Ganfeng Increases Stake in Lithium Americas’ Caucharí-Olaroz

Shares of Lithium Americas (NYSE:LAC,TSX:LAC) jumped almost 20 percent following news that its joint venture partner Ganfeng Lithium (OTC Pink:GNENF,SZSE:002460) will take a controlling stake in the Caucharí-Olaroz lithium project. 

On Friday (February 7), Lithium Americas said the Chinese top lithium producer is upping its interest in Minera Exar from 50 percent to 51 percent. Minera Exar is a joint venture company that owns 100 percent of the US$565 million Caucharí-Olaroz lithium brine project in Argentina.

The new shares of Minera Exar will cost the Chinese lithium giant US$16 million. The funds will be used for the development of the project — which remains on budget and on track to start production in early 2021. After the transaction closes, management will remain the same; “substantive matters” involving Minera Exar will still need joint approval from Ganfeng and Lithium Americas.

“The transaction with Ganfeng Lithium further strengthens our balance sheet while ensuring Caucharí-Olaroz construction continues to advance as planned,” commented Jon Evans, Lithium Americas’ president and CEO.

Last year, Ganfeng invested US$160 million to form its joint venture with Lithium Americas, increasing its stake in Caucharí-Olaroz from 37.5 percent to 50 percent.

In October, the companies released an updated feasibility study for the project, increasing expected production capacity at Caucharí-Olaroz by 60 percent to 40,000 metric tons per year of battery-quality lithium for 40 years. Capital costs also increased by 33 percent.

According to the most up-to-date mineral resource estimate, Caucharí-Olaroz’s measured and indicated resource stands at 19.85 million metric tons of lithium carbonate equivalent (LCE) at a cut-off grade of 300 parts per million (ppm) lithium.

As part of the recent deal, Lithium Americas will also receive US$40 million in cash from the proceeds of non-interest-bearing loans from Ganfeng Lithium.

“For Lithium Americas, the transaction reinforces our strategy of building a low-cost lithium operation in Argentina, and provides funding to advance our second flagship project, Thacker Pass, towards construction in Nevada,” Evans added.

The Vancouver-based company is currently working on a definitive feasibility study to be published in mid-2020 for its Thacker Pass lithium claystone project, aiming for 20,000 metric tons of LCE per year for Phase 1 — down from the 30,000 metric tons indicated in a study released in 2018.

Lithium Americas is also waiting to receive all major permits for Phase 1 by the end of next year, and has started looking at financing options. It expects to begin the formal financing process this year.

Thacker Pass has a measured and indicated mineral resource of 6 million metric tons of LCE at 2,917 ppm lithium and an inferred mineral resource of approximately 2.3 million metric tons of LCE at 2,932 ppm lithium.

On Monday (February 10), Lithium Americas closed up 18.25 percent at C$6.48. The company’s share price has been on an uptrend since the beginning of the year, rising more than 50 percent since January.

Image courtesy of Lithium Americas.

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