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Western Lithium and Lithium Americas Enter Merger Agreement

Western Lithium USA Corporation ("Western Lithium") and Lithium Americas Corp. ("Lithium Americas") are pleased to announce that they have entered into an arrangement agreement to combine their respective companies. The transaction is structured as a statutory plan of arrangement under which Western Lithium will acquire all of the outstanding shares of Lithium Americas in an all-stock transaction that values Lithium Americas at approximately C$80 million.

This strategic combination reflects the commitment of both companies to create a leading lithium development company combining expertise, technology, and two significant lithium deposits based in North America and South America. The goal of the merger is to establish market leadership and develop future lithium supply requirements in a disciplined manner to reshape the current fragmented lithium development sector.

"The merged company will hold two of the leading lithium development projects in the world. We believe this combination will also result in better liquidity, market capitalization and funding opportunities," said Western Lithium's CEO, Jay Chmelauskas. "We have been watching the progress of Lithium Americas for several years and believe that it is the right time to combine our efforts and take a leadership role in the sector, with our shared vision and commitment to develop the lithium market in a disciplined manner, and a focus on technical innovation and successful project execution."

The combined entity will control two assets that it views as globally important to support the burgeoning lithium-ion battery market. In addition to geographic diversification, having two development stage assets will enable post-merger Western Lithium to better manage development timelines to match production supply with growing market demand. Lithium Americas has completed a NI 43-101 compliant feasibility study on its Cauchari-Olaroz lithium project in Jujuy, Argentina, in which it is reported that the project hosts approximately 2.7 million tonnes of lithium carbonate equivalent (LCE) at a lithium cut-off grade of 354 milligrams per litre and which contemplates initial commercial production at a rate of 20,000 tonnes per year of LCE. The project is also permitted for construction. In May 2014, Western Lithium published a NI 43-101 compliant pre-feasibility study for the development of its Stage I lithium deposit, which established a proven and probable reserve of 570,000 tonnes of LCE at a lithium cut-off of 0.32%. The study contemplates starting production at normalized yearly rate of 13,000 tonnes of LCE, with an expansion to 26,000 tonnes in year four, and a project life of 20 years. Western Lithium will continue its permitting process in conjunction with its lithium demonstration plant trials. Both Western Lithium and Lithium Americas have been committed to the implementation of innovative lithium extraction technologies, and believe that emerging technologies may represent the optimal development opportunities for their combined lithium assets.

John Kanellitsas, CEO of Lithium Americas, commented, "Manufacturers of lithium-ion batteries are increasingly looking for alternative sources of lithium supply, particularly as they build-out major production facilities. We are creating a combined entity that will pursue innovative process technology with a goal of producing improved lithium products than compared with traditional sources of supply. This transaction is occurring at an important inflection point for the sector, with the strong fundamentals all coming into focus from the continued growth of electrified vehicles, consumer and industrial energy storage, and consumer electronics using lithium-ion batteries."

Tom Hodgson, Executive Chairman of Lithium Americas, commented, "The battery industry is seeking near term production supply, and a long term stable supply chain that assures volume, quality and price. Through this strategic combination, we will become stewards of two major lithium resources in North and South America, and expect to develop these assets using a measured approach, consistent with market demands and technology development."

Transaction Highlights

Key highlights of the combined company include:

  • Combines two large and geographically diversified lithium projects allows for an orderly development timeline that commences with Western Lithium's Hectatone™ business revenues in 2015, followed by potential revenues from Lithium America's Cauchari-Olaroz project under a contemplated two-year development timeline, and potential revenues from Western Lithium's Kings Valley project under a contemplated four-year development timeline.
  • Increased market capitalization, with the combined entity having a pro-forma capitalization of over C$150 million, which should enhance trading liquidity and access to capital markets.
  • Re-affirms commitment to establishing a first mover advantage in alternative processing and purification technologies, consistent with the end market demands and uses of lithium ion batteries.
  • Creates a combined management team with a strong record of success and complementary skill sets, especially in the areas of project development and funding, and technology development.
  • Establishes a shared commitment to corporate responsibility and sustainability. Both Western Lithium and Lithium Americas are strongly committed to sustainable practices. The shared values and experience in this area will be a competitive advantage in creating long-term value for shareholders.
  • Reduces costs associated with general and administrative expenses to the operation of one public company.

Pursuant to the Arrangement Agreement, all of the Lithium Americas issued and outstanding common shares will be exchanged on the basis of one share of Lithium Americas for 0.789 of a common share of Western Lithium (the "Exchange Ratio"). Western Lithium will also settle all of Lithium America's in-the-money options and warrants, as well as certain change of control payments otherwise payable in cash, using the same Exchange Ratio calculation. Upon completion of the transaction, existing Western Lithium shareholders and Lithium Americas security holders will own approximately 50.05% and 49.95% of the combined company, respectively.

Based on the closing price of Western Lithium's common shares on the Toronto Stock Exchange (the "TSX") of C$0.64 on June 29, 2015, the offer implies consideration of C$0.50 per Lithium Americas common share which represents a premium of 36% to the closing price of Lithium Americas common shares of C$0.37 on the TSX on June 29, 2015 and a premium of 58% based on the volume weighted average prices of each respective company on the TSX for the 20-day period ending on June 29, 2015.

Board of Directors and Management

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.

The new Board of Directors will consist of nine members:

  1. John Macken, Co-Chairman
  2. Edward Flood, Co-Chairman
  3. Tom Hodgson
  4. John Kanellitsas
  5. Jay Chmelauskas
  6. William Haldane
  7. Terry Krepiakevich
  8. Matthew Hornor
  9. Franco Mignacco

Business Combination Summary

The proposed business combination will be effected by way of a Plan of Arrangement completed under the Business Corporations Act (Ontario). The transaction will require approval by at least 66 2/3% of the votes cast by the common shareholders (as well as the approval of the holder of sole outstanding special share, voting separately as a class) of Lithium Americas at a special meeting of Lithium Americas shareholders. Geologic Resources Partners LLC and Symatec Inc., a subsidiary of Magna International Inc., as well as executive officers and directors of Lithium Americas, representing an aggregate of over 43% of the Lithium Americas currently outstanding common shares, have entered into voting support agreements, pursuant to which they have agreed, among other things, to vote their common shares held in favor of the business combination. The transaction is also subject to obtaining approval by a simple majority of votes cast by the shareholders of Western Lithium at a special meeting of Western Lithium. Executive officers and directors of Western Lithium, have entered into voting support agreements, pursuant to which they have agreed, among other things, to vote their common shares held in favor of the transaction. In addition to shareholder and court approvals, the transaction is subject to applicable third party and regulatory approvals and the satisfaction of certain other closing conditions customary in transactions of this nature.

The Arrangement Agreement includes customary deal-protection provisions including non-solicitation provisions, a right to match competing offers and a C$3.2 million termination fee payable to by either party under certain circumstances.

The transaction has been approved by the boards of directors of both Western Lithium and Lithium Americas. An independent committee of Lithium Americas' board of directors, as part of the process, engaged Cormark Securities Inc. as its independent financial advisor. The independent committee of Lithium Americas' board of directors, received fairness opinions from each of Deloitte Corporate Finance Inc. and Cormark Securities Inc., that the consideration payable to Lithium Americas' shareholders is fair, from a financial point of view, to the shareholders of Lithium Americas. Dundee Capital Markets has acted as an independent financial advisor to Western Lithium and provided a fairness opinion to the board of directors of Western Lithium.


Full details of the transaction will be included in the management information circular of Lithium Americas, which is expected to be mailed to Lithium Americas shareholders in late July, 2015 and in the management information circular of Western Lithium, which is expected to be mailed to Western Lithium shareholders in late July 2015. It is anticipated that the special meetings will be held in late August 2015. Closing of the transaction is expected to take place in early September 2015.

Qualified Person

The scientific and technical information regarding Western Lithium contained in this news release has been approved by Dennis Bryan, Western Lithium's Senior Vice President of Development who is a non-independent Qualified Person as defined in National Instrument 43-101 ("NI 43-101").

The scientific and technical information regarding Lithium Americas contained in this news release has been approved by Roger Kelley (Chem.Eng.), who is a Qualified Person as defined in NI 43-101.


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