HIGHLIGHTS
Lithium Americas Corp. (TSX: LAC; NYSE: LAC)
(“
Lithium Americas”, “
LAC” or the
“
Company”) is pleased to announce that it has
entered into a definitive transaction agreement whereby Ganfeng
Lithium Co., Ltd. (together with its subsidiary entities,
“
Ganfeng Lithium” or “
GFL”) has
agreed to subscribe, through a wholly-owned subsidiary, for 141
million newly issued shares of Minera Exar S.A. (“
Minera
Exar”), the holding company for the Caucharí-Olaroz
lithium brine project (“
Caucharí-Olaroz” or the
“
Project”), for cash consideration of US$160
million (such transaction, the “
Project
Investment”). As a result of the Project Investment,
Ganfeng Lithium will increase its interest in Caucharí-Olaroz from
37.5% to 50%, with Lithium Americas holding the remaining 50%
interest (each subject to the rights of JEMSE (the Government of
Jujuy) to acquire an approximate 8.5% interest in Minera Exar).
“The new US$160 million investment by our
partner Ganfeng significantly de-risks Caucharí-Olaroz by providing
additional assurances that the Company remains fully-funded for the
current 25,000 tpa development plan and supports the evaluation of
an increase in initial production capacity to 40,000 tpa of lithium
carbonate,” commented Tom Hodgson, CEO, and Jon Evans, President
and COO. “We are delighted to have Ganfeng Lithium and Lithium
Americas as 50/50 partners in Caucharí-Olaroz and we look forward
to building on our long and productive history of working
together.”
“Construction activities at
Caucharí-Olaroz continue to accelerate as planned and support the
targeted start of production in H2 2020,” commented Gabriel
Rubacha, President of South America Operations. “Ganfeng Lithium
will play a key role in the process definition, engineering and
commissioning of the lithium chemical plant leveraging their track
record as the world leader in the production of high-quality
lithium compounds for electric vehicle and battery customers.”
Project Update
LAC and GFL continue to work with Minera Exar to
optimize Caucharí-Olaroz with the goal of producing the highest
quality battery grade lithium carbonate for the lowest cost. LAC
and GFL have directed Minera Exar to undertake a feasibility study
in respect of an increase in the stated production capacity of the
Project from 25,000 tpa to an aggregate of 40,000 tpa of lithium
carbonate, as well as to advance certain permitting, design and
other development planning activities at Caucharí-Olaroz.
LAC and GFL remain committed to ensuring
Caucharí-Olaroz is fully funded for the capital costs necessary to
complete construction of the current 25,000 tpa development plan.
The 25,000 tpa capital cost estimate of US$425 million, on a 100%
basis and before value-added taxes (“VAT”),
remains unchanged.
The feasibility study work being undertaken is
exploring an increase in initial production using current
infrastructure under development, including the existing 12 km2
pond design under construction. Based on work completed by Minera
Exar to date, the Company anticipates substantial capital cost
efficiencies from the increased scale being considered.
Two evaporation ponds have been completed and
additional four ponds are under construction. The filling of the
first pond with brine commenced in October 2018. A total of seven
wells are currently pumping brine to the ponds and three more wells
are under construction.
Engineering is continuing and is on track to
support the procurement and construction activities. Requests for
quotations for most of the long lead equipment were issued and firm
proposals are under evaluation. The first plant construction
package was awarded and the contractor has been mobilized to
perform the work. Procurement is advancing on schedule for
equipment related to pond operations.
Minera Exar has increased the size of its team
to support operations and construction activities. There are
currently more than 200 full-time Minera Exar employees. 476 people
are working at the site, including 172 Minera Exar employees and
304 contractors. Current camp capacity at the site allows to
accommodate 554 people and additional 128 beds will be added
shortly in preparation for plant construction activities.
Resource Update
LAC has completed an updated mineral resource
estimate for lithium at Caucharí-Olaroz and has obtained a National
Instrument 43-101 technical report in respect of the updated
mineral resource estimate (the “Resource Estimate
TR”) entitled “Updated Mineral Resource Estimate for the
Caucharí-Olaroz Project, Jujuy Province, Argentina ” with an
effective date of March 1, 2019. A copy of the Resource Estimate TR
is available on SEDAR at www.sedar.com. At a cut-off of 300 parts
per million lithium (“ppm Li”), the updated Resource Estimate is as
follows:
Updated Mineral Resource Estimate for Lithium
at Caucharí-Olaroz (effective March 1, 2019) |
Category |
|
Average
Lithium Grade (mg/L) |
|
|
Brine
(m3) |
|
Lithium
Metal (tonnes) |
|
LCE
(tonnes) |
Measured |
|
587 |
|
|
1.11E+09 |
|
651,100 |
|
3,465,700 |
|
|
|
|
|
|
|
|
|
|
Indicated |
|
580 |
|
|
4.70E+09 |
|
2,726,300 |
|
14,511,500 |
|
|
|
|
|
|
|
|
|
|
Measured & Indicated |
581 |
|
|
5.81E+09 |
|
3,377,400 |
|
17,977,200 |
|
|
|
|
|
|
|
|
|
Inferred |
|
602 |
|
|
1.59E+09 |
|
957,400 |
|
5,096,000 |
Notes:(1) Mineral Resources have a
cut-off grade of 300 mg/L of lithium.(2) Mineral
Resources are not Mineral Reserves and do not have demonstrated
economic viability. There is no certainty that all or any part of
the Mineral Resource will be converted to Mineral
Reserves.(3) LCE is calculated based on the following
conversion factor: mass of LCE = 5.322785 x mass of lithium
metal.(4) This Mineral Resource Estimate has an
effective date of March 1, 2019.
The mineral resource estimate provided above
maintains approximately the same total average lithium
concentration of Measured and Indicated mineral resource (585 mg/L
vs. 581mg/L) and an increase of 53% for total lithium carbonate
equivalent (“LCE”) Measured and Indicated mineral
resources (11,752,000 tonnes of LCE vs. 17,977,200 tonnes of LCE).
The Resource Estimate TR reflects the expansion of the mineral
resource base at Caucharí-Olaroz but otherwise leaves in place the
scientific and technical information derived from the Company’s
2017 definitive feasibility study. The authors of the Resource
Estimate TR have recommended, among other things, that the Company
complete additional work to update the mineral reserve estimate at
Caucharí-Olaroz and undertake the feasibility study work in respect
of a possible project expansion. The Company anticipates having the
results of the ongoing feasibility work in respect of a possible
project expansion by the end of 2019.
Transaction Details
Under the terms of the Project Investment,
Ganfeng Lithium has agreed to subscribe for approximately 141
million shares of Minera Exar for cash consideration of US$160
million. The Project Investment shall be used by Minera Exar for
the purpose of construction and development of Caucharí-Olaroz.
As a result of the subscription, the Company and Ganfeng
Lithium will each hold a 50% interest in Minera Exar and
Caucharí-Olaroz.
Lithium Americas and Ganfeng Lithium have agreed
to implement certain amendments to the shareholders agreement
governing the joint venture, including to provide equal
representation on the Minera Exar board of directors and the
Management Committee governing the joint venture.
In addition, on closing of the Project
Investment, Minera Exar is expected to repay an US$8 million loan
that was previously advanced by the Company in order to provide
interim funding used for the construction and development of
Caucharí-Olaroz during the closing of the 2018 transactions between
Lithium Americas and Ganfeng Lithium.
The Project Investment constitutes a “related
party transaction” within the meaning of Multilateral Instrument
61-101 – Protection of Minority Security Holders in Special
Transactions (“MI 61-101”) because Ganfeng Lithium
and its affiliates are significant (16.9%) shareholders of Lithium
Americas. Consequently, the Project Investment is subject to the
formal valuation and minority approval requirements set forth in MI
61-101.
The Project Investment will require the approval
of a simple majority of the votes cast at a special meeting of
Lithium Americas shareholders (“LAC Meeting”),
excluding Ganfeng Lithium and its affiliates and any other persons
required to be excluded in accordance with Multilateral Instrument
61-101 of the Canadian securities regulatory authorities. As a
related party transaction, the board of directors of Lithium
Americas (the “Board”) constituted a special committee of
independent directors (the “Special Committee”) for the purposes
of, among other things, considering the Project Investment,
reviewing, directing and supervising the process to be carried out
by the Company and its professional advisors in assessing and
negotiating the Project Investment, and considering and making
recommendations to the Board with respect to the Project
Investment. The Special Committee is composed of Jean Fraser
(Chair), Gary Cohn and George Ireland. In considering the Project
Investment, the Special Committee retained Osler, Hoskin and
Harcourt LLP as its independent legal counsel and Blair Franklin
Capital Partners Inc. (“Blair Franklin”) as its
valuator and independent financial advisor.
Blair Franklin has provided a formal valuation
in respect of the Project in accordance with MI 61-101. A copy of
the formal valuation will be included in the management information
circular to be sent to LAC shareholders. In addition, Blair
Franklin has provided an opinion to the Special Committee, stating
that, in their opinion and subject to the assumptions, limitations
and qualifications contained in the fairness opinion, as of the
date of the fairness opinion, the consideration paid under the
Project Investment is fair, from a financial point of view, to the
Company.
After careful consideration and deliberation,
the Special Committee determined that the Project Investment is in
the best interests of Lithium Americas and is fair to shareholders
of the Company (other than Ganfeng Lithium and its affiliates) and
unanimously recommended to the Board that the Board approve the
Project Investment.
Following receipt of the unanimous
recommendation by the Special Committee, the Board (with interested
directors having recused themselves) determined that the Project
Investment is in the best interests of Lithium Americas and is fair
to shareholders of the Company (other than Ganfeng Lithium and its
affiliates) and unanimously approved the Project Investment.
In addition to the LAC shareholder approval,
closing of the Project Investment is subject to approval of the
shareholders of Ganfeng Lithium, to regulatory approvals in China
applicable to GFL, and the consent of BCP Innovation Pte. Ltd. in
its capacity as lender pursuant to LAC’s senior credit facility
LAC and GFL have agreed to hold their respective
shareholder meetings as contemporaneously as reasonably
possible.
Further information regarding the Project
Investment and other transactions described herein will be
contained in a management proxy circular the Lithium Americas will
prepare, file and mail to its shareholders in advance of the LAC
Meeting. Copies of the transaction agreement and management proxy
circular will be available in due course on SEDAR at
www.sedar.com.
Qualified Person:
The scientific and technical information in this
news release has been reviewed and approved by Dr. Rene LeBlanc, a
Qualified Person for purposes of NI 43-101. Mr. LeBlanc is the
Chief Technical Officer of the Company. Additional information is
contained in Lithium Americas’ current technical reports for the
Caucharí-Olaroz lithium project and the Thacker Pass lithium
project, available at www.sedar.com.
About Ganfeng Lithium:
Ganfeng Lithium is one of the largest lithium
product makers in China, with a diverse product mix including
lithium carbonate, lithium chloride, lithium fluoride, lithium
metal, and butyl lithium. Ganfeng Lithium’s business model is
mainly procuring lithium minerals, both of spodumene and brine,
from upstream suppliers and processing those materials into lithium
products. Founded in 2000, Ganfeng Lithium is listed on the
Shenzhen Stock Exchange (HK: 1772, SZSE: 002460).
About Lithium
Americas:
Lithium Americas, together with Ganfeng Lithium,
is developing Caucharí-Olaroz, under construction in Jujuy,
Argentina. In addition, Lithium Americas owns 100% of the Thacker
Pass lithium project located in Nevada, the largest known lithium
deposit in the United States. The Company trades on both the
Toronto Stock Exchange and on the New York Stock Exchange, under
the ticker symbol “LAC”.
For further information contact:
Lithium Americas Corp.Investor
RelationsSuite 300 – 900 West Hastings StreetVancouver, BC, V6C
1E6Telephone: 778-656-5820Email:
ir@lithiumamericas.comWebsite: www.lithiumamericas.com
Forward-Looking Statements &
Information
This news release contains “forward-looking
information” and “forward-looking statements” (which we refer to
collectively as forward-looking information) under the provisions
of applicable securities legislation. All statements, other than
statements of historical fact, are forward-looking information.
Examples of forward-looking information in this news release
include, among other things: the timing and completion of
each component of the Project Investment; statements regarding
anticipated decision making with respect to Minera Exar;
anticipated rates of production at Caucharí-Olaroz; successful
development of the Caucharí-Olaroz and Thacker Pass projects,
including timing, anticipated production, and results thereof, the
Company’s ability to successfully fund, or remain fully funded for,
such development, accuracy of estimates of mineral resources,
whether mineral resources can ever be converted into mineral
reserves, whether the Company ever adopts a 40,000 tpa development
plan for Caucharí-Olaroz, that the Company is able to successfully
monetize any increase in off-take from any such increased
development plan, and the expected benefits from the Project
Investment and other transactions described herein, including
successful closing and timing thereof.
Forward-looking information may involve known
and unknown risks, assumptions and uncertainties which may cause
the Company’s actual results or performance to differ materially.
This information reflects the Company’s current views with respect
to future events and is necessarily based upon a number of
assumptions that, while considered reasonable by the Company today,
are inherently subject to significant uncertainties and
contingences. These assumptions include, among others, successful
closing of the Project Investment and other transactions described
herein, forecasted demand for lithium products, the Company’s
ability to fund, advance and develop the Caucharí-Olaroz and
Thacker Pass projects into production, including results therefrom
and timing thereof, accuracy of mineral resources, including
whether such mineral resources can ever be converted into reserves,
accuracy of current budget and construction estimates, maintenance
of a positive business relationship with Ganfeng Lithium, and a
stable and supportive legislative and regulatory environment.
Forward-looking information also involve known and unknown risks
that may cause actual results to differ materially, these risks
include, among others, inherent risks in transactions similar to
the Project Investment, successful completion of all conditions
precedent thereto, inherent risks in development of capital
intensive mineral projects (including as co-owners), variations in
mineral resources and mineral reserves, global demand for lithium,
recovery rates and lithium pricing, changes in project parameters
and funding thereof, changes in legislation or governmental policy,
title risk, cost overruns, operational risks and general market and
industry conditions. Additional risks, assumptions and other
factors are set out in the Company’s management discussion analysis
and most recent annual information form, copies of which are
available on SEDAR at www.sedar.com.
Although the Company has attempted to identify
important risks and assumptions, given the inherent uncertainties
in such forward-looking information, there may be other factors
that cause results to differ materially. Forward-looking
information is made as of the date hereof and the Company does not
intend, and expressly disclaims any obligation to, update or revise
the forward-looking information contained in this news release,
except as required by law. Accordingly, readers are cautioned not
to place undue reliance on forward-looking information.
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