Lithium Americas unveils amendments to U.S. government loan

Lithium Americas Corp. [LAC-TSX, NYSE] has announced the finalization of the parties’ agreement on certain amendments to the company’s US$2.23 billion loan from the U.S. Department of Energy. The funding will be used to finance the construction of the processing facilities at the Thacker Pass lithium mine in Nevada.

The company said these amendments will become effective following the satisfaction of mutually agreed and customary conditions that are expected to be satisfied in the following week.

In addition, the company has announced the completion of a previously announced at-the-market equity program involving the sale of 29.9 million common shares for gross proceeds of $99.9 million.

Lithium Americas shares advanced on the news, rising 6.6% or 76 cents to $12.31 in early trading Wednesday. The shares trade in a 52-week range of $13.20 and $3.30.

Lithium Americas is developing Thacker Pass, which hosts the largest known measured lithium resource and reserve in the world. Thacker Pass is a joint venture project held 62% by Lithium Americas and 38% by General Motors Co. [GM-NYSE].

The company said Thacker Pass supports the U.S. government’s commitment to securing a domestic supply chain for critical minerals to reduce its reliance on foreign materials. It said Phase 1 production could support lithium needs for up to 800,000 vehicles annually.

The US$2.23 billion laon is being made available under the Advanced Technology Vehicles Manufacturing Loan Program. Thacker Pass Phase 1 is intended to produce an initial 40,000 tonnes per year of battery grade lithium carbonate, creating approximately 1,800 direct jobs during the three-year construction period and 360 jobs in operations for its 40-year-mine life.

The company said the amendments to the DOE loan are as follows;

The DOE has agreed to defer $184 million of scheduled debt service obligations from the first five years of loan repayment to the remaining years of loan maturity (which will become effective upon the execution of the amendment to the promissory note issued by the company’s affiliate, Lithium Nevada LLC (LN) in favor of the Federal Financing Bank of the United States, which promissory note reflects the payment obligations with respect to the DOE loan).

The company will contribute an additional $120 million to DOE loan reserve accounts, to be funded within 12 months of the effective date of the amendments.

In consideration for agreeing to the deferral of scheduled debt service as described above, the DOE will receive:

• A 5.0% equity stake in the company through warrants to purchase common shares at an exercise price of $0.01 per share (LAC warrants).
• A 5.0% economic stake in the joint venture through warrants to purchase non-voting, non-transferable equity interest in the joint venture (JV units) with an exercise price of $0.01 per unit (JV Warrants).

In addition, the joint venture and GM have entered into an amendment to GM’s lithium offtake agreement with LN to provide additional support to the project. The amendment permits LN to enter into additional third-party offtake agreements for certain remaining production volumes not forecasted to be purchased by GM.