Lithium Americas Corp. (TSX: LAC) (NYSE:
LAC) ("Lithium Americas" or the "Company") has announced
its financial and operating results for the quarter ended March 31,
2019.
This news release should be read in conjunction
with Lithium Americas’ unaudited condensed consolidated interim
financial statements and management's discussion and analysis
("MD&A") for the three months ended March 31, 2019, which are
available on Lithium Americas’ website and SEDAR.
HIGHLIGHTS
Cauchari-Olaroz:
On April 1, 2019 the Company entered into a
definitive transaction agreement whereby Ganfeng Lithium Co., Ltd.
(“Ganfeng”) has agreed to subscribe, through a wholly-owned
subsidiary, for 141 million newly issued shares of Minera Exar, for
cash consideration of US$160 million (such transaction, the
“Project Investment”). On closing of the Project Investment,
Ganfeng will increase its direct interest in the Cauchari-Olaroz
project 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).
Lithium Americas and Ganfeng have agreed to
implement certain amendments to the Shareholders Agreement
governing the Minera Exar joint venture, including the provision of
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 $8 million loan, together with accrued but unpaid interest
thereon, 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.
The Project Investment constitutes a related
party transaction. Closing of the Project Investment remains
subject to Ganfeng shareholder and regulatory approvals, the
consent of BCP Innovation Pte. Ltd. in its capacity as lender
pursuant to the Company’s senior credit facility, the Company’s
shareholder approval and other customary closing conditions.
Lithium Americas and Ganfeng continue to
actively work with Minera Exar to advance construction, procurement
and engineering at Cauchari-Olaroz with the goal of producing the
highest quality battery grade lithium carbonate for the lowest
cost. Minera Exar is undertaking a feasibility study in
respect of an increase in the stated production capacity of the
Cauchari-Olaroz project from 25,000 tonnes per annum (“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 Cauchari-Olaroz.
- Development activities are on
schedule with the advancement of detailed engineering, ponds
construction, production wells drilling, camp construction, plant
design and equipment procurement to support the start of production
in the second half of 2020.
- Two evaporation ponds are
completed, one pond is filled with brine and subsequent to the
quarter end Minera Exar started filling the second pond and the
third, partially completed, pond. Nine ponds are at various stages
of construction. A total of seven wells are currently pumping brine
to the ponds and three more wells are under construction.
- Requests for quotations for most of
the long lead equipment items are under evaluation. The first plant
construction package was awarded and the contractor mobilized to
perform the work.
- A total of $73 million was advanced
to Minera Exar in 2019 year to date (including $45.6 million by the
Company) in the form of loans to fund the construction.
- As of the current date, 520 people
are working at the site, 178 are Minera Exar employees and 342 are
contractors. Current camp capacity at the site accommodates 554
people and an additional 128 beds will be added in 2019 in
preparation for construction activities in addition to the
operations camp capacity that will follow.
- Initial Stage 1 capital cost
estimate of $425 million, on a 100% basis and before value-added
taxes (“VAT”), remains unchanged.
- The Company increased the Measured
and Indicated mineral resource at its Cauchari-Olaroz project by
53% to 17.9 million tonnes of lithium carbonate equivalent (“LCE”)
at 581 mg/L average grade and the Inferred mineral resource to 5.1
million tonnes of LCE at 602 mg/L. The updated Measured and
Indicated mineral resource has not been used to update the
assumptions in the Company’s detailed feasibility study, see
discussion below.
Lithium Nevada:
- The permitting process for Thacker
Pass is underway, with environmental baseline data collection
complete and a conceptual Mine Plan of Operations (“MPO”) submitted
to the Bureau of Land Management (“BLM”). A final MPO is
forecasted to be submitted to the BLM in the second half of
2019.
- A process testing facility has been
constructed and commissioned in Reno, Nevada to optimize the
process (predominantly to reduce the consumption of sulfuric acid),
prepare tailings samples for stability and geochemical analysis and
to provide feed samples to vendors who will design the equipment
and provide performance guarantees. The Company is considering the
production of lithium hydroxide directly from lithium sulfate to
provide added flexibility to market demand.
- The Company intends to prepare a NI
43-101 compliant definitive feasibility study detailing the status
of the permitting process and outcomes of the 2018 exploration
program and process testing facility testing in due course, along
with other applicable updates.
- The Company is evaluating potential
partnership and financing scenarios for Thacker Pass.
RheoMinerals:
- RheoMinerals’ sales for the three
months ended March 31, 2019 were $1.3 million (2018 – $1.1
million).
- As a result of lower than expected
sales, in Q4 2018 the Company recognized an $11.58 million
impairment of Organoclay property, plant and equipment. In April,
2019, the Company reviewed RheoMinerals’ business plan and
implemented cost-reducing measures with the aim to make the
business profitable.
Finance:
- As at March 31, 2019, the Company
had $36.2 million in cash and cash equivalents.
- The Company has a $205 million
credit facility to finance its share of capital expenditures in
Minera Exar. Since the inception of the credit facility, the
Company has drawn $63.1 million ($17.5 million of which was drawn
in 2018, $37.5 million in Q1, 2019 and $8.1 million subsequently to
Q1 2019).
- As part of the Transaction, Ganfeng
also provided LAC an additional $100 million unsecured, limited
recourse, subordinated loan facility, which is undrawn at the date
of this MD&A, increasing LAC’s overall credit availability to
$241.9 million (net of drawdowns to date). The proceeds of the
subordinated loan facility are available to the Company to be used
for general corporate purposes.
Corporate:
- Tom Hodgson has retired as Chief
Executive Officer and as a director of the Company, effective May
15, 2019. The Board of Directors has appointed Jonathan (Jon)
Evans, currently President and Chief Operating Officer, to the role
of President and Chief Executive Officer and to replace Mr. Hodgson
on the Board. Mr. Hodgson has agreed to stay on as a consultant to
assist with the transition and will continue to support the Company
as needed.
Updated Cauchari-Olaroz Mineral Resource
On April 1, 2019, the Company published the
technical report dated March 31, 2019, with an effective date of
March 1, 2019, entitled “NI 43-101 Technical Report Updated Mineral
Resource Estimate for the Cauchari-Olaroz Project, Jujuy Province,
Argentina” (“Cauchari TR”). Included in the Cauchari TR is an
updated Mineral Resource estimate for the Cauchari-Olaroz Project
as summarized in the table below, reported on a 100% project equity
basis. LAC no longer reports a potassium Mineral Resource on the
project.
Mineral Resources
The Mineral Resource estimate below is expressed
relative to a lithium grade cut-off of greater than or equal to 300
mg/L.
|
Updated Mineral Resource Estimate for Lithium at the
Cauchari-Olaroz project |
|
Category |
|
Average Lithium Grade (mg/L) |
|
Brine (m3) |
|
Lithium Metal |
|
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) The Mineral Resource estimate has an
effective date of February 13, 2019.(2) Mineral Resources have a
cut-off grade of 300 mg/L of lithium.(3) 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.(4) LCE is calculated based
on the following conversion factor: mass of LCE = 5.322785 x mass
of lithium metal.
The updated resource provided above constitutes
a change of -1% for total average lithium concentration of Measured
+ Indicated (585 mg/L vs. 581mg/L) and a change of +53% for total
LCE Measured + Indicated (11,752,000 tonnes LCE vs. 17,977,200
tonnes LCE). The increase in overall mass can be attributed to the
expansion and deepening of the Resource Evaluation Area based on
exploration results obtained in 2017 and 2018. The decline in total
average concentration can be attributed to the updated Resource
estimate affected by the 2017 and 2018 range of samples collected
in SdO and Archibarca areas of the Cauchari-Olaroz Project. When
spatially averaged with the lithium concentration of SdC samples,
which essentially dominated the prior estimate, the updated
estimate has a relatively small percentage decrease in the overall
concentration of lithium.
Technical Information
Detailed scientific and technical information on
the Cauchari-Olaroz Project can be found in the Cauchari TR that
was filed with the securities regulatory authorities in each of the
provinces of Canada on March 31, 2019. The Cauchari TR has an
effective date of March 1, 2019 and was prepared by Ernest Burga,
P.Eng., David Burga, P.Geo., Wayne Genck, P.Eng. and Daniel Weber,
P.G., RM-SME, each of whom is a “qualified person” for the purposes
of NI 43-101.
Financial Results:
The following selected financial information is
presented in thousands of US dollars, shares and other equity
instruments in thousands, unless otherwise stated and except in
relation to per share amounts.
The following table summarises the items that
resulted in the increase in net loss for the three months ended
March 31, 2019 (Q1 2019) versus the three months ended March 31,
2018 (Q1 2018), as well as certain offsetting items:
Financial results |
|
Period ended March 31, |
|
Change |
|
|
|
2019 |
|
2018 |
|
|
|
|
|
|
$ |
|
$ |
|
$ |
|
Organoclay sales |
|
|
1,280 |
|
|
1,096 |
|
|
184 |
|
Cost of sales |
|
|
(1,469 |
) |
|
(1,677 |
) |
|
208 |
|
Exploration expenditures |
|
|
(1,181 |
) |
|
(1,400 |
) |
|
219 |
|
Organoclay research and
development |
|
|
(112 |
) |
|
(133 |
) |
|
21 |
|
General and administrative
expenses |
|
|
(1,910 |
) |
|
(2,017 |
) |
|
107 |
|
Share of gain/(loss) in Joint
Venture |
|
|
1,384 |
|
|
(164 |
) |
|
1,548 |
|
Stock-based compensation |
|
|
(624 |
) |
|
(1,945 |
) |
|
1,321 |
|
Transaction costs |
|
|
(757 |
) |
|
- |
|
|
(757 |
) |
Foreign exchange (loss)/gain |
|
|
(896 |
) |
|
1,369 |
|
|
(2,265 |
) |
Finance costs |
|
|
(640 |
) |
|
- |
|
|
(640 |
) |
Other income |
|
|
457 |
|
|
304 |
|
|
153 |
|
Net Loss |
|
|
(4,468 |
) |
|
(4,567 |
) |
|
99 |
|
Net loss for the three months ended March 31,
2019 was $4,468 compared to $4,567 for the three months ended March
31, 2018. The slight decrease in the net loss was mainly
attributable to a share of gain (versus loss in Q1 2018) in Joint
Venture and a decrease in stock-based compensation, partially
offset by an increase in the foreign exchange loss, transaction
costs and finance costs.
Organoclay Sales and Cost of
Sales
The organoclay sales in Q1 2019 were $1,280 (Q1
2018 - $1,096), with related production costs of $1,315 (Q1 2018 -
$1,496) and depreciation expense of $154 (Q1 2018 - $181) resulting
in gross loss of $189 (Q1 2018 - $581).
Expenses
Exploration expenditures in Q1 2019 of $1,181
(Q1 2018 – $1,400) include expenditures incurred for the Thacker
Pass project. The decrease in the Company’s exploration
expenditures is mostly due to the timing and scheduling of
expenditures on the Thacker Pass project.
Gain from the Joint Venture in Q1 2019 of $1,384
(Q1 2018 – loss of $164) mainly represents the Company’s share of
the Exar Capital BV Joint Venture interest income on the loans to
Minera Exar for the Cauchari-Olaroz project.
Stock-based compensation in Q1 2019 of $624 (Q1
2018 - $1,945) is a non-cash expense and consists of the $209 (Q1
2018 - $1,513) estimated fair value of stock options, the $98 (Q1
2018 - $432) fair market value of RSUs, and the $317 (Q1 2018 –
nil) fair value of PSUs vested during the period. In Q1 2019 the
Company granted 39 DSUs to its directors. Higher stock-based
compensation during Q1 2018 was mainly due to the timing of the new
stock option grants and RSU awards to the Company’s employees and
officers.
Included in General and Administrative expenses
in Q1 2019 of $1,910 (Q1 2018 - $2,017) are:
- Office and administrative expenses of $303 (Q1 2018 - $327)
include insurance, IT, telephone, and other related expenses and
RheoMinerals’ general office expenses.
- Professional fees of $241 (Q1 2018 - $325) consist mainly of
legal fees of $73 (Q1 2018 – $144), consulting fees of $92 (Q1 2018
- $114) and accounting fees of $76 (Q1 2018 - $39). The decrease is
due to the costs of listing the Company on the NYSE in Q1
2018.
- Salaries and benefits of $853 (Q1 2018 - $771) include
compensation to the Company’s employees and directors’ fees. The
increase in salaries and benefits is mainly due to the new
hires.
- Regulatory and filing fees were $112 (Q1 2018 - $175). The
decrease is due to the costs of listing the Company on the NYSE in
Q1 2018.
Other Items
The Company recognized in Q1 2019 a foreign
exchange loss of $896 (Q1 2018 – gain of $1,369). The loss was due
to the weakening of the US dollar against the Canadian dollar. The
Company holds most of its cash in US currency.
Other income in Q1 2019 was $457 (Q1 2018 -
$304) and includes interest income earned on the Company’s cash and
cash equivalents and a $150 progress payment received by
RheoMinerals from Delmon.
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 by virtue of his
experience, education and professional association. Mr.
LeBlanc is the Chief Technical Officer of the Company. Information
on the Company’s data verification and QA / QC procedures is
contained in Lithium Americas’ current technical reports for the
Cauchari-Olaroz lithium project and the Thacker Pass lithium
project, available at www.sedar.com.
About Lithium
Americas:
Lithium Americas, together with Ganfeng Lithium,
is developing the Caucharí-Olaroz lithium brine project, 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:
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 expected benefits from the Project
Investment, including successful closing and timing thereof;
successful development of the Caucharí-Olaroz and Thacker Pass
projects, including timing, anticipated production, and results
thereof, the Company’s ability to successfully fund such
development, further optimization of Caucharí-Olaroz project,
whether the resource update for Cauchari-Olaroz will ever be
developed into reserves, including information and underlying
assumptions related thereto, accuracy of estimates of mineral
resources, whether the Company ever adopts a 40,000 tpa development
plan for Caucharí-Olaroz, success of the Thacker Pass process
testing facility, the results of any future feasibility study at
Thacker Pass, results of partnership and financing options at
Thacker Pass, and the results of RheoMinerals’ business plan and
cost-reducing measures.
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
contingencies. These assumptions include, among others, successful
closing of the Project Investment, including satisfaction of
conditions precedent thereto and timing thereof; forecast demand
for lithium products, the Company’s ability to fund, advance and
develop its projects, including results therefrom, accuracy of
mineral resources and mineral reserves, including whether resources
will ever be developed into reserves, accuracy of current budget
and construction estimates, maintenance of a positive business
relationship with Ganfeng, and a stable and supportive legislative
and regulatory environment. Forward-looking information also
involves known and unknown risks that may cause actual results to
differ materially, these risks include, among others, risks
inherent in transactions similar to the Project Investment,
including 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, whether mineral resources can ever be
converted into mineral reserves, whether the Company ever adopts a
40,000 tpa development plan for Caucharí-Olaroz, 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 and 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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