Q2 2024 Earnings Summary
- Li-Cycle has completed the technical part of the comprehensive review for the Rochester Hub, with the CapEx estimate remaining unchanged, indicating confidence in the project's feasibility.
- Despite soft metal prices for nickel, cobalt, and lithium, Li-Cycle expects the project to be accretive, owing to their diversified exposure to multiple metals rather than reliance on a single commodity.
- Li-Cycle is optimistic about favorable long-term industry trends and is excited to execute on their clear objectives, reflecting confidence in future growth prospects.
- Soft commodity prices for nickel, cobalt, and lithium may negatively impact Li-Cycle's economics. The CEO acknowledged that "we're in a soft period for nickel, cobalt and lithium," which could affect the project's profitability.
- Uncertainty in finalizing the DOE loan and impact of DOE expectations on the project. The CEO mentioned that the DOE "do have an expectation," but did not disclose them, and there may be "targets" from the DOE that could affect the project.
- Lack of detailed guidance on the economics and metal pricing needed to make the project viable. The CEO stated, "we have never really gotten into forecast economics. We'll get there when we get there," indicating a lack of clarity that may concern investors.
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Comprehensive Review & Metal Prices
Q: When will the comprehensive review be completed, and how do metal prices impact it?
A: The technical part of the comprehensive review is complete, including refining the CapEx estimate, which remains unchanged. The financial part involves finalizing the financing package with the DOE as a cornerstone. Despite soft prices for nickel, cobalt, and lithium, the company views the project as accretive even at current metal prices due to diversification across these metals. -
DOE's Price Expectations
Q: Does the DOE have specific price expectations influencing their support?
A: The DOE does have price expectations, but they are confidential. Given it's a loan, these expectations are based on conservative commodity prices, not the bullish prices typically used in equity underwriting.