on quarter and year on year, were factors that contributed to the revenue increase. The most material financial event for our company this past quarter is the start of production in revenue generation at Tres Cabratas in Argentina.

While the production at Tres Cabratas this quarter was minimal owing to the short period of production in September, we expect more normalized production in line with what Zhijin has said, namely annual nameplate of 20,000 tonnes per annum. We are also pleased to report that we received the first royalty payment from Zijin in U. S. Dollars. It is also worth noting that the risk in Argentina continues to be manageable, with the ten year bond in Argentina moving up over 20% after the election results last week and stabilizing there.

We would not have expected any impact of the election on our investments in Argentina. That’s because the commodity is exported, and our royalties are paid in either Canadian dollar or US dollar. However, I do think it is still worth noting to you that the country is on the right track and helps in the perception of our investments. G and A was $1,600,000 in the quarter compared to $1,300,000 in the same period last year. Non cash G and A stock based compensation was $478,000 in the quarter compared to $407,000 in the same period last year.

Taking this into account, our cash G and A was $1,100,000 this quarter compared to $1,200,000 last quarter and $1,100,000 in the same period last year. LRC’s adjusted EBITDA was a loss of $1,100,000 in the quarter compared to a loss of $1,100,000 in the same period last year and a loss of $1,500,000 last quarter. The decrease in loss compared to last year is primarily due to the increase in revenue. The loss is comparable to last quarter. With regards to balance sheet, our position is strong.

We had $27,500,000 of cash at quarter end and no debt. We were active on our NCIB and repurchased 4,400 shares in the quarter at an average price of $5.90. As most of you will know, the rules on share buybacks are restrictive. So we were limited on the quantity we could repurchase in the quarter. However, we do continue to look for opportunities and we still have an ability to purchase up to 1,200,000.0 shares on our current NCIB.

I will now pass it back to Ernie for closing remarks.

Ernie Ortiz, President and CEO, Lithium Royalty Corp: Thank you, Dominique. I will now provide an overview of the lithium market. Lithium demand growth has remained strong and resilient throughout 2025. LRC estimates that lithium demand is on track to grow by north of 25% this year. The largest end market currently is electric vehicles, but that is rapidly diversifying.

Like how electric vehicles amplify the demand profile of lithium for mobile electronics a decade ago, the lithium market is seeing an expansion of its end market base as battery technology proliferates across the energy storage, robotics, humanoid, shipping, and electric vertical takeoff and landing or eVTOL. These new end markets are important for two key reasons. First, the energy storage market is one of the fastest growing end markets within the lithium industry with channel checks suggesting energy storage deployments are on track to grow by approximately 60% in 2025. This is above initial expectations from battery sector analysts. Furthermore, while 2026 growth estimates are preliminary, some estimates call for another strong year of growth on the order of 60% again.

The energy storage market is opaque, which we believe can lead to an underestimation of demand. LRC estimates that energy storage could comprise approximately 30% of global lifting demand this year, showing the growing importance of energy storage. Second, the new applications from robotics, humanoid, shipping, and eVTOL are fragments of the market that are likely not yet counted in demand estimates for lithium. These markets are seeing major capital investments, such as with SoftBank’s acquisition of ABB’s robotics division for $5,400,000,000, Meta’s progress towards its own robot called the Metabot and several leading tech companies expanding in the robotics industry. Furthermore, several companies are working towards electric air aviation with Elon Musk commenting just last week that there could be a product unveiling before the end of the year in this area.

Within the electric vehicle sector, demand growth remains strong with RoMotion reporting 26% year on year growth for EVs globally on a year to date basis. The growth was led by Europe with growth of 32, followed by China at 24%, and North America at 18%. Europe is the second largest electric vehicle market, and the market is seeing a rapid acceleration in growth rates. This is being led by more opt options of affordable mass market EVs and more funds allocated to EV subsidies on the continent. In Europe, BNEF is tracking to at least seven new EV models that are priced below €25,000 to be unveiled in 2026.

In addition, they believe there will be at least 19 affordable models available by the 2027. On top of this, Germany recently announced a €3,000,000,000 subsidy campaign to provide for €4,000 subsidy for certain electric vehicles. This follows some of the recent commitments from The UK, Italy, and France. The subsidies announced amount to over four and a half billion euros of support for electric vehicle market in Europe that started in the second half of this year, but with full effects like it to be felt next year. We have already touched on energy storage, but a few other anecdotes worth sharing.

LG Energy Solutions recently increased their backlog in the energy storage sector to a 120 gigawatt hours from 50 gigawatt hours just a quarter ago. Tesla reported year to date energy storage deployment growth of 60% year on year with the most recent quarter showing 81% year on year growth. Tesla commented on the earnings call that demand for energy storage continues to be really strong into 2026. In contrast, supply growth appears to be moderating on the back of low prices, lower returns, and limited capital raisings in the lithium sector in the last couple of years. Over the last four years, supply growth averaged approximately 30% per year.

Over the next three to four years, consensus supply growth is forecasted to grow by mid teens per year. In other words, supply growth rates are expected to half versus the recent history in the lithium market. Should demand trends remain robust as they have been in 2025, there is the potential to rebalance the lithium market sooner rather than later. Data providers in the sector suggest that there have been monthly drawdowns of inventory in China in both September and October. Current battery production trends suggest continued firm demand in November as well.

SMM reports that inventories have declined by 11% since the recent peak in July, although it is important to note that we are in the historically strong season for demand and tracking industry trends in in the next quarter will be important. To conclude, LRC is well positioned to thrive in the quarters and years ahead. LRC has a strong balance sheet with $27,500,000 in cash for which we continue to evaluate attractive opportunities. This quarter marked an important milestone as Zijin Mining started the Tres Quebradas project. We expect operations to ramp up and royalty revenue to increase as we head into 2026.

Our portfolio continues to progress, and we believe visibility into the organic growth profile of the business will improve as portfolio companies achieve their milestones. The industry is lapping the most negative impacts from price declines of this current downturn. At current prices, the 2025 is expected to be the first quarter of positive year on year price growth in spodumene concentrate since our IPO. SE 6 prices are now at $950 per ton compared to $850 per ton exiting the 2025. The combination of asset startups such as Zijin and Gangfeng with a potential pricing recovery should help revenue growth in 2026.

We are encouraged by the resilient demand in the lithium sector with energy storage growth rates surpassing market expectations. The positive incremental demand has the potential to rebalance the market earlier than expected. Our pipeline remains strong, and we are evaluating more high quality opportunities with a focus on advanced assets with a near term path to cash flow. We believe we are well positioned to grow and thrive in the years ahead. LRC is set to benefit from operating leverage from more volume and potentially higher prices.

This will be enhanced by a strong balance sheet that will allow us to unlock further growth via additional royalty acquisitions. With that, I will pass it back to Yunita for Q and A.

Yunita Zaganore, Vice President of Investor Relations, Lithium Royalty Corp: Thank you, Ernie. We are ready now to open up the lines for Q and A.

Conference Operator: Thank you. We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please raise your hand now. If you’ve dialed in to today’s call, please press 9 to raise your hand and 6 to unmute your line when prompted.

Please standby while we compile the Q and A roster. Your first question comes from the line of David Deckelbaum with TD Cowen. Please go ahead. Thanks for the time, Ernie.

David Deckelbaum, Analyst, TD Cowen: I appreciate it this morning. Curious just with the Tungsten acquisition, if you could add a bit more color there on just how that came to pass and with maybe some of the recent Trump administration initiatives around reshoring the supply chain in The U. And obviously, what we’ve seen up in Canada with Kearny. Are are you are you looking outside of the lithium world a little bit more aggressively now, as as sort of a a longer dated, opportunity for for some some some attractive value here as we we attempt to reassure the supply chain here.

Ernie Ortiz, President and CEO, Lithium Royalty Corp: Sure. Hi, David. Yes. So this acquisition, came through, our network. So as as I I alluded to in prepared remarks, we do have a very strong IP, in lithium, but, lithium as a as a critical mineral does touch other verticals, that have the same end markets as other critical minerals.

So, through our network, we were able to evaluate this second hand royalty on the tungsten asset. It’s one of the highest grade assets, in North America and just in generally, in the West. So we thought it given our IP in the space, given the strength of our network, we were able to capitalize on that, and, we do think it provides very good optionality. The returns are, very high for for something like this, and we were able to, assume very conservative assumptions. So we do think it adds, an element of diversification.

But at the same time, our preference right now is for lithium royalty, so it’s it is a relatively, small outlay. We are, looking at other critical mineral royalties. I wouldn’t say we’re looking at it more aggressively than we have been in the past. I think just our our network continues to grow and expand. And as our cash balance is still very strong, we are able to be more opportunistic and tactical when it comes to evaluating these opportunities.

But we do take note in, some of the new government efforts, particularly in the West of trying to, bring more supply into the domestic supply markets and allied countries. And we think LRC will be an important, avenue to finance some of these mines, mostly in lithium. But like I said, if there are some tactical opportunities and other critical minerals where it’s not competitive, it’s bilateral, it’s, within our network, and we can leverage our IP, then I think it’s something that we will continue to look at.

David Deckelbaum, Analyst, TD Cowen: Thank you, guys.

Conference Operator: Your next question comes from the line of Patrick Cunningham with Citi. Please go ahead.

David Deckelbaum, Analyst, TD Cowen: Hi, good morning. You provided a pretty helpful timeline on the upcoming milestones and you expect to get some inaugural royalty revenue from Mariana next year. I guess what should we expect in terms of order and payment timing, revenue step up throughout 2026? And any milestones that we should be aware of just to be tracking in real time when some of these assets start producing?

Ernie Ortiz, President and CEO, Lithium Royalty Corp: Sure. Hi, Patrick. So, every asset is, is different. And as we’ve seen with some of these startups, the timing of shipments is, particularly important. And, obviously, with prices also being quite volatile, that can also impact the cadence and the timing of these shipments by way of an analog.

Sigma, for example, in 2023 started production in April, and then but their first shipments started in the third quarter of the year, so we didn’t record first revenue until the 2023, and then means we got the cash afterwards once the payments were due. So that’s an analog from from preview from, prior iterations. Of course, every asset is different. In this case, three q, was actually quick to do a small shipment even though it’s small, so we did get payment in the in the third quarter. But we suspect that once they have, steady production, this will likely not be as a huge impact as far as timing and cadence of shipments.

We do know there are, I guess, monthly export data that, we’re tracking out of Argentina and other countries to help, have a better visibility, into the timing of of the shipments and production. But, I think we’re, just very pleased that Zegion was, able to get one small shipment, and now production seems to be going in the right direction. So I think it’s something that as we get additional color from our operators, we’ll we’ll provide additional information. But right now, I guess, we’re, sensitive to what they’ve disclosed.

Patrick Cunningham, Analyst, Citi: Fantastic. And then maybe just a higher level lithium market question. Just given some of the volatility discussed and obviously, it seems like equity values and pricing increases in lithium are likely to stay somewhat volatile. How much of it is short lived and maybe sentiment driven versus structural? I guess maybe a better way of asking that question is, has this current view or updated supply order demand view changed your underwriting assumptions or or long term price outlook?

Ernie Ortiz, President and CEO, Lithium Royalty Corp: Sure. So our long term, pricing outlook and expectations haven’t changed all that much. And we actually also mentioned that even consensus, long term price expectations haven’t changed, dramatically even throughout the last two and a half years. So, since, I think, about two years ago, consensus had around $1,414.50 a ton for long term spodumene price. And now on our our tracker, it’s around $1,300 a ton.

Of course, term prices have shifted dramatically, but the long term price expectation hasn’t shifted, too dramatically, either internally or or externally. We think the recent volatility, it’s it’s something that is part of the course for for lithium. It’s a nascent market, and we think volatility while it will likely diminishes over time as the sector grows, it’s it’s still, nascent. So it still needs time to mature and to develop. But I think bigger picture, what is, the most important is that this is being a demand, led, kind of price firming in the last, three to six months.

The biggest story has been energy storage, and that demand surpassing, expectations, by, very big numbers. And now from our prepared remarks, we think it could be 30% of the market. And if that continues to grow at similar growth rates, which some expect in 2026, that alone could be around 18% of of demand growth in 2026. So, obviously, we’re taking it day by day. But right now, I think the bigger picture is that we are encouraged by the energy storage market.

So it’s being it’s a demand led, story for the time being. And, it hasn’t changed our views dramatically, but, of course, we’re always trying to, maximize value for shareholders. So we’re trying to get the highest returns on the lowest assumed price as possible.

David Deckelbaum, Analyst, TD Cowen: Thank you so much.

Conference Operator: Your next question comes from the line of Katie Lachappel with Canaccord Genuity. Your line is open. Please go ahead. Hey, Katie. You may need to unmute yourself on the Zoom platform.

Katie Lachappel, Analyst, Canaccord Genuity: Sorry about that. Hey, Ernie and team. Thanks for taking my question, guys. Can you just quickly discuss some near term capital allocation priorities, royalty transactions versus buybacks? I know during the quarter, you highlighted that your current pipeline is very robust.

So maybe some incremental detail there and and when you believe that, you know, some of those transactions could be announced if it’s near term or medium term, etcetera? Thank you.

Ernie Ortiz, President and CEO, Lithium Royalty Corp: Sure. So as far as capital allocations, the priority is still to acquire, additional, royalty acquisitions. We did retire about 9% of the float this year, by way of buyback, and that has been, a very attractive return for our shareholders given, the the return that they’ve seen to date. But like I said, the pipeline remains robust. We are, seeing activity that is picking up, evaluating several projects.

The project attributes remain relatively similar as discussed in the past. We’re looking at high grade, low cost assets with a preference for near term cash flow. Ranges between, say, 3,000,000 US dollars to as high as 30 to 40,000,000, US dollars. We are hopeful that we could announce something in the next couple of quarters, but, of course, it depends on, two parties, involved. But I would say we’re seeing more robust levels of, discussions, recently, and that is very encouraging to see.

But, of course, we’ll we’ll we’ll take it day by day. And to the extent that we can be opportunistic, with the shares, since we do have a very strong balance sheet, I think we do have a very optimistic view of where the company can head over the next few years. So we will, look to to stay active where we can on the buybacks.

Katie Lachappel, Analyst, Canaccord Genuity: Awesome. That’s it on my end. Thanks, guys.

Conference Operator: At this time, we have no further questions. I’ll turn the call back over to you, Yanita, for closing remarks.

Yunita Zaganore, Vice President of Investor Relations, Lithium Royalty Corp: Thank you to everyone who joined us today. This concludes our third quarter twenty twenty five results call. Goodbye.

Conference Operator: Ladies and gentlemen, this concludes your conference for today. We thank you for participating and ask that you please disconnect your lines.

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