Lithium Americas Corp. (TSX:LAC)(NYSE:LAC)
("Lithium Americas" or the "Company") has
announced its financial and operating results for the second
quarter ended June 30, 2018.
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 six months ended June 30, 2018, which are
available on Lithium Americas’ website and on SEDAR.
HIGHLIGHTS
Cauchari-Olaroz:
- Development activities continue as planned with the advancement
of detailed engineering, ponds and camp construction, plant design
and supply purchases, with Stage 1 production expected to commence
in 2020.
- Engineering for the infrastructure is over 89% complete and,
due to certain changes not affecting the overall schedule, is
scheduled to be completed during the second half of 2018. Plant
design for Phase I shows a progress of 74% on track to issue the
first plant construction bid work packages in late 2018.
- Evaporation ponds construction commenced in early February 2018
and the filling of the ponds is expected to begin in the second
half of 2018. Earth works, production well drilling and
hydrological testing are underway.
- $29 million has been advanced to Minera Exar during the first
half of 2018 by the Joint Venture partners (including $14.5 million
by the Company) in the form of equity contributions and loans.
- There are currently approximately 400 people working in
Argentina, including direct employees and contractors.
- In addition to the scope currently under execution by Hatch
Ltd. (“Hatch”) for the detailed engineering of the project, Hatch
has also been engaged to provide project controls services to the
project.
- In May 2017, a technical report prepared in accordance with
National Instrument 43-101 – Standards of Disclosure for Mineral
Projects (“NI 43-101”) that summarizes the Stage 1 Definitive
Feasibility Study was filed on SEDAR at www.sedar.com and an
updated technical report was filed on January 17, 2018.
Lithium Nevada:
- On June 21, 2018 the Company announced the preliminary PFS
results and on August 2, 2018 the Company filed the Preliminary
Feasibility Study (“PFS”) for its Thacker Pass lithium project. The
PFS, prepared and approved by WorleyParsons Canada Inc.,
demonstrates a design capacity of 60,000 tonnes per annum (“tpa”)
of battery-grade lithium carbonate (“Li2CO3”) with initial
production capacity of 30,000 tpa (“Phase 1”) and increasing to
60,000 tpa (“Phase 2”). The PFS contemplates average life of mine
(LOM) operating costs of $2,570/t of Li2CO3, net of credits from
sulfuric acid and electricity sales. Initial capital costs,
including a 19% contingency, are estimated at $581 million for
Phase 1, and $478 million for Phase 2. Average annual EBITDA of
$520 million ($246 million – Phase 1), after-tax NPV of US$2.6
billion (at an 8% discount rate) and after-tax IRR of 29.3% are
projected, assuming a price of US$12,000/t for battery-grade
Li2CO3.
- On April 5, 2018 the Company updated the Measured and Indicated
mineral resource at its Thacker Pass project to 6.0 million tonnes
of lithium carbonate equivalent (“LCE”) at 2,917 parts per million
lithium (“ppm Li”) and the Inferred mineral resource to 2.3 million
tonnes of LCE at 2,932 ppm Li. This represents an approximate 80%
increase in the Measured and Indicated mineral resource from the
Company’s 2016 resource estimate and establishes Thacker Pass as
the largest known claystone lithium resource in the United
States.
- Lithium Nevada has identified extensions of high-grade (average
3,998 ppm Li) and near-surface lithium mineralization adjacent and
northwest of the proposed 2012 pit boundary.
- The Company is considering potential partnership and financing
scenarios to advance the Thacker Pass project.
RheoMinerals:
- The sales of RheoMinerals for the six months ended June 30,
2018 were $2.0 million (2017 – $2.8 million).
- In 2016, RheoMinerals entered into a “Technical Assistance and
Royalty Agreement” with Delmon Co. Ltd. in relation to the
construction of a manufacturing facility by The Delmon Group of
Companies in Saudi Arabia. The plant is undergoing commissioning
and product sales from the plant are expected to commence in Q4
2018. Delmon has achieved product certification with the leading
Saudi Arabia oil producer, for the organophilic leonardite product,
DEL-TROL HT, that will be manufactured at the new facility in
Dhahran, Saudi Arabia. Delmon is currently in the process of
achieving certification of its product, DEL-GEL organophilic
bentonite. The Company is entitled to net profit and gross profit
royalties from the future production of the plant.
Finance:
- In February 2018, the Company filed a final short form base
shelf prospectus in each province of Canada, other than the
Province of Quebec, to qualify the distribution, from time to time
over a 25-month period, of up to $500 million of the Company’s debt
and equity securities. The Company also filed a corresponding shelf
registration statement with the SEC on Form F-10 under the
Multijurisdictional Disclosure System. While the Company has no
immediate plans to raise capital, the shelf prospectus provides
financial flexibility and the ability to efficiently access capital
markets as the Company pursues future growth opportunities in
Argentina, Nevada or elsewhere.
- As at June 30, 2018, the Company had US$31.5 million in cash
and cash equivalents. As a result of the completion of
investment agreements with GFL International Co., Ltd. (“Ganfeng”)
and The Bangchak Petroleum Public Company Limited in 2017, the
Company has a US$205 million credit facility to finance its share
of capital expenditures with respect to the Minera Exar. On August
8, 2018 the Company received $5 million on its first drawdown of
this credit facility.
Corporate:
- In January 2018, the Company announced that it had received
approval for the listing of its common shares (“Common Shares”) on
the NYSE. The Common Shares opened for trading on the NYSE on
January 25, 2018.
Subsequent Event:
- On August 13, 2018 the Company announced that it has entered
into agreements to implement several transactions (together, the
“Transaction”), pursuant to which, among other things, a subsidiary
of SQM has agreed to sell its interest in Minera Exar to a
subsidiary of Ganfeng. As a result of the Transaction, Lithium
Americas’ interest in the Caucharí-Olaroz project will increase
from 50% to 62.5% with Ganfeng holding the remaining 37.5%
interest. In connection with the Transaction, Ganfeng has
also agreed to provide Lithium Americas with a new $100 million
unsecured, limited recourse, subordinated loan facility. With this
new source of financing, the Company expects to have more than
sufficient financial resources to fully fund its 62.5% share of
Minera Exar’s capital expenditures related to Stage 1 of the
Caucharí-Olaroz project.In addition, Ganfeng has also agreed to
provide a loan to Minera Exar to permit Minera Exar to repay $25
million of its outstanding indebtedness to the Company.The closing
of the Transaction is subject to customary closing conditions.
Financial
Results:
The following selected financial information is
presented in thousands of US dollars, shares in thousands, unless
otherwise stated and except per share amounts
The following table summarises the key items
that resulted in the decrease in net loss for the three months
ended June 30, 2018 (Q2 2018) versus the three months ended June
30, 2017 (Q2 2017), as well as certain offsetting items:
Financial results |
Quarter ended June 30, |
|
Change |
|
|
2018 |
|
2017 |
|
|
|
|
$ |
|
$ |
|
$ |
|
Organoclay sales |
855 |
|
1,612 |
|
(757 |
) |
Cost of sales |
(1,312 |
) |
(1,815 |
) |
503 |
|
Exploration
expenditures |
(2,205 |
) |
(829 |
) |
(1,376 |
) |
Organoclay research and
development |
(141 |
) |
(91 |
) |
(50 |
) |
General and
administrative expenses |
(3,887 |
) |
(1,211 |
) |
(2,676 |
) |
Share of loss in Joint
Venture |
(106 |
) |
(3,482 |
) |
3,376 |
|
Stock-based
compensation |
(1,014 |
) |
(2,356 |
) |
1,342 |
|
Foreign exchange
gain/(loss) |
876 |
|
(1,672 |
) |
2,548 |
|
Other
income/(expense) |
285 |
|
118 |
|
167 |
|
Net Loss |
(6,649 |
) |
(9,726 |
) |
3,077 |
|
Net loss for the three months ended June 30,
2018 was $6,649 compared to $9,726 for the three months ended June
30, 2017. The decrease in the net loss was mainly attributable to
the lower loss from the Joint Venture (as most costs were
capitalized in the three months ended June 30, 2018, but expensed
during the three months ended June 30, 2017), lower stock-based
compensation and higher foreign exchange gain partially offset by
higher exploration expenses at the Thacker Pass project and higher
general and administrative expenses. Basic and diluted loss per
share was $0.08 in Q2 2018 versus $0.15 in Q2 2017.
The organoclay sales in Q2 2018 was $855 (Q2
2017 - $1,612), with related production costs of $1,125 (Q2 2017 -
$1,633), depreciation expense of $184 (Q2 2017 - $222), and
inventory writedown of $3 (Q2 2017 – reversal of $40) resulting in
gross loss from organoclay sales of $457 (Q2 2017 - $203). The
decrease in sales is due to the timing of oil drilling products
orders which rebounded in July, 2018.
Organoclay research and development costs are
consistent from period to period and include costs of operating the
research and development team and lab for new organoclay product
development.
Exploration expenditures in Q2 2018 of $2,205
(Q2 2017 – $829) include expenditures incurred for the Thacker Pass
project. The increase in the Company’s exploration expenditures is
mostly due to advancing the Thacker Pass project.
Loss from the Joint Venture in Q2 2018 of $106
(Q2 2017 – $3,482) represents the Company’s share of the Joint
Venture losses for the Cauchari-Olaroz project. In July 2017, the
Joint Venture’s Cauchari-Olaroz project entered the development
phase. Effective July 1, 2017, all costs directly attributable to
the project are being capitalized. The Company’s share of the Joint
Venture losses decreased in Q2 2018 compared to Q2 2017 as the
majority of costs incurred in Q2 2018 were capitalized as project
development costs.
Stock-based compensation in Q2 2018 of $1,014
(Q2 2017 - $2,356) is a non-cash expense and consists of the $766
(Q2 2017 - $839) estimated fair value of stock options vested
during the period and the $248 (Q2 2017 - $1,517) fair market value
of restricted shares. In Q2 2018 the Company granted 21 restricted
shares to its employees. The increase in this category was due to
vesting of the 2017 stock option grants and restricted share awards
to the Company’s employees and officers.
Included in General and Administrative expenses
in Q2 2018 of $3,887 (Q2 2017 - $1,211) are:
- Office and administrative expenses of $314 (Q2 2017 - $163)
includes Vancouver, Reno, and Toronto office rent, insurance, IT,
telephone, and other related expenses and RheoMinerals’ general
office expenses. The increase in this category is mainly due to
higher directors’ and officers’ insurance costs as a result of the
NYSE listing.
- Professional fees of $367 (Q2 2017 - $108) consist of legal
fees of $218 (Q2 2017 – $20), consulting fees of $64 (Q2 2017 -
$12), public relations fees of $3 (Q2 2017 - $31), and accounting
fees of $82 (Q2 2017 - $44). Professional fees were higher in Q2
2018 due to increased activities at corporate and Lithium
Nevada.
- Salaries and benefits of $2,183 (Q2 2017 - $525) include
salaries, benefits, and bonuses for the Company’s employees and
directors’ fees. The increase in salaries and benefits is due to
hiring additional employees in the second half of 2017 and Q1 2018
and annual bonuses in Q2 2018.
- Regulatory and filing fees were $524 (Q2 2017 - $42). The
increase is due to the costs of listing the Company on the NYSE and
filing of the base shelf prospectus on February 7, 2018.
Other Income/expense in Q2 2018 includes a
foreign exchange gain of $876 (Q2 2017 – loss of $1,672). The gain
was due to the strengthening of the US dollar against the Canadian
dollar and a higher US dollar denominated cash balance in the Q2
2018 period. The Company holds most of its cash in US currency.
Other income in Q2 2018 was $285 compared to
other income of $118 in Q2 2017. Included in other income in Q2
2018 are $155 in interest income on cash and $264 interest income
on the loans to the Joint Venture. Included in other income in Q2
2017 was mainly interest income on cash.
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 a Senior Chemical Engineering Manager at Lithium Nevada
Corp., a wholly-owned subsidiary of the Company. Information on the
Company’s data verification and QA / QC procedures is contained in
Lithium Americas’ most recently filed press-release dated August 2,
2018 and the current technical reports for the Thacker Pass
project, available at www.sedar.com.
About Lithium
Americas:
Lithium Americas is developing Caucharí-Olaroz,
under construction in Jujuy, Argentina, and on closing of the
Transaction will have a 62.5% interest in Cauchari-Olaroz with
Ganfeng holding a 37.5% interest. In addition, Lithium Americas
owns 100% of the Thacker Pass project (formerly Stage 1 of Lithium
Nevada project), and RheoMinerals Inc., a supplier of rheology
modifiers for oil-based drilling fluids, coatings, and specialty
chemicals. 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 1150 – 355 Burrard StreetVancouver,
BC, V6C 2G8Telephone: 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. Such forward-looking
information is subject to various risks and uncertainties.
Forward-looking information in this news release includes, but is
not limited to, statements with respect to development activities,
the achievement of technical and development milestones, ability to
fund Cauchari-Olaroz project, commencement of production at
Cauchari-Olaroz, the potential for partnership and financing
scenarios for the Thacker Pass project, and completion of the
transactions related to the sale by SQM of its interest in Minera
Exar to a subsidiary of Ganfeng. Forward looking information is
subject to a variety of risks and uncertainties and other factors
that could cause actual events or results to differ materially from
those projected in the forward-looking information, including, but
not limited to, risks and uncertainties related to whether there
will ever be production at the Company’s mineral properties,
geological, technical, drilling or processing problems,
environmental liabilities and risks inherent in mineral extraction
operations, lack of availability of additional financing, and
obtaining regulatory approvals in a timely manner, or at all. There
can be no assurance that such statements will prove to be accurate,
as actual results and future events could differ materially from
those anticipated in such statements. Forward-looking statements
are 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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