Electric Royalties Ltd (TSX-V:ELEC, OTC:ELECF) announced that it has entered into an amended and restated letter of intent with 1544230 Ontario Inc., MK Exploration Services Inc. and Gravel Ridge Resources Ltd to acquire a portfolio of 22 royalty agreements and 36 prospective lithium properties in Ontario, Canada.
CEO Brendan Yurik highlighted that the new terms of the acquisition were highly favourable given the current lithium market conditions.
“We have successfully reduced the overall cash acquisition cost by approximately C$2,500,000 to C$1,975,000 to acquire 22 existing royalties, plus 36 lithium properties which have been optioned out to third parties,” Yurik said.
“We anticipate that scheduled option payments from the properties will generate meaningful revenues to the company over the next several years until partners have earned-in to each respective project, at which point each will convert to a new royalty in our portfolio.”
He said that while lithium is seemingly oversupplied in the short term, new sources will need to be developed to meet long-term demand from electric vehicles and battery plants.
“This revised transaction comes at an opportune time to significantly expand exposure to lithium in Ontario at a relatively low cost,” he said.
“A top-tier mining jurisdiction, Ontario has the potential to be a major supplier of lithium: the permitting environment is favourable, especially for battery metal projects, and mineralization is commonly close to surface, increasing the odds of new discoveries progressing along the development curve.”
Upon closing of the transaction, Electric Royalties will have a portfolio of 44 royalties.
The company will issue the vendors an aggregate of 2,250,000 shares; a cash payment of C$1,975,000 minus the C$75,000 exclusivity fee already paid; the amount of certain payments received by the vendors under specific earn-in, option, royalty or similar agreements on or after January 1, 2024; and 50% of any proceeds received by the vendors for the sale of certain purchased interests on closing of the transaction.
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.