(All amounts in US$ unless
otherwise indicated)
Lithium Americas Corp. (TSX: LAC) (NYSE: LAC)
(“Lithium Americas” or the “Company”) announced the
Company and General Motors Holdings LLC (“GM”) have entered
into a new investment agreement (“Investment Agreement”) to
establish a joint venture (“JV”) for the purpose of funding,
developing, constructing and operating (the “JV
Transaction”) Thacker Pass in Humboldt County, Nevada
(“Thacker Pass” or the “Project”). The JV Transaction
will deliver $625 million of cash and letters of credit from GM to
Thacker Pass alongside the conditional commitment for a $2.3
billion U.S. Department of Energy (“DOE”) loan announced
earlier this year.
Under the terms of the Investment Agreement, GM will acquire a
38% asset-level ownership stake in Thacker Pass for $625 million in
total cash and letters of credit (“GM’s JV Investment”),
including $430 million of direct cash funding to the JV to support
the construction of Phase 11 and a $195 million letter of credit
facility (“LC Facility”) that can be used as collateral to
support reserve account requirements2 under the DOE Loan (as
defined below). The JV Transaction replaces the $330 million
Tranche 2 common equity investment commitment from GM under its
original investment agreement with the Company (“Tranche 2”)
announced in January 2023.
TRANSACTION HIGHLIGHTS
- Largest ever publicly announced investment by a U.S. OEM in a
lithium carbonate project highlights the strategic importance of
Thacker Pass in creating a domestic supply chain for critical
minerals.
- Allows Lithium Americas to secure $625 million in cash and
letters of credit, while avoiding common equity dilution associated
with Tranche 2.
- Builds upon an already strong relationship with GM as strategic
investor and extends Phase 1 offtake to 20 years.
The JV Transaction is incremental to GM’s February 2023 Tranche
1 investment of $320 million, which resulted in GM acquiring
approximately 15 million common shares of Lithium Americas3. In
addition to the JV Transaction, GM has agreed to extend its
existing offtake agreement for up to 100% of production volumes
from Phase 1 of Thacker Pass to 20 years to support the expected
maturity of the DOE Loan. Upon closing of the JV, GM will also
enter into an additional 20-year offtake agreement for up to 38% of
Phase 24 production volumes and will retain its existing right of
first offer on the remaining Phase 2 production volumes.
“Our relationship with GM has been significantly strengthened
with this joint venture as we continue to pursue a mutual goal to
develop a robust domestic lithium supply chain by advancing the
development of Thacker Pass,” said Jonathan Evans, President and
CEO of Lithium Americas. “Today’s joint venture announcement is a
win-win for GM and Lithium Americas. GM’s JV Investment
demonstrates their continued support and helps us to unlock the
previously announced $2.3 billion DOE Loan. We will be working
closely with GM to advance towards the final investment decision,
which we are targeting by the end of the year.”
“We’re pleased with the significant progress Lithium Americas is
making to help GM achieve our goal to develop a resilient EV
material supply chain,” said Jeff Morrison, SVP, Global Purchasing
and Supply Chain. “Sourcing critical EV raw materials, like
lithium, from suppliers in the U.S., is expected to help us manage
battery cell costs, deliver value to our customers and investors,
and create jobs.”
JV TRANSACTION DETAILS
The key terms of the JV Transaction are summarized below:
- Lithium Americas will have a 62% interest in Thacker Pass and
will manage the Project (the “Manager”) on behalf of Lithium
Americas and GM (together the “JV Partners”).
- GM will have a 38% interest in Thacker Pass and commit $625
million in cash and letters of credit to the JV:
- $330 million cash to be contributed on the date of the JV
closing;
- $100 million cash to be contributed at Final Investment
Decision (“FID”) for Phase 1; and
- $195 million LC Facility prior to first draw on the $2.3
billion DOE Loan.
- Lithium Americas will contribute $387 million of funding to the
JV for its 62% ownership in the Project:
- $211 million (with expenditures on capex after August 2024
being credited against and reducing this amount, along with other
adjustments) to be contributed on the date of the JV closing;
and
- The remainder to be contributed upon FID for Phase 1.
- As of June 30, 2024, Lithium Americas had approximately $376
million in cash and cash equivalents.
- LC Facility provided by GM to the JV as part of its
consideration for its equity interest will have no interest and a
maturity consistent with DOE Loan requirement that will be
withdrawn once replaced with cash that is generated by Thacker
Pass.
- Board of Directors to be established at the JV level to oversee
the JV and approve the Project’s budgets and business plans, and
implement policies to align with GM’s vendor requirements,
including GM’s Human Rights Policy.
- Upon closing of the JV Transaction, GM will also enter into an
additional 20-year offtake agreement for up to 38% of production
volumes from Phase 2 of Thacker Pass and will retain its right of
first offer on the remaining balance of Phase 2 volumes.
GM’s JV Investment is subject to certain conditions precedent,
including those related to the loan agreement for the DOE Loan.
BACKGROUND
U.S. DOE Loan
In March 2024, the Company received a conditional commitment for
a $2.3 billion loan from the U.S. DOE under the Advanced Technology
Vehicles Manufacturing (“ATVM”) Loan Program (the “DOE
Loan”). Prior to making the first draw on the DOE Loan,
expected sometime in the middle of 2025, the Company is required to
fund approximately $195 million (funded by either cash or letters
of credit) for reserve accounts associated with the DOE Loan (for
construction contingency, ramp-up and sustaining capital). The GM
LC Facility will be used to fund the DOE’s reserve accounts.
2023 GM Investment
On January 30, 2023, Old LAC5 entered into a purchase agreement
with GM, pursuant to which GM agreed to make a $650 million equity
investment (the “2023 Transaction”), the proceeds of
which are to be used for the construction and development of
Thacker Pass. The 2023 Transaction was comprised of two tranches, a
first tranche investment of $320 million (“Tranche 1”) and
Tranche 2. Tranche 1 closed and the Phase 1 offtake agreement was
executed on February 16, 2023. On October 3, 2023, pursuant to the
Separation, the full amount of the remaining unspent proceeds of
Tranche 1 were included in the net assets distributed by Old LAC to
the Company.
As the Separation was completed before the closing of Tranche 2,
on October 3, 2023, the agreement for Tranche 2 in Old LAC was
terminated and replaced by a corresponding subscription agreement
between GM and the Company whereby the proceeds of Tranche 2 would
be received by the Company.
On August 30, 2024, the Company and GM agreed to extend the
outside date for the Tranche 2 subscription agreement until the end
of the year to provide time for the parties to explore alternative
structures for GM’s additional investment in a mutually beneficial
manner. The Company and GM have terminated the Tranche 2
subscription agreement concurrent with the execution of the JV
Investment Agreement.
THACKER PASS PROJECT UPDATE
The Company continues to focus on de-risking project execution
by advancing detailed engineering, project planning and procurement
packages.
- Detailed engineering continues to progress in advance of
issuing full notice to proceed, currently at approximately 40%
design complete.
- Site preparation for major earthworks has been completed and
the process plant area is currently being excavated (approximately
50% complete) to prepare for concrete placement, forecasted to
begin by mid-2025.
- Procurement packages for the top seven pieces of long-lead
equipment have been awarded. Contracts for key construction
materials have been awarded and field purchases of goods and
services have commenced.
- Major earth works for the all-inclusive housing facility for
construction workers (the Workforce Hub) are completed. The current
focus is on finalizing engineering and permitting for utilities and
preparing to award contracts for the detailed earthworks,
foundation installation and erection of the housing units.
To date, the Company has achieved over one million work hours
without a lost time injury.
NEXT STEPS
The Company continues to work closely with the DOE and expects
to close the DOE Loan in the coming weeks. The Company and GM are
targeting making the FID and issuing full notice to proceed for
Thacker Pass by the end of the year, following closing of the DOE
Loan and the JV Transaction.
ADVISORS
Goldman Sachs & Co. LLC and Evercore Group L.L.C. are acting
as financial advisors to Lithium Americas and Vinson & Elkins
and Cassels Brock & Blackwell are acting as legal counsel to
Lithium Americas in connection with the JV Transaction. BMO Capital
Markets acted as financial advisor to Lithium Americas in
connection with GM’s original Tranche 2 investment announced in
January 2023.
Morgan Stanley & Co. LLC is acting as GM’s financial advisor
and Mayer Brown and Osler, Hoskin & Harcourt are acting as
legal counsel to GM in connection with the JV Transaction.
TECHNICAL INFORMATION
The scientific and technical information in this news release
has been reviewed and approved by Rene LeBlanc, PhD, SME, Vice
President, Growth and Product Strategy of the Company, and a
“qualified person” as defined under National Instrument 43-101 and
Subpart 1300 of Regulation S-K under the United States Securities
Act of 1933.
ABOUT LITHIUM AMERICAS
Lithium Americas is committed to responsibly developing the
Thacker Pass project located in Humboldt County in northern Nevada,
which hosts the largest known Measured and Indicated lithium
resource in North America. The Company is focused on advancing
Thacker Pass Phase 1 toward production, targeting nameplate
capacity of 40,000 tpa of battery-quality lithium carbonate. The
Company and its engineering, procurement and construction
management contractor, Bechtel, entered into a National
Construction Agreement (Project Labor Agreement) with North
America’s Building Trades Unions for construction of Thacker Pass.
The three-year construction build is expected to create
approximately 1,800 direct jobs. Lithium Americas’ shares are
listed on the Toronto Stock Exchange and New York Stock Exchange
under the symbol LAC. To learn more, visit www.lithiumamericas.com
or follow @LithiumAmericas on social media.
FORWARD-LOOKING INFORMATION
This news release contains “forward-looking information” within
the meaning of applicable Canadian securities legislation, and
“forward-looking statements” within the meaning of the United
States Private Securities Litigation Reform Act of 1995
(collectively referred to as “forward-looking information”
(“FLI”)). All statements, other than statements of
historical fact, are FLI and can be identified by the use of
statements that include, but are not limited to, words, such as
“anticipate,” “plan,” “continues,” “estimate,” “expect,” “may,”
“will,” “projects,” “predict,” “proposes,” “potential,” “target,”
“implement,” “scheduled,” “forecast,” “intend,” “would,” “could,”
“might,” “should,” “believe” and similar terminology, or statements
that certain actions, events or results “may,” “could,” “would,”
“might” or “will” be taken, occur or be achieved. FLI in this news
release includes, but is not limited to, expectations regarding
completion of the JV Transaction and the DOE Loan; the expected
timetable for completing JV Transaction and the DOE Loan;
anticipated timing for FID; expectation about the extent that the
JV Transaction, DOE Loan, and cash on hand would fund the
development and construction of Thacker Pass; expectations and
timing on the commencement of major construction and first
production; project de-risking initiatives; expectations related to
the construction build, job creation and nameplate capacity as well
as other statements with respect to the Company’s future objectives
and strategies to achieve these objectives, and management’s
beliefs, plans, estimates and intentions, and similar statements
concerning anticipated future events, results, circumstances,
performance or expectations that are not historical facts.
FLI involves known and unknown risks, assumptions and other
factors that may cause actual results or performance to differ
materially. FLI reflects the Company’s current views about future
events, and while considered reasonable by the Company as of the
date of this news release, are inherently subject to significant
uncertainties and contingencies. Accordingly, there can be no
certainty that they will accurately reflect actual results.
Assumptions upon which such FLI is based include, without
limitation, the completion of the JV Transaction and DOE Loan prior
to the end of 2024, or at all, and the absence of material adverse
events affecting the Company during this time; the ability of the
Company to satisfy all closing conditions for the JV Transaction
and the DOE Loan in a timely manner; expectations regarding the
Company's financial resources and future prospects; the ability to
meet future objectives and priorities; a cordial business
relationship between the Company and third party strategic and
contractual partners; general business and economic uncertainties
and adverse market conditions; the availability of equipment and
facilities necessary to complete development and construction at
the Project; unforeseen technological and engineering problems;
political factors, including the impact of the 2024 U.S.
presidential election on, among other things, the extractive
resource industry, the green energy transition and the electric
vehicle market; uncertainties inherent to feasibility studies and
mineral resource and mineral reserve estimates; uncertainties
relating to receiving and maintaining mining, exploration,
environmental and other permits or approvals in Nevada; demand for
lithium, including that such demand is supported by growth in the
electric vehicle market; current technological trends; the impact
of increasing competition in the lithium business, and the
Company’s competitive position in the industry; compliance by joint
venture partners with terms of agreements; the regulation of the
mining industry by various governmental agencies; as well as
assumptions concerning general economic and industry growth rates,
commodity prices, resource estimates, currency exchange and
interest rates and competitive conditions. Although the Company
believes that the assumptions and expectations reflected in such
FLI are reasonable, the Company can give no assurance that these
assumptions and expectations will prove to be correct.
Readers are cautioned that the foregoing lists of factors are
not exhaustive. There can be no assurance that FLI will prove to be
accurate, as actual results and future events could differ
materially from those anticipated in such information. As such,
readers are cautioned not to place undue reliance on this
information, and that this information may not be appropriate for
any other purpose, including investment purposes. The Company’s
actual results could differ materially from those anticipated in
any FLI as a result of the risk factors set out herein and in the
Company’s filings with securities regulators.
The FLI contained in this news release is expressly qualified by
these cautionary statements. All FLI in this news release speaks as
of the date of this news release. The Company does not undertake
any obligation to update or revise any FLI, whether as a result of
new information, future events or otherwise, except as required by
law. Additional information about these assumptions and risks and
uncertainties is contained in the Company’s filings with securities
regulators, including the Company’s most recent Annual Report on
Form 20-F and most recent management’s discussion and analysis for
our most recently completed financial year and, if applicable,
interim financial period, which are available on SEDAR+ at
www.sedarplus.ca and on EDGAR at www.sec.gov. All FLI contained in
this news release is expressly qualified by the risk factors set
out in the aforementioned documents.
___________________________________________________ 1 Phase 1 is
the initial phase of production at Thacker Pass, targeting 40,000
tonnes per annum (“tpa”) of battery-grade lithium carbonate.
2 See the section titled Background – U.S. DOE Loan for more
details. 3 See the section titled Background – 2023 GM Investment
for more details. 4 Phase 2 is the second phase of production at
Thacker Pass, targeting an additional 40,000 tpa, for total
production capacity of 80,000 tpa. 5 Old LAC is now named Lithium
Americas (Argentina) Corp., pursuant to a separation transaction
that was undertaken on October 3, 2023 (the “Separation”),
when the Company acquired ownership of Old LAC’s North American
business assets and investments.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241016466651/en/
INVESTOR CONTACT Virginia Morgan, VP, IR and ESG
+1-778-726-4070 ir@lithiumamericas.com
Lithium Americas (NYSE:LAC)
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