Wednesday 14 November 2012

Lithium Americas shares rally, gets Cauchari-Olaroz project approval from Jujuy province


Toronto-based Lithium Americas Corp. (TSE: LAC) (OTCQX: LHMAF) has snagged approval for the construction of its Cauchari-Olaroz lithium project from a committee of the province of Jujuy, in Argentina. 
The company said the "committee of experts" is tasked with assessing the impact and benefits to the province of any proposed lithium project. Shares in the lithium explorer moved up more than 12 per cent to $1.06 Wednesday morning.
“Receipt of Committee of Experts project approval is another major milestone for our company," said executive chairman, Tom Hodgson.  
"Given that the fundamentals of the lithium industry continue to be very strong, we are extremely pleased to be one important step closer to the construction of Cauchari-Olaroz, projected to be one of the largest and lowest cost lithium brine projects in the world.  
"Our focus is now on finalizing project financing, and on preparing for the project construction phase.”
The lithium explorer said the approval from the committee follows an agreement it signed with Jujuy Energia y Mineria Sociedad del Estado (JEMSE) - the government's mining investment company. 
The agreement will see JEMSE aquire an 8.5 per cent interest in the project, providing Lithium Americas with management expertise and services to develop the asset. 
These services include liaising with the national customs authorities for the import of all necessary equipment and materials, as well as the export of products, and liaising with the authorities of Argentina's central bank to facilitate the import and export of currency, among other services.
JEMSE will be required to cover its pro rata share of the financing for the construction of the Cauchari-Olaroz project. The distribution of dividends to JEMSE and other shareholders in the project will only start once all annual commitments related to project debt financing are met, the company said. 
Lithium Americas was able to achieve project approval within less than a year of submitting its initial Environmental Impact Statement," said president and CEO, Dr.Waldo Perez, in a statement Wednesday.  
"Very few resource projects anywhere in the world have moved forward in terms of discovery, feasibility and government approval as quickly as our project.  
"This is attributable to the strength of our Argentinean team, as well as the overwhelming support of the aboriginal communities which have been strong advocates of ourproject."
Lithium Americas has defined the world’s third largest lithium brine resource at its project, and completed a definitive feasibility study that identified an operating cost per tonne of lithium carbonate expected to be one of the lowest in the industry. The company snagged the environmental approvals for the property back in August. 
In June, the company said the low operating cost and large brine reserves of the project compare "very favourably" to existing lithium carbonate producers, and suggest that the company has the potential to become one of the largest and lowest cost lithium operations in the world.
The property has proven and probable reserves sufficient to operate at a production rate of up to 40,000 tonnes per annum (TPA) of lithium carbonate for 40 years, and up to 80,000 TPA of potash, which would include an initial five year ramp-up period.
The company's 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.
Highlights of the base case feasibility study include a pre-tax net present value, at an 8 per cent discount rate, of US$738 million and a pre-tax internal rate of return of 23 per cent.
Net cash operating costs per tonne of lithium carbonate are seen at US$1,332. Overall project revenue is projected at US$6.6 billion and project EBITDA is pegged at US$4.3 billion.
The company said that given the value of its project, it has received "several" new expressions of interest in financing the Argentinean property, on top of the off-take agreements it already has in place with Mitsubishi Corporation and Magna International
In an effort to manage this, Lithium Americas has created an executive committee to oversee the financing proposal process, and to manage discussions with strategic partners. The committee, which will include Dr. Perez and Hodgson, will be assisted by financial advisor Scotia Capital. 
In other news, the company said that Mike Cosic, previously its VP of corporate development, assumed the CFO role earlier this month, replacing Omar Salas. 

No comments:

Post a Comment