Lithium Americas closes $172 million strategic financing with Ganfeng Lithium

Lithium Americas Corp has completed the closing of the investment agreement with GFL International, a wholly-owned subsidiary of Jiangxi Ganfeng Lithium Co. Ltd. Pursuant to the Investment Agreement, Ganfeng Lithium agreed to provide Lithium Americas with an aggregate of approximately $172 million in financing. Ganfeng Lithium now holds 75,000,000 common shares of the company.

Tom Hodgson, Lithium Americas’ CEO, commented: “We welcome Ganfeng Lithium as our largest shareholder. The closing of the Investment Agreement places Lithium Americas in a strong financial position and will allow the company to now commence construction of the Cauchari-Olaroz lithium project with our joint venture partner SQM, with the objective of becoming the next low cost brine producer of lithium by 2019.”

Ganfeng Lithium is the largest integrated lithium producer in China, with a total capacity of around 30,000 t/y of lithium carbonate equivalent. Ganfeng Lithium’s products include lithium metal, lithium hydroxide, lithium carbonate, lithium fluoride, and lithium chloride. In Australia, Ganfeng Lithium owns a 43.1% interest in the Mount Marion lithium spodumene project with Mineral Resources Ltd (43.1%) and Neometals Ltd (13.8%).

Lithium Americas, together with SQM, is developing the Cauchari-Olaroz lithium project, located in Jujuy, Argentina, through its 50% interest in Minera Exar. In addition, Lithium Americas owns 100% of the Lithium Nevada project (formerly Kings Valley project), and RheoMinerals Inc, a supplier of rheology modifiers for oil-based drilling fluids, coatings, and specialty chemicals.

Cauchari-Olaroz is located in northwest Argentina. It is situated in the Salar de Olaroz and Salar de Cauchari, adjacent to Orocobre Ltd’s Olaroz facility, which has been in production since 2015. The project is approximately 270 km east of SQM’s Salar de Atacama brine operation, accessible via an international highway. Cauchari-Olaroz is well serviced by nearby infrastructure including major paved highways, a national and international rail link which connects to the port of Antofagasta in Chile, a high-voltage power grid, and a gas pipeline.

The production process involves two distinct steps and is generally consistent with other established brine operations. The first step uses a solar evaporation process to concentrate lithium in the brine and precipitate competing salts in large-scale ponds. The ponds at Cauchari-Olaroz are based on SQM’s pond design criteria used in their existing Atacama operation and involve the use of shallow ponds where the precipitated salt is annually harvested from the flat pond base. The second step uses the processing facilities that transform the concentrated lithium brine into battery-grade lithium carbonate while ensuring the removal of impurities from the end-product.

Cauchari-Olaroz Stage 1 DFS Results

Lithium Carbonate Price $12,000/t Li2CO3
Average Annual Production 25,000 tpa Li2CO3
Expected Project Life 40 years
Project capital costs $425 million
Operating costs $2,495/t Li2CO3
Average annual EBITDA $233 million
Pre-tax NPV 10% discount $1,266 million
After-tax NPV 10% discount $803 million
Pre-tax IRR 34.0%
After-tax IRR 28.4%
Payback period 3 years, 5 months