Ganfeng Closes US$160 Million Investment in Lithium Americas’ Cauchari-Olaroz

- August 19th, 2019

The deal, which was announced in April, has increased the Asian top lithium producer’s 37.5 percent interest in the project to 50 percent.

Chinese lithium producer Ganfeng Lithium (OTC Pink:GNENF,SZSE:002460) has closed a US$160 million investment in Lithium Americas’ (NYSE:LAC,TSX:LAC) Caucharí-Olaroz brine project.

The deal, which was announced in April, has increased the Asian top lithium producer’s previous 37.5 percent interest to 50 percent, forming a 50/50 joint venture with Toronto-based Lithium Americas.

The investment will support the development of Cauchari-Olaroz, which is located in Jujuy, Argentina, near Orocobre’s (ASX:ORE,TSX:ORL,OTC Pink:OROCF) lithium-producing facility Olaroz.

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“At Cauchari-Olaroz, construction activities continue to proceed on schedule with over 600 employees and contractors mobilized at site,” Lithium Americas President and CEO Jon Evans said in a statement.

First production from the project is expected in the second half of 2020, with Stage 1 output capacity estimated to reach 25,000 tonnes per year of battery-grade lithium carbonate.

“With the project investment complete, we have further strengthened our liquidity and expect to release the results of a feasibility study on an expanded initial production capacity for the project of 40,000 tonnes per annum of battery-grade lithium carbonate in September 2019,” Evans added.

According to the latest mineral resource estimate, Cauchari-Olaroz’s measured and indicated resources stand at 17.9 million tonnes of lithium carbonate equivalent at a cut-off grade of 300 parts per million lithium.

Lithium experts took to Twitter to comment on the news, including Joe Lowry of Global Lithium, who pointed out that trade wars and negative sentiment “were not enough” to stop this deal.

Similarly, Chris Berry of House Mountain Partners, who is also an advisor for Lithium Americas, said that, despite numerous macro headwinds, “value accretive deals in lithium can get completed.”

Aside from Caucharí-Olaroz, Lithium Americas owns 100 percent of the Thacker Pass lithium project located in Nevada, the largest known lithium deposit in the US.

On Monday (August 19), the company closed up 1.72 percent at US$3.55 in New York. Despite the decline in lithium prices, Lithium Americas’ share price has increased more than 7 percent year-to-date.

Meanwhile, shares of China’s Ganfeng were up 2.91 percent, trading at CNY 21.24 in Shenzhen.

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Securities Disclosure: I, Priscila Barrera, hold no direct investment interest in any company mentioned in this article.

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