Lithium Americas Corp. (TSX:
LAC)
(NYSE:
LAC) ("
Lithium Americas"
or the "
Company") is pleased to announce that it
has entered into definitive agreements with Ganfeng Lithium Co.,
Ltd. (together with its subsidiaries, “
Ganfeng
Lithium”) in respect to their joint venture company,
Minera Exar S.A. (“
Minera Exar” or
“
JV”) (collectively, the
“
Transaction”). Minera Exar owns 100% of the
Caucharí-Olaroz lithium project (“
Caucharí-Olaroz”
or the “
Project”) currently under construction in
Jujuy, Argentina. The Transaction includes the following
provisions:
- Ganfeng Lithium has agreed to
subscribe for new shares of Minera Exar for cash consideration of
US$16 million increasing its interest from 50% to 51%, with Lithium
Americas owning the remaining 49%.
- Both parties have agreed to the
2020 funding schedule, including investment of up to US$400
million, in accordance with the 2019 approved construction
plan.
- Caucharí-Olaroz remains on budget
and schedule to commence production in early 2021.
- Joint venture and related
agreements will be amended as a result of the new ownership
structure to preserve joint approval for substantive matters
involving Minera Exar and to maintain the existing construction
plan and management team.
- In addition, Lithium Americas will
receive US$40 million in cash from the proceeds of
non-interest-bearing loans from Ganfeng Lithium (additional details
below).
"The Transaction with Ganfeng Lithium further
strengthens our balance sheet while ensuring Caucharí-Olaroz
construction continues to advance as planned," commented Jon Evans,
the Company’s President and CEO. "For Lithium Americas, the
Transaction reinforces our strategy of building a low-cost lithium
operation in Argentina, and provides funding to advance our second
flagship project, Thacker Pass, towards construction in
Nevada.”
"We remain firmly committed to investing in
Argentina, Caucharí-Olaroz and the team at Minera Exar," said
Xiaoshen Wang, Vice-Chairman and Vice-President of Ganfeng Lithium.
"The Transaction provides increased financial flexibility and
benefits to Ganfeng Lithium as we continue to invest in one of the
largest and lowest cost sources of lithium carbonate globally
alongside our partner, Lithium Americas.”
Transaction Details
Under the terms of the Transaction, Ganfeng
Lithium has agreed to subscribe for new shares of Minera Exar for
cash consideration of US$16 million. Proceeds will be used by
Minera Exar for the purpose of advancing the construction and
development of Caucharí-Olaroz. Upon completion of the Transaction,
the Company and Ganfeng Lithium will own 49% and 51% of Minera
Exar, respectively.
In addition, Lithium Americas and Ganfeng
Lithium have agreed to restructure Exar Capital BV (“Exar
Capital”), a jointly controlled entity which provides
funding to Caucharí-Olaroz, to reflect the proportionate ownership
of Minera Exar. As part of the Transaction, Ganfeng Lithium has
agreed to provide US$40 million to Exar Capital in
non-interest-bearing loans, repayable in 2029 (subject to an
additional one-year extension). Proceeds of the loan will be used
to repay intercompany loans owing to Lithium Americas, with US$20
million to be paid on closing of the Transaction and an additional
US$20 million payable on August 1, 2020 (or such earlier date as
the parties may agree).
In connection with the Transaction, the parties
have agreed to a funding schedule, including investment of up to
US$400 million, in accordance with the 2019 approved construction
plan. The revised structure of the JV, as set out in the
Transaction, will improve Ganfeng Lithium’s financial flexibility
and position regarding regulatory approvals in China.
The parties have also agreed to an interim
funding structure that would be implemented to maintain continuity
of project funding until closing the Transaction, by which Lithium
Americas would draw down funds under its loan facilities (the
subordinated loan facility with Ganfeng Lithium and the senior
credit facility with Ganfeng Lithium and BCP Innovation Pte. Ltd.).
Proceeds of the loans would be used to fund Minera Exar with
Ganfeng Lithium providing proportionate contributions on completion
of the Transaction.
Upon completion of the Transaction, Ganfeng
Lithium will become a controlling shareholder of Minera Exar while
Lithium Americas will receive fulsome minority shareholder
protections. The amended shareholders agreement will continue to
require joint approval for substantive business decisions including
material changes to:
- Funding plans
- Construction program
- Project design and process
- Capital and corporate structure
- Production output level
- Capital investment plan (including expansions)
Minera Exar will remain the operator of
Caucharí-Olaroz and have agreed that Lithium Americas will enter
into a management services contract with Ganfeng Lithium which will
provide for the continued services of the Company’s senior
management, including Gabriel Rubacha as CEO and Franco Mignacco as
President of Minera Exar.
Caucharí-Olaroz Construction
Update
Construction activities at Caucharí-Olaroz
continue to advance in accordance with the 40,000 tonne per annum
(“tpa”) of battery-quality lithium carbonate
construction plan approved in Q3 2019. There are currently close to
900 construction personnel on site, with 275 full-time employees in
Jujuy, Argentina. The construction program, which is approximately
31% complete, continues to advance on schedule and on budget, with
construction scheduled to be substantially mechanically complete by
the end of 2020.
Construction Status Update:
- The Project remains on budget and
schedule to commence production in early 2021.
- As of December 31, 2019, US$280
million (50%) of the planned capital expenditure has been committed
of which US$181 million (32%) has been spent.
- Contracts associated with the 33 kV
powerline and the 13.2 kV distribution lines were awarded, the
contractors were mobilized and the development activities have
commenced.
- The gas pipeline contract was
awarded and the contractor commenced development activities at
site.
- The construction camp has close to
1,000 beds available and completion of the operations camp is
expected by the end of Q1 2020.
- Earthworks for the carbonate plant
site have been completed.
- 87% of the total planned earthworks
for the 12 square kilometer (“km2“) evaporation
pond layout are completed and 33% of liner has been installed.
- The concrete foundation for the
boron solvent extraction (“SX”) plant is
approximately 33% advanced.
- Construction of buildings for
storage of soda ash, reagents, finished products and other
warehouses is 75% complete.
Evaporation Ponds & Production
WellsConstruction of the remaining 13% of the earthworks for the 12
km2 of planned solar evaporation ponds is scheduled to be finalized
by the end of Q1 2020, followed by completion of the remaining 67%
of liner installation required to finalize the entire area in early
Q3 2020. Currently, there are 15 production wells completed
and 11 in progress, with 7 drilling rigs operating at site.
Approximately 4.3 million cubic meters (“m3”) of
brine has been pumped into the ponds for initial evaporation and
process testing.
InfrastructureConstruction of the access roads
and platforms for the wells is 94% complete. Gas pipeline
engineering is complete, the pipes are at site and construction is
underway. The engineering, purchase and construction for the main
33 kV power line and 13.2 kV distribution line has been awarded to
provide power to the ponds and plant and the contractor was
mobilized.
Lithium Carbonate PlantThe majority of the
critical, long-lead-time equipment is currently under fabrication,
including the crystallizer, SX plant, lime plant, reactors,
centrifuges, micronizer, tanks, filters, dryer, and boilers.
Lime plant equipment has been received at site and construction has
started. The boron removal SX plant foundations are well advanced.
The civil works contractor for the crystallizer/KCl removal plant
has been selected and construction will commence following the
completion of the SX plant. The first SX plant equipment is
scheduled to arrive at site this month followed by the crystallizer
equipment. Construction of the soda ash and finished products
storage facilities are complete and additional warehouses are well
advanced.
Capital ExpendituresPre-production capital cost
estimates for Caucharí-Olaroz, including a contingency, remain
unchanged at US$565 million of which approximately US$181 million
has been spent as of December 31, 2019. Approximately US$280
million of the total has been committed and remains within the
budget. To date, most of the major contracts have been awarded or
are ready to be awarded.
2020 Construction Schedule - Major
Milestones:
- Pond completion by the end of first
Q1 2020 with liner installation finalized by early Q3
2020.
- Lime plant to be completed by the
end of Q2 2020 followed by commissioning and start up.
- Power line and gas pipeline are
scheduled to be completed in early Q3 2020.
- Carbonate plant civil works to be
completed in early Q3 2020.
- SX Boron Extraction plant is
scheduled to be completed in early Q4 2020.
- Crystallizer/KCl removal plant is
scheduled to be completed in Q4 2020.
Transaction Approvals &
Closing
The Transaction constitutes a "related party
transaction", as defined under Multilateral Instrument 61-101
("MI 61-101") as Ganfeng Lithium is considered a
“related party” (as defined in MI 61-101) to the Company.
Ganfeng Lithium is a significant shareholder of Lithium Americas,
holding approximately 16.7% of the Company’s outstanding common
shares as of the date of this press release. MI 61-101 provides
that where an issuer borrows from a related party or sells,
transfers or disposes of an asset to a related party, those
transactions may be considered “related party transactions” for the
purposes of MI 61-101. The Company has determined that the
Transaction would not be subject to either the formal valuation or
minority shareholder approval requirements, respectively, set out
in MI 61-101 on the basis of the exemptions in Sections 5.5(a) and
5.7(1)(a) of MI 61-101, being that the fair market value of the
Transaction does not exceed 25% of Lithium Americas’ market
capitalization (calculated in accordance with MI 61-101).
Lithium Americas formed a special committee
(“Special Committee”) of independent directors to:
(i) oversee the identification of strategic alternatives; (ii)
evaluate strategic alternatives, including the Transaction; and
(iii) supervise the negotiation and settlement of such
alternatives, including the Transaction. The Special
Committee retained National Bank Financial Inc.
(“NBF”) as its financial advisor, and Miller
Thomson LLP, as independent legal counsel. The Special Committee
deliberated extensively in discharging its mandate. The
Special Committee, having taken into account a fairness opinion of
NBF (delivered orally) and such other matters it considered
relevant and after receiving legal and financial advice,
unanimously recommended that the board of directors of the Company
approve the Transaction.
Cassels Brock & Blackwell LLP acted as legal
advisor to Lithium Americas.
Closing of the Transaction is subject to receipt
of all required regulatory approvals, consent of Lithium Americas’
senior lenders, settlement of an amended and restated shareholder
agreement and other definitive agreements, and other customary
closing conditions. The Transaction is expected to be
completed by Q3 2020; however, there can be no assurance regarding
timing of completion of the regulatory review process.
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. Dr.
LeBlanc is the Chief Technical Officer of the Company.
Information on the Company’s data verification, and QA/QC
procedures as contained in the technical report for the Project
titled “NI 43-101 Technical Report – Updated Feasibility Study and
Mineral Reserve Estimation to Support 40,000 tpa Lithium Carbonate
Production at the Caucharí-Olaroz Salars, Jujuy Province,
Argentina” with an effective date of August 19, 2019, a copy of
which is available on the Company’s Sedar profile 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
high-quality lithium products. Founded in 2000, Ganfeng Lithium is
listed on the Shenzhen Stock Exchange and Hong Kong Stock Exchange
(HKEX: 1772, SZSE: 002460).
About Lithium Americas
Lithium Americas is focused on advancing
Caucharí-Olaroz, which is under construction in Jujuy, Argentina.
Lithium Americas, through a wholly owned subsidiary, Lithium
Nevada, owns 100% of the Thacker Pass lithium project located in
Nevada and 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 Relations Suite 300 – 900 West
Hastings Street Vancouver, BC, V6C 1E5Telephone:
778-656-5820 Email:
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 Transactions, including, without limitation,
receipt of all required regulatory approvals in connection
therewith; statements regarding anticipated decision-making with
respect to Minera Exar; anticipated rates of production at
Caucharí-Olaroz; successful development of Caucharí-Olaroz ,
including timing of various construction milestones, timing for
commencement of production, anticipated levels of production, and
results thereof and 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, the continued advancement of the 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
Transactions 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 Transactions and other transactions described
herein, forecasted demand for lithium products, the Company’s
ability to fund, advance and develop the Caucharí-Olaroz project
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 Transactions,
successful completion of all conditions precedent thereto
(including receipt of all regulatory approvals in connection
therewith), 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.
Lithium Americas (TSX:LAC)
Historical Stock Chart
From Mar 2024 to Apr 2024
Lithium Americas (TSX:LAC)
Historical Stock Chart
From Apr 2023 to Apr 2024