The Strategic Implications of Power Metals' Cesium Offtake Agreement with Albemarle for Lithium Royalty Corp.

The recent cesium concentrate offtake agreement between Power Metals and Albemarle Corporation represents a pivotal development for Lithium Royalty Corp. (LIRC), offering a near-term royalty exposure to a critical mineral market characterized by severe supply constraints and surging demand. By securing a C$5 million prepayment to support Power Metals' Case Lake project, Albemarle-a global leader in critical minerals-has not only validated the project's viability but also accelerated its path to production by 2026. For LIRC, which holds a 2.0% gross overriding royalty (GOR) on the Case Lake project, this agreement underscores a high-conviction opportunity in a sector where scarcity and strategic demand are converging to create outsized value.

A Low-Cost Path to Production in a Scarcity-Driven Market

Power Metals' Case Lake project is uniquely positioned to capitalize on the global cesium shortage. The project hosts a maiden inferred resource of 13,000 tonnes at 2.4% cesium oxide, with significant exploration potential. Albemarle's prepayment of up to C$5 million, coupled with the offtake agreement, reduces financial risk for Power Metals, enabling a low-capital development strategy. This is critical in a market where cesium carbonate prices have surged to nearly US$219,000 per tonne, driven by dwindling stockpiles from legacy mines like Tanco (Canada) and Bikita (Zimbabwe), which are expected to deplete within years.

The strategic importance of cesium cannot be overstated. It is a linchpin in advanced electronics, aerospace, and defense applications, with demand further amplified by its role in emerging energy technologies. Albemarle's involvement-its first major foray into cesium-signals a recognition of the mineral's growing strategic value, particularly as global demand for energy transition minerals accelerates. For LIRC, the 2.0% GOR on Case Lake positions it to benefit directly from Power Metals' production, which could deliver the first incremental cesium supply to a market starved of new sources.

LIRC's exposure to cesium extends beyond the Case Lake project. In 2025, the company acquired a 1.0% net smelter revenue (NSR) royalty on the Falcon West lithium-cesium project in Manitoba, operated by Grid Metals. This deposit, with historical resources of 226,800 tonnes at 1.75% lithium oxide (Li₂O) and drill results showing up to 14% Cs₂O in pollucite-rich zones, highlights LIRC's ability to leverage synergies between lithium and cesium projects. Grid Metals' ongoing 70-drill hole campaign further underscores the potential for resource expansion in a market where cesium formate demand alone is projected to require an additional 500 tonnes annually.

LIRC's third-quarter 2025 results also reveal a broader strategy to consolidate its position in critical minerals. The company's 1.0% GOR on the Yinnetharra project, combined with its stake in Case Lake, reflects a deliberate focus on assets with near-term production timelines. This diversification mitigates project-specific risks while aligning with global trends in energy transition minerals, where demand for lithium, nickel, and rare earth elements is expected to grow exponentially.

Investment Implications: Near-Term Payoff in a Tightening Market

The combination of Power Metals' low-cost production model, Albemarle's strategic prepayment, and LIRC's royalty structure creates a compelling investment thesis. With cesium pricing at record highs and only two active producers globally, the Case Lake project's entry into production by 2026 could generate immediate revenue for LIRC's 2.0% GOR. This royalty, which is gross (i.e., not subject to deductions for production costs), ensures that LIRC captures a direct share of the project's cash flow without bearing operational risks.

Moreover, the scarcity-driven price environment amplifies the potential returns. As stockpiles from legacy mines dwindle and demand outpaces supply, LIRC's royalties could benefit from both volume growth and price appreciation. The company's additional exposure to cesium through Falcon West and Yinnetharra further diversifies its revenue streams, reinforcing its positioning as a near-term play in a sector poised for structural growth.

Conclusion

Power Metals' offtake agreement with Albemarle is more than a corporate milestone-it is a catalyst for LIRC's royalty exposure to a critical mineral market in acute shortage. By aligning with a project that combines low capital requirements, strategic prepayment terms, and a scarcity-driven pricing environment, LIRC has positioned itself to capitalize on the energy transition's next frontier. For investors, this represents a rare opportunity to access a high-conviction, near-term royalty play in a sector where supply constraints and demand surges are set to collide.