Monday 1 April 2013

Lithium Americas makes “great strides” at Cauchari-Olaroz lithium project; actively involved in financing discussions


Lithium Americas Corp. (TSE:LAC) Monday reported its financial results for the 10-month period that ended December 31, and said that it is “actively involved” in financing discussions for its South America-based lithium project.
The company is developing one of the largest lithium operations and says it has defined the world’s third largest lithium brine resource. Its principal property consists of a portion of two adjacent Argentinean salt lakes, Cauchari and Olaroz, covering 82,498 hectares in the Lithium Triangle region of South America.
As at December 31, Lithium Americas had invested $45.7 million in property rights, exploration, and evaluation activities related to its Cauchari-Olaroz lithium project.  
The company had $1.0 million in cash and equivalents, and $7 million available under its stand-by line of credit facility as at the end of the 10-month period and noted that given that it is a development stage company, it is not yet in a position to generate any revenue.
Net loss for the period was $4.3 million, or a loss per share of six cents.
In order to conform to a more standardized industry and calendar basis, Lithium Americas changed its financial year-end date from February 28 to December 31. 
“Lithium Americas made great strides in 2012 towards putting its world-class lithium deposit into commercial production”, said president and CEO Waldo Perez.  
“Having completed our feasibility study, and having obtained the final project approval from the respective governmental authorities, we are now in a position to commence the detailed engineering work for construction of our project, once project financing is obtained.  
“We are actively involved in project financing discussions with a number of interested parties.”
In June 2012, Lithium Americas announced the results of its feasibility study, prepared by independent engineering firm ARA WorleyParsons, hydrogeologic modelling expert AquaResource, a division of Matrix Solutions Inc., and hydrogeology expert Groundwater Insight.  
According to the reserve estimate outlined in the study, the company’s Cauchari-Olaroz lithium project has proven and probable reserves sufficient to operate at a production rate of up to 40,000 tonnes per year of lithium carbonate and up to 80,000 tonnes per year of potash for 40 years, which would include an initial five year ramp-up period.  
The feasibility study assumes a base-case, pre-tax net present value (NPV) of US$738 million, assuming an eight-per-cent discount rate, and an after-tax NPV of US$464 million, with a base-case, pre-tax internal rate of return (IRR) of 23 per cent and an after-tax IRR of 20 per cent.  
Estimated cash operating costs for lithium carbonate are $1,876 per tonne, or $1,332 per tonne if expressed on a net cash operating cost basis. Initial capital costs associated with lithium carbonate production are expected to be $269 million, and initial capital costs associated with potash production are forecast to be $45 million.
The company's business plan is to build the project in two stages, with each stage consisting of a 20,000-tonnes-per-year lithium carbonate facility and a 40,000-tonnes-per-year potash facility.  
The second stage is not expected to begin until 2018, and it will be the subject of a separate study, the company said, adding that no estimated financial results associated with stage two are included in the feasibility study.
Lithium Americas said its feasibility study results indicate that it is expected to have one of the largest and lowest cost lithium operations in the industry.
Last November, the company entered into a letter of intent with the Jujuy Energia y Mineria Sociedad del Estado (JEMSE), the government of Jujuy’s mining investment company. 
Under the terms of the agreement, JEMSE will acquire an 8.5-per-cent equity interest in the company’s Argentinean subsidiary, Minera, in order to develop its lithium project and will also cover its pro rata share of the financing requirements for the construction of the project.

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