Proactiveinvestors is a leading multi-media news organisation, investor portal and events management business with offices in New York, Sydney, Toronto, Frankfurt and London.
Monday, 15 October 2012
Lithium Americas posts Q2 earnings, focus on government approval for Cauchari-Olaroz
Lithium Americas (TSE:LAC)(OTCQX:LHMAF) Monday reported results for the second quarter of its fiscal year, a period that saw the approval of an environmental impact statement for its Cauchari-Olaroz lithium/potash project.
The company is developing one of the world's largest and lowest cost lithium operations in Argentina. The company has defined the world's third largest lithium brine resource, and a completed definitive feasibility study identified that Lithium Americas’ operating cost per tonne of lithium carbonate is expected to be one of the lowest in the industry.
As at August 31, 2012, the company had $2.3 million in cash and cash equivalents and positive working capital of $0.7 million, and $8 million available underits stand-by line of credit to fund current operations.
"With our definitive feasibility study complete and the pilot plant operational, our attention has been focussed on obtaining final government approval and on securing our project financing," said Lithium Americas president and CEO Waldo Perez.
"The global market for lithium continues to besupported by strong demand for batteries of all sizes, from hand held electronic devices to large scale grid storage, creating upward pressure onlithium carbonate prices.
"The scale and projected low operating cost of the Cauchari-Olarozproject is expected to make us extremely competitive in this growing market."
During the three months ended August 31, net loss narrowed to $1.2 million from $2.1 million a year earlier with loss per share down to two cents from a loss of three cents last year.
In the second quarter, Lithium Americas said that according to the reserve estimate outlined in the definitive feasibility study , the Cauchari-Olaroz property has proven and probable reserves sufficient to operate at a production rate of upto 40,000 tonnes per annum (TPA) of lithium carbonate and up to 80,000 TPA of potash for 40 years, which would include an initial five year ramp-up period.
Consistent with the company’s previously-released preliminary economic Assessment, Lithium Americas’ business plan is to build the project in two stages, with each stage consisting of a 20,000 TPA lithium carbonate facility and a 40,000 TPA potash facility.
The second stage is not expected to commence until 2018 and it will be the subject of a separate study.
The feasibility study results identify that Lithium Americas is expected to have one of the largest and lowest cost lithium operations in the industry and calculates a base case pre-tax net present value of US$738 million, assuming an 8 per cent discount rate, and an after-tax NPV of US$464 million.
The Provincial Environmental Agency of Jujuy Province, Argentina has approved the Environmental Impact Statement for the construction of the company’s lithium/potash project.
Lithium Americas has previously obtained definitive mining title as well as secured long-term land use agreements with the five aboriginal communities on which its Cauchari-Olaroz reserve estimate was calculated and its project will be built.
Final government approval to proceed with construction and production is expected in Q4 of calendar year 2012.
Looking ahead, the company said it has completed its exploration program and its feasibility study, and is now focused on completing the remaining initiatives required in order to begin commercial operations.
Significant milestones that the company will be working towards over the next 12 monthswith the goal of achieving commercial production during calendar year 2015 include detailed engineering, which is due to commence in early calendar year 2013.
The company also said that negotiations with strategic partners regarding project financing have already started and are expected to conclude within Q4 of 2012 or early 2013.