Lithium Americas Announces Positive Feasibility Study for Stage 1 of the Cauchari-Olaroz Lithium Project
March 29, 2017
Lithium Americas Announces Positive Feasibility Study for Stage 1 of the
Cauchari-Olaroz Lithium Project
Vancouver, Canada: Lithium Americas Corp. ("Lithium Americas" or the "Company") (TSX: LAC)
(OTCQX: LACDF) is pleased to provide results of a Definitive Feasibility Study ("Stage 1 DFS") on the
Cauchari-Olaroz lithium project ("Cauchari-Olaroz" or the “Project”) in Jujuy province, Argentina.
Unless otherwise stated, all figures are quoted in U.S. dollars ("$") and are reported on a 100% equity
project basis.
Highlights:
Average annual production of 25,000 tonnes of battery-grade lithium carbonate over a 40-year project
life
Estimated construction capital cost of $425 million, before working capital and value-added taxes
(“VAT”)
Average operating costs of $2,495/t of battery-grade lithium carbonate produced
Average annual EBITDA of $233 million, after-tax NPV of $803 million (at a 10% discount rate) and
after-tax IRR of 28.4% assuming a price of $12,000/t of battery-grade lithium carbonate sold
Creation of at least 260 permanent jobs during the 40 years of operations and employment of at least
800 people during the 2-year construction period
Government confirmation of all necessary permits to commence construction and operate
Construction expected to commence in the first half of 2017 with production starting in 2019
Cauchari-Olaroz is 100% owned by Minera Exar S.A. (“Minera Exar”), an Argentine company owned
50/50 by Lithium Americas and Sociedad Quimica y Minera de Chile S.A. (“SQM”). As previously
announced, Minera Exar is pursuing a development plan at Cauchari-Olaroz for production capacity of
50,000 tonnes per annum ("tpa") of battery-grade lithium carbonate (“Li2CO3”) in two stages, with each
stage consisting of 25,000 tpa of Li2CO3. The Stage 1 DFS covers the first stage (“Stage 1”) and the
plant for Stage 1 has been engineered to integrate production from the second stage (“Stage 2”). No
estimated financial results or reserve estimate associated with Stage 2 are included in the Stage 1 DFS.
The results of the Stage 1 DFS are provided in Table 1 on a 100% equity project basis:
Table 1: Cauchari-Olaroz Stage 1 DFS Results
Stage 1 DFS
Lithium carbonate price $12,000/t Li2CO3
Average annual production 25,000 tpa Li2CO3
Expected project life 40 years
Project capital costs $425 million
Operating costs $2,495/t Li2CO3
Average annual EBITDA $233 million
Pre-tax NPV 10% discount $1,266 million
After-tax NPV 10% discount $803 million
Pre-tax IRR 34.0%
After-tax IRR 28.4%
Payback period 3 years, 5 months
Tom Hodgson, CEO of Lithium Americas, commented: "We are very pleased with the results of the Stage
1 DFS, which highlights the value created from our partnership with SQM, our experienced team in
Argentina and strong support from the government of Jujuy. The Stage 1 DFS leverages our partner’s
expertise to develop a low-cost and long-life lithium project. We plan to start construction immediately
upon closing our strategic investments with Ganfeng Lithium and Bangchak Petroleum, which are
expected to close in the coming month.”
Project Details
Cauchari-Olaroz is located in Jujuy Province in north -west Argentina. The Project is situated in the Salar
de Olaroz and Salar de Cauchari, adjacent to Orocobre Ltd.’s Olaroz facility, which has been in
production since 2015 . The Project is approximately 270 km east of SQM’s Salar de Atacama brine
operation, accessible via an international highway. Cauchari-Olaroz is well serviced by nearby
infrastructure including major paved highways, a national and international rail link which connects to the
port of Antofagasta in Chile, a high-voltage power grid, and a gas pipeline.
The Stage 1 DFS is based on using a conventional, commercially-proven brine processing technology at
Cauchari-Olaroz to produce high quality battery -grade lithium carbonate that can be used directly by
battery material producers in manufacturing cathode and electrolyte for lithium -ion batteries.
The production process involves two distinct steps and is generally consistent with other established brine
operations. The first step uses a solar evaporation process to concentrate lithium in the brine and
precipitate competing salts in large -scale ponds. The ponds at Cauchari -Olaroz are based on SQM’s
pond design criteria used in their existing Atacama operation and involve the use of shallow ponds where
the precipitated salt is annually harvested from the flat pond base . The second step uses the processing
facilities that transform the concentra ted lithium brine into battery-grade lithium carbonate while ensuring
the removal of impurities from the end-product.
The Stage 1 DFS contemplates producing 25,000 tpa of battery-grade Li2CO3 for a project life of 40 years
with production starting in 2019 The production and sale of potassium chloride (“KCl”) is not contemplated
in the Stage 1 DFS.
Minera Exar has granted a right to Jujuy Energia y Mineria Sociedad del Estado (“JEMSE”), a mini ng
investment company owned by the government of Jujuy Province in Argentina, to acquire an 8.5% equity
interest in Minera Exar and provide management services as required to develop the Project.
Permitting Status
Minera Exar has an approved Environmental Impact Statement (“EIS”) permit issued by the Province of
Jujuy on July 11, 2012. Minera Exar’s permitting status was recently affirmed by a letter from the
Secretary of Mining and Hydrocarbons of the Province of Jujuy on March 21, 2017 confirming that
Cauchari-Olaroz has the necessary permits to commence construction and operate in accordance with the
EIS.
Economic Benefits to Jujuy Province and Argentina
The Stage 1 DFS demonstrates that Cauchari -Olaroz will provide substantial economic benefits to
Argentina at the local, provincial, and national levels, including:
Direct employment by Minera Exar of at least 800 people during the 2-year construction period;
Direct employment by Minera Exar of at least 260 people in permanent positions during the 40 year
operations;
Several hundred indirect jobs with suppliers of products and services to support mine operations;
Annual payments to the government totaling approximately $ 63 million in the form of income tax,
corporate tax, and royalties (based on a price of $12,000/t of Li2CO3);
Training and skills development programs aimed at maximizing local employment at the Project;
Expected improvement of local and regional infrastructure; and
Continuation and future expansion of existing community investment programs, small business
development, and support of cultural development.
Operating Costs
The operating and capital cost estimates have been reviewed and confirmed by Andeburg Consulting
Services Inc. ( “ACSI”) in accordance with NI 43 -101 Standards of Disclosure for Mineral Projects . The
Project cost estimates are based on an exchange rate of 16:1 Argentine pesos to the U.S. dollar. The
average operating costs were calculated for a facility with production of 25,000 tpa of battery -grade
Li2CO3, and are presented below in Table 2 . Additional work through engineering refinements and
contract negotiation will continue in an effort to reduce the operating expenditures.
Table 2: Operating Costs
Category
Operating Cost
($/t Li2CO3) % of Total
Reagents $991 40%
Pond Harvesting & Tailing Management $345 14%
Maintenance $210 8%
Electric Power $187 7%
Labour $166 7%
Product Transportation $135 5%
Catering, Security & Third Party Services $97 4%
Natural Gas $85 3%
G & A $76 3%
Diesel $69 3%
Consumables $51 2%
Water Treatment System $38 2%
Bus-In / Bus-Out Transportation $35 1%
E & C $10 <1%
Total Operating Costs $2,495 100%
Capital Costs
The construction capital cost estimates are based on current Argentin e costs for labor and materials. The
Stage 1 construction capital cost is estimated at $425 million inclusive of a 15% contingency .
Construction and commissioning will take approximately two years. Detailed c apital c ost estimates are
presented in Table 3 and are exclusive of VAT and working capital. During construction, VAT and working
capital are expected to total $51.1 million and $12.5 million, respectively. The VAT is refundable with an
average repayment period of 2 years.
Table 3: Capital Costs
Category
Capital Costs
($ millions)
Direct Costs
Evaporation ponds $129
Lithium carbonate plant $121
On site infrastructure $26
Offsite infrastructure
Brine extraction wells and piping
$41
$15
Total Direct Cost $333
Total Indirect Cost $37
Contingency (15%) $55
Total Capital Costs $425
The sustaining capital requirement is estimated at an average of $4.7 million per year (approximately
$190/t Li2CO3 produced).
Lithium Americas will be responsible for contributing 50% of capital expenditures for development of the
project, amounting to approximately $212.5 million.
Project Economics
The financial results are derived from inputs based on an annual production schedule included in the
Stage 1 DFS. A sensitivity analysis on the unlevered economic results for the 25,000 tpa of Li2CO3 over a
40-year operating period are summarized in Table 4 and 5 and reported on a 100% equity project basis.
Table 4: After-Tax NPV and IRR Sensitivity Analysis
Discount Rate Low Case NPV Base Case NPV High Case NPV
(%) $10,000/t Li2CO3
($ millions)
$12,000/t Li2CO3
($ millions)
$14,000/t Li2CO3
($ millions)
6% $1,204 $1,609 $2,015
8% $807 $1,113 $1,420
10% $564 $803 $1,042
IRR (%) 23.5% 28.4% 33.0%
Table 5: EBITDA Sensitivity Analysis
Lithium Carbonate Price
($/t Li2CO3)
Average Annual EBITDA
($ millions)
$6,000 $86
$8,000 $135
$10,000 $184
$12,000 $233
$14,000 $282
$16,000 $331
Mineral Resource Estimation
The Mineral Resources for Cauchari-Olaroz remain unchanged from the technical report entitled
“Feasibility Study – Reserve Estimation and Lithium Carbonate and Potash Production at the Cauchari -
Olaroz Salars, Jujuy Province, Argentina” with an effective date of July 11, 2012. Mineral Resources are
summarized in Table 6 and reported on a 100% equity project basis.
Table 6: Measured and Indicated Mineral Resources
Category
Average
Lithium
Grade (mg/L) Brine (m³)
Lithium Metal
(tonnes)
Lithium Carbonate
Equivalent (tonnes)
Measured 630 9.1 x 108 576,000 3,039,000
Indicated 570 2.9 x 109 1,650,000 8,713,000
Total 585 3.8 x 109 2,226,000 11,752,000
Notes:
1) Mineral Resources have a cut-off grade of 354 mg/L of lithium.
2) Mineral Resources are not mineral reserves and do not have demonstrated economic viability. There is
no certainty that all or any part of the mineral resource will be converted to mineral reserves.
3) Lithium carbonate equivalent (“LCE”) is calculated based the following conversion factor: Mass of LCE
= 5.323 x Mass of lithium metal
4) The values in the columns on Lithium Metal and Lithium Carbonate Equivalent above are expressed as
total contained metals within the relevant cut-off grade.
Mineral Reserve Estimation
Consultants Montgomery & Associates Inc. ("M&A") were engaged to update the Mineral Reserves in
brine for various areas within the Salar de Cauchari and Salar de Olaroz in accordance with the
guidelines for lithium brines set forth by the Canadian Institute of Mining, Metallurgy and Petroleum (CIM
2012). The reserve estimate was based on numerical model simulations that demonstrated a sustainable
maximum production rate of over 25,000 tpa of LCE for 40 years. The proven reserves include brines
sourced entirely within the project’s property boundaries, while 99.9% of the probable reserves are
sourced within the project boundary. Simulated well field pumping was constrained by restricting
drawdown to a maximum of 100 m at any given production well. A minimum cut-off value was not
required in the reserve estimate because average lithium concentrations after 40 years of simulated
pumping decreased marginally from 713 mg/L to 695 mg/L, which is significantly above economic mineral
cut-off criteria.
Mineral Reserves for Cauchari -Olaroz have an effective date of March 5 , 2017 . Mineral Re serves are
summarized in Table 7 and are reported on a 100% basis.
Table 7: Proven and Probable Mineral Reserves
Category
Time Period
(years)
Average
Lithium
Grade (mg/L)
Brine (m³) Lithium Metal
(tonnes)
Lithium Carbonate
Equivalent (tonnes)
Proven 1 - 5 712 4.9 x 107 35,159 187,000
Probable 6 - 40 695 3.5 x 108 246,474 1,312,000
Total 40 698 4.0 x 108 281,633 1,499,000
Notes:
1) Ratios of lithium to other metals include: K:Li of 8.2, Mg:Li of 2.4, B:Li of 1.6, SO4:Li of 28.5.
2) LCE is calculated based the following conversion factor: Mass of LCE = 5.323 x Mass of lithium metal
3) The conversion is direct and does not account for estimated processing losses.
4) The values in the columns on Lithium Metal and Lithium Carbonate Equivalent above are expressed as
total contained metals.
Conclusions and Next Steps
Lithium Americas contemplates that Minera Exar will commence construction immediately following the
close of the Ganfeng Lithium and Bangchak Petroleum investment agr eements. The construction
timetable is targeted to follow:
H1 2017 - Site preparation and camp construction
H2 2017 - Pond construction and wellfield installation commences
2018 - Plant construction; offsite infrastructure
2019 - Commissioning and first production
Report Filing
The Company plans to file an NI 43 -101 compliant technical report that summarizes the Stage 1 DFS on
SEDAR (http://www.sedar.com) and on the Company’s website (http://www.lithiumamericas.com) within
45 days.
Qualified Persons
The Stage 1 DFS was prepared in accordance with NI 43 ‐101 standards by M&A, AquaResource (a
division of Matrix Solutions Inc.) , Groundwater Insight Inc. (“Groundwater Insight”) and ACSI in
conjunction with a team of globally recognized consultants. The independent qualified persons who lead
the team of consultants are:
Michael Rosko, PG, a United States professional geoscientist and hydrogeologist with M& A, and is a
registered member of the Society for Mining, Metallurgy & Exploration (SME). Mr. Rosko is one of
the independent qualified persons signing the report regarding the Mineral Reserve estimates.
Ernie Burga, P.Eng., a Canadian Professional Engine er registered with the Professional Engineers of
Ontario is one of the independent qualified persons signing the Report for ACSI.
David Burga, P.Geo., a Canadian Professional Geoscientist registered with the Association of
Professional Geoscientists of Ont ario is one of the independent qualified persons signing the report
for ACSI.
Mark King, Ph.D., P.Geo. a Canadian Professional Geoscientist registered with the Association of
Professional Geoscientists of Nova Scotia is the independent qualified person si gning the report for
Groundwater Insight.
Daron Abbey, M.Sc., P.Geo. a Canadian Professional Geoscientist registered with the Association of
Professional Geoscientists of Ontario is the independent qualified person signing the report for
AquaResource.
Tony Sanford, a registered scientist of the South African Council for Natural Scientific Professions
(SACNASP) is the independent qualified person signing the report for Ausenco Perú S.A.C.
Each of the qualified persons noted above have reviewed and approved the scientific and technical
information in this press release.
About Lithium Americas
Lithium Americas, together with SQM, is developing the Cauchari-Olaroz lithium project, located in Jujuy,
Argentina, through its 50% interest in Minera Exar. In addition, Lithium Americas owns 100% of the
Lithium Nevada project (formerly Kings Valley project), and RheoMinerals Inc., a supplier of rheology
modifiers for oil-based drilling fluids, coatings, and specialty chemicals.
For further information contact:
Lithium Americas Corp.
Investor Relations
Suite 1100 – 355 Burrard Street
Vancouver, BC, V6C 2G8
Telephone: 778-656-5820
Email: [email protected]
Website: www.lithiumamericas.com
Forward-looking statements
Statements in this release that are forward-looking information are subject to various risks and
uncertainties concerning the specific factors disclosed here and elsewhere in the Company's periodic
filings with Canadian securities regulators. Forward-looking information in this news release includes: (i)
the timing of the filing of the technical report; (ii) completion of the Ganfeng and Bangchak investment
agreements; (iii) the results of analysis to increase the production rate at the Cauchari-Olaroz project to
50,000 tpa (iv) the timing for commencement of construction and production at the Cauchari-Olaroz
project. The results of the Stage 1 DFS also constitute forward-looking information, including estimates of
capital and operating costs, estimates of financial performance and operating results. When used in this
document, the words such as “intent”, “target”, “expect”, “estimated” and “scheduled” and similar
expressions represent forward-looking information. Information provided in this document is necessarily
summarized and may not contain all available material information.
The release references Mineral Resources and Mineral Reserves. The estimation of Mineral Resources is
inherently uncertain and involves subjective judgments about many relevant factors. Mineral Resources
that are not Mineral Reserves do not have demonstrated economic viability. The accuracy of any such
estimates is a function of the quantity and quality of available data, and of the assumptions made and
judgments used in engineering and geological interpretation (including estimated future production, the
anticipated tonnages and grades that will be mined and the estimated recovery rates that will be realized),
which may prove to be unreliable and depend, to a certain extent, upon the analysis of exploration results
and statistical inferences that may ultimately prove to be inaccurate. Mineral Resource estimates may
have to be re-estimated based on: (i) fluctuations in lithium price; (ii) results of further exploration work;
(iii) the evaluation of mine plans subsequent to the date of any estimates; and (vi) revocation of required
permits, approvals and licenses. Mineral Reserves are also disclosed in this release. Mineral Reserves
are those portions of Mineral Resources that have demonstrated economic viability after taking into
account all mining factors. Mineral Reserves may, in the future, cease to be a Mineral Reserve if
economic viability can no longer be demonstrated because of, among other things, adverse changes in
commodity prices, changes in law or regulation or changes to mine plans.
All such forward-looking information and statements are based on certain assumptions and analyses
made by Lithium Americas management in light of their experience and perception of historical trends,
current conditions and expected future developments, as well as other factors management believes are
appropriate in the circumstances. These statements, however, are subject to a variety of risks and
uncertainties and other factors that could cause actual events or results to differ materially from those
projected in the forward-looking information or statements. Important factors that could cause actual
results to differ from these forward-looking statements include those described under the heading "Risks
Factors" in the Lithium Americas’ most recently filed MD&A, Annual Information Form and other
continuous disclosure filings, as well as the timing and completion of the investment transactions with
Ganfeng Lithium and Bangchak Petroleum, including settling definitive agreements and other conditions
to completion. The Company does not intend, and expressly disclaims any obligation to, update or revise
the forward-looking information contained in this news release, except as required by law. Readers are
cautioned not to place undue reliance on forward-looking information or statements.