Lithium Royalty Corp. Announces Significant Share Buyback Offer
Lithium Royalty Corp has announces plans to undertake a substantial issuer bid (the “Offer”), offering to repurchase up to C$7 million worth of its outstanding common shares (the “Shares”) from shareholders (the “Shareholders”). The Offer will be announces conducted through a “modified Dutch auction” process, allowing Shareholders to tender their Shares within a price range of not less than C$4.50 and not more than C$5.20 per Share (the “Purchase Price”). The Offer is set to commence on or around March 25, 2025, and will remain open until 5:00 p.m. (Toronto time) on or about April 30, 2025, unless extended, varied, or withdrawn by the Company (the “Expiration Date”).
As of March 20, 2025, LRC had 25,005,827 Shares and 30,549,214 convertible common shares (“Convertible Common Shares”), for a total of 55,555,041 Equity Shares announces outstanding. Depending on the final Purchase Price, the Offer will represent approximately 2.4% to 2.8% of the total issued and outstanding Equity announces Shares. The Offer is exclusively for common Shares announces and does not extend to Convertible Common Shares or other securities of the Company.
Mechanics of the Offer
The “modified Dutch auction” process provides Shareholders with two methods for tendering their Shares:
- Auction Tenders: Shareholders specify the number of Shares they wish to sell and the price per Share (within the C$4.50–C$5.20 range, in increments of C$0.10 per Share).
- Purchase Price Tenders: Shareholders do not specify a price but agree to sell a specified number of Shares at the final Purchase Price determined by the auction process.
If Shareholders submit Shares without specifying a tender method, they will be deemed to have made a Purchase Price Tender. The Purchase Price will be the lowest price within the specified range that enables LRC to buy back the maximum number of Shares announces under the Offer. Shareholders whose Shares are accepted will receive the Purchase Price in cash, subject to applicable withholding taxes. Shares tendered at prices above the Purchase Price will be returned to the respective Shareholders.
Allocation in Case of Oversubscription
If the total number of Shares tendered exceeds the Offer limit, LRC will allocate purchases as follows:
- Priority to Odd Lot Holders: Shareholders who own fewer than 100 Shares will have their Shares purchased first at the Purchase Price.
- Pro-Rata Basis: The remaining Shares will be bought back proportionally from other participating Shareholders, with adjustments made to avoid fractional Shares.
The Offer is not conditional upon a minimum number of Shares being tendered but is subject to standard conditions. LRC reserves the right to withdraw, extend, or amend the Offer under certain circumstances, as detailed in the Offer Documents.
Funding and Rationale
LRC intends to finance the Offer using available cash reserves, recently bolstered by the partial sale of its Tres Quebradas royalty interest on March 19, 2025. The Board of Directors views the Offer as a strategic allocation of financial resources, believing that the Company’s Shares are currently undervalued. By executing this buyback, LRC aims to return up to C$7 million to participating Shareholders while increasing the proportional ownership of non-participating Shareholders.
Suspension of Normal Course Issuer Bid (NCIB)
In conjunction with the Offer, LRC has temporarily suspended Share repurchases under its NCIB. The Company will resume repurchases under the NCIB once the Offer concludes.
Details and Availability of Offer Documents
Comprehensive details regarding the Offer, including tendering instructions and the Board’s rationale, will be outlined in the formal Offer Documents. These documents, which include the offer to purchase, issuer bid circular, letter of transmittal, and notice of guaranteed delivery, will be mailed to Shareholders and made available on SEDAR+ (www.sedarplus.com) around March 25, 2025. Shareholders are advised to review these documents carefully before making any decisions regarding the Offer.
Liquidity Opinion and Major Shareholder Participation
The Board has secured a liquidity opinion (the “Liquidity Opinion”) from Cormark Securities Inc. (“Cormark”). Based on their analysis, Cormark concluded that:
- A liquid market for the Shares exists.
- Post-Offer, the market for non-tendering Shareholders will remain sufficiently liquid.
A full version of Cormark’s Liquidity Opinion will be included in the Offer Documents.
Certain major Shareholders have confirmed their intent not to participate in the Offer:
- Waratah Capital Advisors Ltd., representing four Royalty Capital funds holding all 30,549,214 Convertible Common Shares, will not convert their holdings into Shares or tender to the Offer.
- Riverstone VI LRC B.V., which controls 15,912,472 Shares (approximately 63.6% of outstanding Shares), has also stated it will not tender Shares.
- To the best of the Company’s knowledge, no directors or officers have expressed an intention to participate in the Offer.
Engagement of TSX Trust Company
LRC has engaged TSX Trust Company (“TSX Trust”) as the depositary for the Offer, ensuring a smooth and structured process for Shareholders electing to tender their Shares.
Board of Directors’ Approval and Shareholder Guidance
The Company’s Board of Directors has approved the Offer. However, neither LRC, its Board, Cormark, nor TSX Trust makes any recommendation to Shareholders regarding participation. Shareholders are encouraged to conduct their own assessments, carefully review the Offer Documents, and seek professional financial, legal, investment, and tax advice before making a decision.
