Lithium Americas announces that it has entered into definitive transaction agreements to implement a number of transactions, pursuant to which, among other things, a subsidiary of Sociedad Química y Minera de Chile S.A. (“SQM”) has agreed to sell all of its interest in Minera Exar S.A. (“Minera Exar”), the holding company for the Caucharí-Olaroz lithium brine project (“Caucharí-Olaroz” or the “Project”), to a subsidiary of Jiangxi Ganfeng Lithium Co., Ltd. (“Ganfeng Lithium” or “GFL”). As a result of the Transaction, Ganfeng Lithium will become Lithium Americas’ partner in developing and operating the Project, which is currently under development in Jujuy, Argentina. Lithium Americas’ interest in Caucharí-Olaroz will increase from 50% to 62.5%, with Ganfeng Lithium holding the remaining 37.5% interest.
In connection with the Transaction, Ganfeng Lithium has agreed to provide Lithium Americas with a new US$100 million limited recourse, subordinated loan facility to fully fund Lithium Americas’ share of Caucharí-Olaroz’ capital expenditures.
In addition, Lithium Americas and Ganfeng Lithium have entered into a strategic collaboration agreement (the “Strategic Collaboration Agreement”) to explore future opportunities to collaborate (the “Strategic Collaboration”) and develop lithium resources. The focus of the Strategic Collaboration Agreement will be on technical and financial collaboration with the objective of identifying and developing lithium resource projects in North and South America that leverage both companies’ respective strengths.
“We would like to thank SQM for providing the support to advance Caucharí-Olaroz into construction, helping to build an independent team in Jujuy and putting the Project on a path to reach first production by 2020,” said Lithium Americas’ CEO, Tom Hodgson. “We are also very pleased to welcome Ganfeng Lithium as our new partner at Cauchari-Olaroz to continue development on our previously disclosed timeline and explore future opportunities to collaborate.”
“We share Lithium Americas’ goal to advance Caucharí-Olaroz to production as quickly as possible to further diversify and reduce the cost profile of our lithium resource portfolio,” said Ganfeng Lithium’s Vice Chairman, Wang Xiaoshen. “We believe many opportunities exist to enhance and grow the Project for the mutual benefit of all stakeholders, including the local communities in Jujuy, Argentina, and look forward to working more closely with Lithium Americas going forward.”
Under the terms of the Transaction, Ganfeng Lithium has agreed to purchase SQM’s interest in Minera Exar. SQM will receive an aggregate of US$87.5 million in cash (including repayment of outstanding indebtedness owing from Minera Exar and certain other costs) plus a deferred payment of US$50 million, which is payable on satisfaction of certain agreed milestones when the Project has successfully reached production.
In addition, Ganfeng Lithium has also agreed to provide a loan to Minera Exar to permit Minera Exar to repay US$25 million of its outstanding indebtedness owing to Lithium Americas.