Lithium Americas Corp. ("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.