Unlocking Thacker Pass: General Motors to Contribute Combined $625 Million in Cash and Letters of Credit to New Joint Venture with Lithium Americas
Unlocking Thacker Pass: General Motors to Contribute Combined $625
Million in Cash and Letters of Credit to New Joint Venture with Lithium
Americas
(All amounts in US$ unless otherwise indicated)
VANCOUVER, British Columbia--(BUSINESS WIRE)--October 16, 2024--Lithium Americas
Corp. (TSX: LAC) (NYSE: LAC) (“Lithium Americas” or the “Company”) announced the
Company and General Motors Holdings LLC (“GM”) have entered into a new investment
agreement (“Investment Agreement”) to establish a joint venture (“JV”) for the purpose of
funding, developing, constructing and operating (the “JV Transaction”) Thacker Pass in
Humboldt County, Nevada (“Thacker Pass” or the “Project”). The JV Transaction will deliver
$625 million of cash and letters of credit from GM to Thacker Pass alongside the conditional
commitment for a $2.3 billion U.S. Department of Energy (“DOE”) loan announced earlier this
year.
Under the terms of the Investment Agreement, GM will acquire a 38% asset-level ownership
stake in Thacker Pass for $625 million in total cash and letters of credit (“GM’s JV
Investment”), including $430 million of direct cash funding to the JV to support the
construction of Phase 11 and a $195 million letter of credit facility (“LC Facility”) that can be
used as collateral to support reserve account requirements2 under the DOE Loan (as defined
below). The JV Transaction replaces the $330 million Tranche 2 common equity investment
commitment from GM under its original investment agreement with the Company (“Tranche
2”) announced in January 2023.
TRANSACTION HIGHLIGHTS
Largest ever publicly announced investment by a U.S. OEM in a lithium carbonate
project highlights the strategic importance of Thacker Pass in creating a domestic supply
chain for critical minerals.
Allows Lithium Americas to secure $625 million in cash and letters of credit, while
avoiding common equity dilution associated with Tranche 2.
Builds upon an already strong relationship with GM as strategic investor and extends
Phase 1 offtake to 20 years.
The JV Transaction is incremental to GM’s February 2023 Tranche 1 investment of $320
million, which resulted in GM acquiring approximately 15 million common shares of Lithium
Americas3. In addition to the JV Transaction, GM has agreed to extend its existing offtake
agreement for up to 100% of production volumes from Phase 1 of Thacker Pass to 20 years to
support the expected maturity of the DOE Loan. Upon closing of the JV, GM will also enter into
an additional 20-year offtake agreement for up to 38% of Phase 24 production volumes and will
retain its existing right of first offer on the remaining Phase 2 production volumes.
“Our relationship with GM has been significantly strengthened with this joint venture as we
continue to pursue a mutual goal to develop a robust domestic lithium supply chain by advancing
the development of Thacker Pass,” said Jonathan Evans, President and CEO of Lithium
Americas. “Today’s joint venture announcement is a win-win for GM and Lithium Americas.
GM’s JV Investment demonstrates their continued support and helps us to unlock the previously
announced $2.3 billion DOE Loan. We will be working closely with GM to advance towards the
final investment decision, which we are targeting by the end of the year.”
“We’re pleased with the significant progress Lithium Americas is making to help GM achieve
our goal to develop a resilient EV material supply chain,” said Jeff Morrison, SVP, Global
Purchasing and Supply Chain. “Sourcing critical EV raw materials, like lithium, from suppliers
in the U.S., is expected to help us manage battery cell costs, deliver value to our customers and
investors, and create jobs.”
JV TRANSACTION DETAILS
The key terms of the JV Transaction are summarized below:
Lithium Americas will have a 62% interest in Thacker Pass and will manage the Project
(the “Manager”) on behalf of Lithium Americas and GM (together the “JV Partners”).
GM will have a 38% interest in Thacker Pass and commit $625 million in cash and letters
of credit to the JV:
o $330 million cash to be contributed on the date of the JV closing;
o $100 million cash to be contributed at Final Investment Decision (“FID”) for
Phase 1; and
o $195 million LC Facility prior to first draw on the $2.3 billion DOE Loan.
Lithium Americas will contribute $387 million of funding to the JV for its 62%
ownership in the Project:
o $211 million (with expenditures on capex after August 2024 being credited
against and reducing this amount, along with other adjustments) to be contributed
on the date of the JV closing; and
o The remainder to be contributed upon FID for Phase 1.
o As of June 30, 2024, Lithium Americas had approximately $376 million in cash
and cash equivalents.
LC Facility provided by GM to the JV as part of its consideration for its equity interest
will have no interest and a maturity consistent with DOE Loan requirement that will be
withdrawn once replaced with cash that is generated by Thacker Pass.
Board of Directors to be established at the JV level to oversee the JV and approve the
Project’s budgets and business plans, and implement policies to align with GM’s vendor
requirements, including GM’s Human Rights Policy.
Upon closing of the JV Transaction, GM will also enter into an additional 20-year offtake
agreement for up to 38% of production volumes from Phase 2 of Thacker Pass and will
retain its right of first offer on the remaining balance of Phase 2 volumes.
GM’s JV Investment is subject to certain conditions precedent, including those related to the
loan agreement for the DOE Loan.
BACKGROUND
U.S. DOE Loan
In March 2024, the Company received a conditional commitment for a $2.3 billion loan from the
U.S. DOE under the Advanced Technology Vehicles Manufacturing (“ATVM”) Loan Program
(the “DOE Loan”). Prior to making the first draw on the DOE Loan, expected sometime in the
middle of 2025, the Company is required to fund approximately $195 million (funded by either
cash or letters of credit) for reserve accounts associated with the DOE Loan (for construction
contingency, ramp-up and sustaining capital). The GM LC Facility will be used to fund the
DOE’s reserve accounts.
2023 GM Investment
On January 30, 2023, Old LAC5 entered into a purchase agreement with GM, pursuant to which
GM agreed to make a $650 million equity investment (the “2023 Transaction”), the proceeds of
which are to be used for the construction and development of Thacker Pass. The 2023
Transaction was comprised of two tranches, a first tranche investment of $320 million
(“Tranche 1”) and Tranche 2. Tranche 1 closed and the Phase 1 offtake agreement was executed
on February 16, 2023. On October 3, 2023, pursuant to the Separation, the full amount of the
remaining unspent proceeds of Tranche 1 were included in the net assets distributed by Old LAC
to the Company.
As the Separation was completed before the closing of Tranche 2, on October 3, 2023, the
agreement for Tranche 2 in Old LAC was terminated and replaced by a corresponding
subscription agreement between GM and the Company whereby the proceeds of Tranche 2
would be received by the Company.
On August 30, 2024, the Company and GM agreed to extend the outside date for the Tranche 2
subscription agreement until the end of the year to provide time for the parties to explore
alternative structures for GM’s additional investment in a mutually beneficial manner. The
Company and GM have terminated the Tranche 2 subscription agreement concurrent with the
execution of the JV Investment Agreement.
THACKER PASS PROJECT UPDATE
The Company continues to focus on de-risking project execution by advancing detailed
engineering, project planning and procurement packages.
Detailed engineering continues to progress in advance of issuing full notice to proceed,
currently at approximately 40% design complete.
Site preparation for major earthworks has been completed and the process plant area is
currently being excavated (approximately 50% complete) to prepare for concrete
placement, forecasted to begin by mid-2025.
Procurement packages for the top seven pieces of long-lead equipment have been
awarded. Contracts for key construction materials have been awarded and field purchases
of goods and services have commenced.
Major earth works for the all-inclusive housing facility for construction workers (the
Workforce Hub) are completed. The current focus is on finalizing engineering and
permitting for utilities and preparing to award contracts for the detailed earthworks,
foundation installation and erection of the housing units.
To date, the Company has achieved over one million work hours without a lost time injury.
NEXT STEPS
The Company continues to work closely with the DOE and expects to close the DOE Loan in the
coming weeks. The Company and GM are targeting making the FID and issuing full notice to
proceed for Thacker Pass by the end of the year, following closing of the DOE Loan and the JV
Transaction.
ADVISORS
Goldman Sachs & Co. LLC and Evercore Group L.L.C. are acting as financial advisors to
Lithium Americas and Vinson & Elkins and Cassels Brock & Blackwell are acting as legal
counsel to Lithium Americas in connection with the JV Transaction. BMO Capital Markets acted
as financial advisor to Lithium Americas in connection with GM’s original Tranche 2 investment
announced in January 2023.
Morgan Stanley & Co. LLC is acting as GM’s financial advisor and Mayer Brown and Osler,
Hoskin & Harcourt are acting as legal counsel to GM in connection with the JV Transaction.
TECHNICAL INFORMATION
The scientific and technical information in this news release has been reviewed and approved by
Rene LeBlanc, PhD, SME, Vice President, Growth and Product Strategy of the Company, and a
“qualified person” as defined under National Instrument 43-101 and Subpart 1300 of Regulation
S-K under the United States Securities Act of 1933.
ABOUT LITHIUM AMERICAS
Lithium Americas is committed to responsibly developing the Thacker Pass project located in
Humboldt County in northern Nevada, which hosts the largest known Measured and Indicated
lithium resource in North America. The Company is focused on advancing Thacker Pass Phase 1
toward production, targeting nameplate capacity of 40,000 tpa of battery-quality lithium
carbonate. The Company and its engineering, procurement and construction management
contractor, Bechtel, entered into a National Construction Agreement (Project Labor Agreement)
with North America’s Building Trades Unions for construction of Thacker Pass. The three-year
construction build is expected to create approximately 1,800 direct jobs. Lithium Americas’
shares are listed on the Toronto Stock Exchange and New York Stock Exchange under the
symbol LAC. To learn more, visit www.lithiumamericas.com or follow @LithiumAmericas on
social media.
FORWARD-LOOKING INFORMATION
This news release contains “forward-looking information” within the meaning of applicable
Canadian securities legislation, and “forward-looking statements” within the meaning of the
United States Private Securities Litigation Reform Act of 1995 (collectively referred to as
“forward-looking information” (“FLI”)). All statements, other than statements of historical fact,
are FLI and can be identified by the use of statements that include, but are not limited to, words,
such as “anticipate,” “plan,” “continues,” “estimate,” “expect,” “may,” “will,” “projects,”
“predict,” “proposes,” “potential,” “target,” “implement,” “scheduled,” “forecast,” “intend,”
“would,” “could,” “might,” “should,” “believe” and similar terminology, or statements that
certain actions, events or results “may,” “could,” “would,” “might” or “will” be taken, occur or
be achieved. FLI in this news release includes, but is not limited to, expectations regarding
completion of the JV Transaction and the DOE Loan; the expected timetable for completing JV
Transaction and the DOE Loan; anticipated timing for FID; expectation about the extent that the
JV Transaction, DOE Loan, and cash on hand would fund the development and construction of
Thacker Pass; expectations and timing on the commencement of major construction and first
production; project de-risking initiatives; expectations related to the construction build, job
creation and nameplate capacity as well as other statements with respect to the Company’s future
objectives and strategies to achieve these objectives, and management’s beliefs, plans, estimates
and intentions, and similar statements concerning anticipated future events, results,
circumstances, performance or expectations that are not historical facts.
FLI involves known and unknown risks, assumptions and other factors that may cause actual
results or performance to differ materially. FLI reflects the Company’s current views about
future events, and while considered reasonable by the Company as of the date of this news
release, are inherently subject to significant uncertainties and contingencies. Accordingly, there
can be no certainty that they will accurately reflect actual results. Assumptions upon which such
FLI is based include, without limitation, the completion of the JV Transaction and DOE Loan
prior to the end of 2024, or at all, and the absence of material adverse events affecting the
Company during this time; the ability of the Company to satisfy all closing conditions for the JV
Transaction and the DOE Loan in a timely manner; expectations regarding the Company's
financial resources and future prospects; the ability to meet future objectives and priorities; a
cordial business relationship between the Company and third party strategic and contractual
partners; general business and economic uncertainties and adverse market conditions; the
availability of equipment and facilities necessary to complete development and construction at
the Project; unforeseen technological and engineering problems; political factors, including the
impact of the 2024 U.S. presidential election on, among other things, the extractive resource
industry, the green energy transition and the electric vehicle market; uncertainties inherent to
feasibility studies and mineral resource and mineral reserve estimates; uncertainties relating to
receiving and maintaining mining, exploration, environmental and other permits or approvals in
Nevada; demand for lithium, including that such demand is supported by growth in the electric
vehicle market; current technological trends; the impact of increasing competition in the lithium
business, and the Company’s competitive position in the industry; compliance by joint venture
partners with terms of agreements; the regulation of the mining industry by various
governmental agencies; as well as assumptions concerning general economic and industry
growth rates, commodity prices, resource estimates, currency exchange and interest rates and
competitive conditions. Although the Company believes that the assumptions and expectations
reflected in such FLI are reasonable, the Company can give no assurance that these assumptions
and expectations will prove to be correct.
Readers are cautioned that the foregoing lists of factors are not exhaustive. There can be no
assurance that FLI will prove to be accurate, as actual results and future events could differ
materially from those anticipated in such information. As such, readers are cautioned not to place
undue reliance on this information, and that this information may not be appropriate for any
other purpose, including investment purposes. The Company’s actual results could differ
materially from those anticipated in any FLI as a result of the risk factors set out herein and in
the Company’s filings with securities regulators.
The FLI contained in this news release is expressly qualified by these cautionary statements. All
FLI in this news release speaks as of the date of this news release. The Company does not
undertake any obligation to update or revise any FLI, whether as a result of new information,
future events or otherwise, except as required by law. Additional information about these
assumptions and risks and uncertainties is contained in the Company’s filings with securities
regulators, including the Company’s most recent Annual Report on Form 20-F and most recent
management’s discussion and analysis for our most recently completed financial year and, if
applicable, interim financial period, which are available on SEDAR+ at www.sedarplus.ca and
on EDGAR at www.sec.gov. All FLI contained in this news release is expressly qualified by the
risk factors set out in the aforementioned documents.
___________________________________________________
1 Phase 1 is the initial phase of production at Thacker Pass, targeting 40,000 tonnes per annum
(“tpa”) of battery-grade lithium carbonate.
2 See the section titled Background – U.S. DOE Loan for more details.
3 See the section titled Background – 2023 GM Investment for more details.
4 Phase 2 is the second phase of production at Thacker Pass, targeting an additional 40,000 tpa,
for total production capacity of 80,000 tpa.
5 Old LAC is now named Lithium Americas (Argentina) Corp., pursuant to a separation
transaction that was undertaken on October 3, 2023 (the “Separation”), when the Company
acquired ownership of Old LAC’s North American business assets and investments.
Contacts
INVESTOR CONTACT
Virginia Morgan, VP, IR and ESG
+1-778-726-4070