Ontario Teachers’ bid for lithium stake on hold after lawsuit

27th September 2023

By: Bloomberg


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A dispute between two mining firms has cast uncertainty on a Canadian pension fund’s bid to invest in one of the world’s largest lithium projects.

Ontario Teachers’ Pension Plan was nearing a deal to buy a bundle of battery metals royalties from New York-based Orion Resource Partners that includes a royalty on future revenues from the Thacker Pass lithium project in Nevada, according to people familiar with the matter. That deal is now on hold over a recent court decision that awarded the rights to a portion of Orion’s Thacker Pass stake to competing firm Lithium Royalty Corp, said the people, who asked not to be named while discussing confidential information.

Ontario Teachers’ declined to comment. Orion did not respond to requests for comment.

The dispute over the Thacker Pass stake comes at a time when the project has become an integral piece of the US administration’s efforts to build a domestic supply chain for electric vehicles and cleaner energy products. The project is expected to supply roughly 11% of the world’s lithium once operational in 2026, according to the Bank of Nova Scotia, and has attracted major investors like General Motors Co., which bought a $650-million stake in the project earlier this year.

The Ontario court ruled in August that Toronto-based Lithium Royalty has a “binding and enforceable contract” to buy an 85% stake in Orion’s Thacker Pass royalty for $18.7 million. Lithium Royalty said it had entered into an agreement to buy the stake from Orion in 2021, but claimed that Orion reneged on the deal two months later in order to sell a smaller 60% stake in the royalty to a rival company for $28-million instead.

The court decision could complicate Orion’s ability to sell a portion of the Thacker Pass stake to the Canadian pension fund.

Orion initially marketed its package of battery metals royalties at roughly $900-million, while Ontario Teachers’ was bidding for a portion of the package valued at $200-million to $300-million, said a person familiar with the matter. The deal is stuck in limbo but could still be completed, the person said.

Mining investment firms like Orion and Lithium Royalty have taken on greater roles in project financing as mine builders seek alternative sources of capital for expensive projects. The companies mostly pay cash to miners in exchange for a cut of future revenue at a discounted price.

Edited by Bloomberg


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