March 13, 2020 - Vancouver, Canada: Lithium Americas Corp. (TSX: LAC)(NYSE: LAC)("Lithium Americas" or the "Company") has reported financial and operating results for the fourth quarter and year ended December 31, 2019.
This news release should be read in conjunction with Lithium Americas’ audited consolidated financial statements and management's discussion and analysis ("MD&A") for the year ended December 31, 2019, which are available on the Company’s website and SEDAR.
All amounts are in U.S. dollars unless otherwise indicated.
Caucharí-Olaroz Lithium Project (“Caucharí-Olaroz”):
•Construction activities at Caucharí-Olaroz continue to advance in accordance with the 40,000 tonne per annum (“tpa”) of battery-quality lithium carbonate development plan.
•Currently, there are more than 1,000 construction personnel on site, including 286 full-time employees in Jujuy, Argentina.
•Construction is approximately 36% complete, as of the end of February 2020, and continues to advance on budget.
•As of February 29, 2020, $331 million (59%) of the planned capital expenditure has been committed of which $222 million (39%) 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 remaining bed modules is expected by the end of Q1 2020.
•Earthworks for the carbonate plant site have been completed.
•98% of the total planned earthworks for the 12 square kilometer evaporation pond layout are completed and approximately 38% of the liner has been installed.
•The concrete foundation for the boron solvent extraction plant is approximately 60% complete.
•Construction of buildings for storage of soda ash, reagents, finished products and other warehouses is 99% complete.
•The development plan contemplates that construction will be substantially mechanically complete by the end of 2020; however, several major pieces of equipment for the chemical plant are being fabricated in China and some suppliers have sub-vendors fabricating in China. The Company has become aware that there will be delays of up to 90 days in the delivery time for some of these items as a result of the recent COVID-19 outbreak. Accordingly, the Company anticipates that there will be a delay in achieving substantial completion of construction until early 2021. The Company continues to assess the impact of COVID-19 on the development program, including discussions with all vendors and freight forwarders on the delivery schedule, to assess the impact on schedule and to develop mitigation strategies, if necessary. The Company intends to provide updated guidance on the construction schedule in Q2 2020.
Thacker Pass Lithium Project (“Thacker Pass”):
•Permitting continues as planned, with the Mine Plan of Operations accepted by the Bureau of Land Management (“BLM”) and the Notice of Intent published on January 21, 2020 in the federal register, which started a mandated 365 day requirement for the BLM to complete the permitting process. Major permits for Phase 1 (as defined further below) are expected to be received by early 2021.
•Over 10,500 kg of high-quality lithium sulphate has been produced at the process testing facility in Reno, Nevada.
•Third-party vendors are engaged to engineer and design lithium carbonate and lithium hydroxide evaporator and crystallizer as well as provide performance guarantees and product samples.
•A definitive feasibility study (“DFS”) is being completed with an initial targeted production capacity of 20,000 tpa lithium hydroxide and approximately 2,000 tpa lithium carbonate (“Phase 1”); the DFS is on track to be complete by mid-2020.
•The Industrial Company, a division of Kiewit, is engaged to complete key aspects of the feasibility study.
•Project permitting and DFS costs are expected to be fully funded from available cash on hand.
•The Company is exploring financing options, including the possibility of a joint venture partner at Thacker Pass.
•As at December 31, 2019, the Company had $83.6 million in cash and cash equivalents, including $52.5 million representing the Company’s 50% share of Caucharí-Olaroz cash and cash equivalents and $31.1 million held by Lithium Americas and its subsidiaries.
•As at December 31, 2019, the Company had drawn $83.8 million of the $205.0 million senior credit facility available to fund its share of Caucharí-Olaroz construction. An additional $12.0 million was drawn subsequent to year end.
•In February 2020, the Company drew down $22.2 million from its $100.0 million unsecured, limited recourse, subordinated loan facility with $77.8 million remaining undrawn and available to fund the Company’s share of Caucharí-Olaroz expenditures and general corporate purposes.
•As at the date of this news release, the Company has total available credit and loan facilities of $187.0 million.
•As previously announced, on February 7, 2020 the Company and Ganfeng Lithium Co. Ltd. (“Ganfeng”) entered into an agreement whereby Ganfeng has agreed to subscribe for new shares of Caucharí-Olaroz for cash consideration of $16.0 million increasing its interest in Caucharí-Olaroz from 50% to 51%, with Lithium Americas owning the remaining 49%. In addition, Lithium Americas will
receive $40.0 million in cash from the proceeds of non-interest-bearing loans from Ganfeng. Ganfeng has commenced the regulatory approval application process in China and the transaction is expected to be completed in Q3 2020.
•On October 20, 2019, the Board of Directors appointed Dr. Yuan Gao as an independent director of the Company.
•The Company is closely monitoring the impact of the COVID-19 virus and is prepared for potential short-term impacts on its projects. The Company has appointed a team with overall responsibility for COVID-19 response planning, which includes senior management of the Company. The Company is putting a particular focus on the health and safety of all its employees and contractors as well as its host communities. In addition, the Company is conducting a careful review of various areas that may impact the timing of the Company's projects.
Selected consolidated financial information is presented as follows:
(in US$ million except per share information) Year ended December 31,
2019 Year ended December 31, 2018
Expenses (15.7 ) (23.7 )
Net income/(loss) 51.7 (28.3 )
Total comprehensive income/(loss) 52.1 (32.4 )
Income/(loss) per share - basic 0.58 (0.32 )
Cash and cash equivalents 83.6 41.6
Total assets 293.8 103.9
Total long-term liabilities (119.2 ) (18.3 )
Following closing of the $160.0 million investment by Ganfeng in Cauchari-Olaroz (the “Project Investment”) in August, 2019 the Company’s investment in Caucharí-Olaroz is accounted for as a joint operation and the Company now recognizes its share of any assets, liabilities and results of the joint operation rather than equity accounting for the investment. In 2019, total assets increased primarily as a result of recognizing the Company’s 50% share of Caucharí-Olaroz’s cash of $52.5 million, property, plant and equipment of $156.9 million and other assets. In 2019, total long-term liabilities increased primarily as a result of recognizing the Company’s share of its joint operation’s borrowings of $28.9 million and drawdowns from the Company’s senior credit facility of $66.3 million.
Net income for the year ended December 31, 2019 was $51.7 million compared to net loss of $28.3 million for the year ended December 31, 2018. Net income in 2019 is primarily a result of a gain on closing of the Project Investment of $74.5 million.
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 is contained in Lithium Americas’ current technical reports for the Caucharí-Olaroz lithium project and the Thacker Pass lithium project.