Li-Cycle Reports Second Quarter 2023 Operational and Financial Results; Spoke & Hub Network on Path to Become A Top Global Producer of Key Battery-Grade Materials
Li-Cycle reports second quarter 2023 operational and financial results – Spoke & Hub network on path to become a top global producer of key battery grade materials.
Li-Cycle Holdings Corp. (NYSE: LICY) (“Li-Cycle” or the “Company”), an industry leader in lithium-ion battery (LIB) resource recovery and the leading LIB recycler in North America, announced a business update and financial results for its second quarter ended June 30, 2023.
Ajay Kochhar, Li-Cycle’s President and Chief Executive Officer, said:
During the second quarter, we made significant strides on our strategic objectives, growing and operationalizing our Spoke & Hub network.
“In Europe, we successfully commenced processing battery materials at our Germany Spoke, our first in Europe, which is expected to become the largest pre-processing facility in our global Spoke network by the end of 2023. We are also progressing our co-development of the Portovesme Hub with Glencore with the DFS on track for completion by mid-2024. In North America, the Rochester Hub remains on schedule to commence commissioning in late 2023.”
Mr. Kochhar concluded, “As a result of our continued execution, we have further solidified Li-Cycle’s leadership role as a sustainable and pure-play domestic solutions provider for key battery-grade materials in North America and Europe.”
“When both the Rochester and Portovesme Hubs are in full operation, Li-Cycle is expected to have total lithium carbonate production capacity of up to 25,000 tonnes per year, making Li-Cycle a top global and sustainable producer of lithium carbonate and key battery-grade materials.”
Commercial Arrangements
On July 11, 2023, Li-Cycle and EVE Energy, a leading lithium-ion battery technology company, signed a memorandum of understanding (MOU) to collaborate and explore lithium-ion battery recycling solutions for EVE battery materials. EVE is one of the world’s largest lithium-ion battery cell manufacturers, with global manufacturing facilities and customers that include global automakers.
The MOU includes a framework to explore global sustainable recycling solutions for EVE’s lithium-ion battery materials in the North American market, as well as battery manufacturing scrap generated at EVE’s planned lithium-ion battery cell manufacturing facilities in Hungary and Malaysia. In view of this commercial partnership, Li-Cycle is undertaking a site selection process for a potential new Spoke location in Hungary.
Global Network Expansion
Li-Cycle continued to build upon its significant first mover advantage as a critical domestic source of key battery-grade materials, supported by numerous strategic commercial partnerships and leading patent-protected sustainable technology.
With projected Spoke pre-processing capacity of greater than 100,000 tonnes LIB equivalent and Hubs post-processing capacity of 85,000 to 105,000 tonnes of black mass, Li-Cycle is on the path to become the leader in lithium-ion battery resource recovery and a top global and sustainable producer of lithium carbonate (up to 25,000 tonnes of lithium carbonate per year), and key battery materials (e.g., nickel and cobalt), particularly in North America and Europe.
Europe
Along with its joint development partner Glencore, the Company continued to make positive strides in the development of the Portovesme Hub with the DFS work progressing and on schedule to be completed by mid-2024. Leveraging our strategic partnership, the Portovesme site is a strong fit with Li-Cycle’s proprietary process for metallurgical recovery of lithium and critical materials.
With speed to market and lower capital intensity, we are developing an expedited flowsheet that requires fewer processing steps to produce lithium carbonate and a mixed hydroxide product (MHP) containing nickel and cobalt.
Subject to a final investment decision, the project would proceed to construction, with commissioning expected to commence in late 2026 to early 2027. Once operational, the Portovesme Hub would have an annual processing capacity of up to 70,000 tonnes per year of black mass, producing approximately 15,000 to 16,500 tonnes of lithium carbonate, as well as up to approximately 18,000 tonnes of nickel, and 2,250 tonnes of cobalt contained in MHP.
On August 1, 2023, Li-Cycle announced the start of operation of line one of its Germany Spoke, with an annual LIB capacity of 10,000 tonnes. The facility, which is the Company’s first in Europe, utilizes Li-Cycle’s patented and environmentally friendly ‘Generation 3’ Spoke technology to directly process all forms of LIBs, including full EV battery packs.
The Germany Spoke will be the largest in the Company’s portfolio when fully operational, with a total annual processing capacity of up to 30,000 tonnes of LIB, including two lines of 10,000 tonnes each, in addition to ancillary processing capacity. The Company expects to operationalize the second line in late 2023.
North America
The Rochester Hub achieved significant milestones and remains on schedule to start commissioning in late 2023. Detailed engineering and procurement are nearly complete. Construction activities are progressing on site, with major buildings nearing completion, steel and concrete installation progressing, alongside the start of mechanical and electrical equipment installation.
The Company is focused on actively managing the construction labor as part of the Rochester Hub construction budget of $560 million.
Li-Cycle successfully received and installed the largest piece of process equipment at the Rochester Hub, as can be viewed on this link.
Balance Sheet Position
At June 30, 2023, Li-Cycle had cash on hand of $288.8 million. During the quarter, the Company’s capital spend was $78.4 million, primarily driven by the procurement of equipment and construction materials and services for the Rochester Hub.
On February 27, 2023, the Company entered into a conditional commitment with the DOE for a loan of up to $375 million through its Advanced Technology Vehicles Manufacturing Program, in support of the Rochester Hub development. The Company progressed the loan documentation to final stages and is currently on track to execute and close in September 2023.
Financial Results for the Three Months Ended June 30, 2023
Revenues from product sales and recycling services before non-cash fair market value (FMV) adjustments were $5.5 million, which increased from $4.7 million in the same period of 2022. The increase in product revenue was primarily attributable to the higher sales volume, partially offset by a reduction in market prices of cobalt and nickel.
Total revenues including FMV adjustments were $3.6 million, compared with nil last year, and included an unfavorable non-cash FMV impact of $1.9 million driven by a decline in cobalt and nickel prices versus an unfavorable FMV impact of $4.7 million last year.
Operating expenses increased to $46.1 million versus $33.3 million in the same period of 2022, driven primarily by higher raw material and supply costs coupled with higher average material costs. In addition, other expenses were higher due to growth in personnel related to the expansion of the Company’s global Spoke network and the construction of the Rochester Hub.
Net loss was $35.3 million, compared to $28.1 million in the same period of 2022, and included a fair value gain on financial instruments of $7.3 million and $7.7 million, respectively.
Adjusted EBITDA1 loss was $39.7 million, compared to a loss of $30.6 million in the same period of 2022, attributed to higher expenses relating to expansion of the global network, which more than offset increased revenue. Additionally, non-cash share-based compensation decreased to $3.7 million from $4.5 million in the same period of 2022.
Highlights
- Expanded market-leading position and speed to market through growth of Spoke & Hub network in North America and Europe; on path to produce up to 25,000 tonnes of lithium carbonate per year;
- Advanced construction of the Rochester Hub, maintaining start of commissioning in late 2023; successfully received and installed the largest piece of progress equipment on site – video link here;
- Progressed development of European Hub (Portovesme Hub) with Glencore with Definitive Feasibility Study (DFS) expected to be completed by mid-2024;
- Commercialized first European Spoke in Germany, largest in Li-Cycle’s global Spoke network and one of the largest on the continent;
- Signed memorandum of understanding with EVE Energy to collaborate on global sustainable lithium-ion battery recycling solutions; exploring site selection for new Spoke in Hungary;
- Advanced documentation for $375 million Department of Energy (DOE) loan to final stages, with close anticipated in September 2023; and
- Ended June 30, 2023 with cash on hand of $288.8 million.
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Li-Cycle Reports Second Quarter 2023 Operational and Financial Results; Spoke & Hub Network on Path to Become A Top Global Producer of Key Battery-Grade Materials, Toronto, August 14, 2023
