Overview

12 Months Ended

Dec. 31, 2024

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Overview

Overview

Li-Cycle’s core business model is to build, own and operate recycling plants tailored to regional needs. Li-Cycle’s Spoke & Hub Technologies™ provide an environmentally friendly resource recovery solution that addresses the growing global lithium-ion battery recycling challenges supporting the global transition toward electrification.

Li-Cycle Holdings Corp. and its subsidiaries, (collectively “Li-Cycle” or the “Company”) started their business as Li-Cycle Corp., which was incorporated in Ontario, Canada under the Business Corporations Act (Ontario) (“OBCA”) on November 18, 2016. The Company's registered address is 207 Queens Quay West - Suite 590, Toronto, Ontario, Canada.

On August 10, 2021, in accordance with the plan of arrangement to reorganize Li-Cycle Corp., the Company finalized a business combination (the “Business Combination”) with Peridot Acquisition Corp., and the combined company was renamed Li-Cycle Holdings Corp. The common shares of Li-Cycle Holdings Corp. are traded on the OTCQX® Best Market under the symbol “OTCQX:LICYF”.

Going concern

The going concern basis of accounting assumes that the Company will continue in operation for the foreseeable future and will be able to realize its assets and discharge its liabilities and commitments in the normal course of business.

The Company has evaluated whether there are certain conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date that these consolidated annual financial statements are issued. Based on its recurring losses from operations since inception, which included losses from operations of $125.5 million for the year ended December 31, 2024 ($162.6 million for the year ended December 31, 2023), cash flows used in operating activities of $106.4 million during the year ended December 31, 2024 ($99.8 million for the year ended December 31, 2023), and the pause on construction of the Rochester Hub project, and the delisting of the Company's common shares from a national stock exchange, the Company has concluded that there is substantial doubt about its ability to continue as a going concern for a period of one year from the date that these Consolidated Financial Statements were issued.

To date, the Company has financed its operations primarily through proceeds received in connection with (i) the Business Combination, (ii) the concurrent $315.5 million private placement of common shares, and (iii) private and public offerings of other Company securities (including convertible notes, common shares, and warrants). On March 11, 2024, the Company entered such a private placement agreement (the “Glencore Senior Secured Convertible Note Purchase Agreement”) to issue a senior secured convertible note in an aggregate principal amount of $75.0 million to an affiliate of Glencore plc (the “Senior Secured Convertible Glencore Note”) which closed on March 25, 2024. On November 7, 2024, the Company executed a definitive financing agreement with the United States Department of Energy (“DOE”) for a loan for gross proceeds of up to $475.0 million (the “DOE Loan”), and it is actively exploring other financing options and strategic alternatives to secure additional financing required to fund a required base equity commitment and required reserve amounts to draw on the DOE Loan. There can be no assurance that it will be able to secure additional funding at attractive commercial terms or at all. Furthermore, any additional financing may be insufficient to provide adequate liquidity for ongoing operations, to fund the Company's future growth or capital projects, including the Rochester Hub, or otherwise satisfy any of the Company's funding needs and obligations. Additional financing may have restrictive covenants that significantly limit the Company's operating and financial flexibility or its ability to obtain future funding.

In addition, inherent risks are associated with the Company's ability to execute its growth strategy. There can be no assurance that the Company will develop the manufacturing capabilities and processes, secure reliable sources of component supply to meet quality, engineering, design, or production standards, or meet the required production volumes to grow into a viable, cash-flow-positive business successfully.

These factors, in addition to potential rising inflation, commodity and labour prices, adverse regulatory and policy changes, and other challenging macroeconomic conditions, have led the Company to implement mitigating activities to strengthen its financial position, enhance liquidity and preserve cash flow, depending on how these uncertain circumstances unfold, including:

On October 23, 2023, Li-Cycle announced that it was pausing construction work on its Rochester Hub, pending completion of a comprehensive review of the go-forward strategy for the project. During 2024, the Company continued to implement its Cash Preservation Plan, which was announced in November 2023. Among other things, Li-Cycle commenced closure activities at the Ontario Spoke, curtailed operations at the New York Spoke and slowed operations at its other Spokes, while continuing to review the timing and BM&E needs of the Rochester Hub. The Ontario Spoke is expected to complete its closure plans in early 2025.

In addition, on October 31, 2023, the Board authorized a reduction in workforce plan across Li-Cycle , and on March 25, 2024, the Board approved additional plans to reduce approximately 17% of the Company’s global workforce, and additional steps may be taken based on our go-forward strategic objectives and the Cash Preservation Plan to right-size and right-shape our organization.