Lithium Royalty Corp: Undervalued Gem with a Strategic Buyback Catalyst

The lithium boom isn’t slowing down—and neither is Lithium Royalty Corp (LRC). As global demand for EVs and energy storage surges, LRC’s royalty portfolio positions it to capitalize on the lithium supercycle. Yet its shares remain stubbornly undervalued, creating a rare opportunity for investors to buy in at a steep discount to intrinsic value. Let’s dissect why now is the time to act.

The Buyback: A 30% Premium to Value, But Shares Still Lag

In April 2025, LRC announced an amended buyback plan offering a 30% premium to its pre-offer 20-day VWAP (Volume-Weighted Average Price). The upper price limit of CAD $5.70 per share reflects management’s conviction that the stock is undervalued. However, the tender’s undersubscription—just 72% of eligible shareholders participated by June 1, 2025—suggests the market hasn’t yet recognized LRC’s true worth.

This partial uptake means LRC retains flexibility: with cash reserves bolstered by proceeds from its March 2025 asset sale, it can deploy capital toward accretive acquisitions or further buybacks. The CAD $7 million allocated to this round represents only ~2.4% of outstanding shares, leaving ample room for future action.

The Valuation Gap: NAV Estimates vs. Share Price

LRC’s management has explicitly stated a NAV range of CAD $3.50–$4.00 per share by 2025, driven by rising lithium prices, cost efficiencies, and new royalty streams. Compare this to the CAD $5.70 buyback price, which already exceeds the upper end of this NAV estimate. This discrepancy is alarming—management is willing to pay a premium to its own valuation floor, signaling confidence in LRC’s ability to outperform.

If the stock’s current trading price lags behind even the conservative NAV forecast, investors are effectively buying future growth at a 50% discount. The buyback’s terms—prioritizing odd-lot holders and offering a Dutch auction structure—further underscore a commitment to maximizing shareholder value.

Why the Undervaluation? And Why Now?

Market skepticism persists due to lithium’s cyclical nature and macroeconomic headwinds. Yet LRC’s geographically diversified royalty portfolio (spanning South America and Australia) buffers it against regional volatility. Meanwhile, the EV market’s 30% annual growth rate through 2030 (per IEA) ensures sustained lithium demand.

The buyback’s undersubscription is a golden signal. When management buys back shares at a premium but fails to attract full participation, it creates a vacuum of liquidity. For contrarian investors, this is a buy sign: the market’s hesitation means LRC’s shares are ripe for revaluation.

ESG-Aligned Growth with a Catalyst

LRC’s royalty model aligns perfectly with ESG priorities. By owning non-operational stakes in lithium projects, it avoids the environmental liabilities of mining while benefiting from rising lithium prices. This structure positions LRC to thrive in a world increasingly prioritizing sustainability—and investor demand for ESG-compliant assets is surging.

The buyback’s completion by June 2025 marks a turning point. With shares trading below management’s NAV estimates and the buyback’s premium validating intrinsic value, the setup is textbook: a catalyst-driven re-rating opportunity.

Final Analysis: A Buy at This Price

Lithium Royalty Corp is a valuation outlier in a lithium sector that’s already underappreciated. The buyback’s terms, undersubscription, and NAV guidance combine to create a compelling case for entry:
- Catalyst: The buyback’s completion removes overhang, signaling confidence and freeing capital for future growth.
- Margin of Safety: Trading below its NAV floor offers downside protection.
- Growth Tailwinds: EV adoption and energy storage demand will amplify lithium’s value.

The clock is ticking. With shares still undervalued and the lithium supercycle in full swing, now is the time to act.

Investor Takeaway: LRC’s buyback and NAV gap present a rare opportunity to profit from market mispricing. The shares are undervalued, the catalyst is clear, and the lithium story is only just beginning. Act now before the revaluation lifts this gem to its true worth.