There is more than one fish in the sea. Sure Tesla Pond is in the back yard of Western Lithium and we all love fishing close to home cuz its cheaper. But Western Lithium adding LAC is wicked smart move. Lac admitted there management was lacking.
Western Lithium will continue to be led by CEO Jay Chmelauskas. Lithium Americas executives Tom Hodgson, John Kanellitsas and Franco Mignacco will join the Western Lithium Board of Directors. Franco Mignacco will continue in his role as President of Lithium America’s subsidiary Minera Exar S.A. and Tom Hodgson and John Kanellitsas have agreed to be engaged as consultants for Western Lithium under a six-month term and become members of a Western Lithium integration team established to execute initiatives related to corporate development, strategy and capital raising. Each of Messrs Hodgson, Kanellitsas and Mignacco have executed agreements by which they have agreed to settle change of control payments for common shares of Western Lithium and to a six-month lock-up on all securities held following the effective date of the merger.
TORONTO, Canada, August 27, 2015 - Lithium Americas Corp. (TSX: LAC) (“LAC” or the
“Company") is pleased to announce that it has executed a Heads of Agreement (“HOA”) with
POSCO regarding the commercialization of the Company’s Cauchari-Olaroz lithium project in
Jujuy Province, Argentina. As previously reported, POSCO and LAC’s decision to commercialize
the Cauchari-Olaroz lithium project (the third largest known lithium brine resource in the
world) is based on the successful results surrounding the operation of POSCO’s innovative high
efficiency lithium extraction demonstration plant (the “Demo Plant”). The Demo Plant, with an
operating capacity of 200 tonnes per year of lithium carbonate equivalent (“LCE”), was
inaugurated at the LAC Cauchari project site on December 19, 2014 and achieved full and
continuous operating rates throughout a test period that ended in late January, 2015. During
this period, over 20 tonnes of lithium compound was produced and subsequently exported to
POSCO’s facility in Pohang, Korea where it was further processed into battery grade lithium
carbonate and lithium hydroxide. POSCO advised Lithium Americas that initial test results
indicated that the Demo Plant achieved or exceeded all performance targets and that the
lithium products processed in Pohang were of very high quality. POSCO claims that its high
efficiency lithium extraction technology has numerous advantages compared to traditional
lithium brine evaporation technology, specifically that its technology produces lithium
considerably more quickly than traditional brine evaporation technology, minimizes the
environmental footprint associated with large scale evaporation ponds used in traditional brine
evaporation technology, and has a recovery rate which is significantly higher than traditional
brine evaporation technology.
The HOA, legally non-binding and non-exclusive, provides the basic framework and conditions
to establish a Joint Venture Company, which the parties expect to negotiate after completion
of due diligence, and during the fourth quarter of 2015. Both parties will now commence
detailed due diligence with the objective of establishing a financial model and business
plan. Further details on terms such as capital investment, operating costs, product mix,
economic ownership and financing responsibilities will be finalized within a Joint Venture
Agreement.
At this time the parties have agreed that POSCO will contribute to the joint venture the right to
use its proprietary lithium extraction technologies for the production of lithium carbonate and
lithium hydroxide, while LAC will contribute the right to use brine from its Cauchari-Olaroz salar
properties. The plant is expected to be producing up to 2,500 tonnes per annum by year-end
2016, and anticipates ramping up to 20,000 tonnes by year-end 2017.
POSCO has agreed to finance the capital expenditures required for the initial phase of 2,500
tonnes commercial production, ahead of the Joint Venture Company raising project financing
for 20,000 tonnes.
Commenting on the HOA, the Company’s Executive Chairman, Tom Hodgson, stated: “We are
very pleased to execute this agreement on the eve of our merger with Western Lithium. This
memorializes our joint commitment to develop a lithium project in Jujuy, Argentina and is the
culmination of over two years of working together with POSCO. We would like to congratulate
the many people whose hard efforts made this achievement possible including the strong
support from our local partners in Jujuy, Argentina."
Update on Proposed Merger between Lithium Americas and Western Lithium
On June 30, 2015, LAC and Western Lithium USA Corporation (“WLC”) announced that they had
entered into an arrangement agreement pursuant to which WLC agreed to acquire all of the
issued and outstanding common shares of LAC on the basis of 0.789 of a WLC common share
for each outstanding LAC common share pursuant to a statutory and court-approved plan of
arrangement. The special meeting of shareholders of LAC is scheduled to be held at 2:00 p.m.
(Toronto time) on Monday, August 31, 2015 to vote on, among other things, the special
resolution to approve the arrangement. Completion of the arrangement is subject to, among
other things, receiving the requisite shareholder, court and stock exchange approvals, and the
satisfaction of other customary conditions contemplated by the arrangement agreement.
According to Frost & Sullivan, the global market for lithium-ion batteries is expected to double to $22.5 billion in 2016 from $11.7 billion in 2012. Consumer goods and automobile sectors are driving the demand.
The share of the automobile sector in the lithium-ion battery market is expected to grow to 25% in 2016 from 14% in 2012, per the data from Frost & Sullivan. This represents a Compounded Annual Growth Rate (CAGR) of 37%. With the increasing use of lithium-ion batteries in consumer electronic products as well as efforts to promote the use of electric cars by many governments to curb pollution, the demand for these batteries is expected to rise.
