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Lithium Americas inks investment agreement with Thai energy company

18th July 2017

By: Samantha Herbst

Creamer Media Deputy Editor

     

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JOHANNESBURG (miningweekly.com) – Niche minerals company Lithium Americas has closed an investment agreement with BCP Innovation, a wholly owned subsidiary of Thai energy company Bangchak Corporation Public Company, in which the latter has agreed to provide Lithium Americas with an aggregate of $113-million to fund a portion of the construction costs for the Cauchari-Olaroz lithium project, in Argentina’s Jujuy province.

"We are very pleased to complete this important financing with Bangchak and to welcome Bangchak's CEO, Chaiwat Kovavisarach, onto the Lithium Americas board of directors,” commented Lithium Americas CEO Tom Hodgson.

He added that, together with the recent Ganfeng investment, Lithium Americas has raised $285-million in debt and equity and is in a strong financial position to fund the remaining share of Cauchari-Olaroz's capital costs alongside Lithium Americas’ joint venture partner,  Sociedad Química y Minera de Chile (SQM).

“With development now well under way, we remain on track to reach production by 2019, with the objective of becoming the next low-cost lithium producer from brine."

TSX-listed Lithium Americas' investment agreement with Bangchak comprises a private placement equity financing, a debt facility and an offtake agreement.

Under the terms of the private placement, Lithium Americas has issued 50-million common shares to Bangchak at C$0.85 a common share for gross proceeds of C$42.5-million ($33-million).

Combined with the 20.3-million common shares Bangchak previously owned, the Thai energy major holds about 70-million common shares of the company, or about 16.4% of the company's issued and outstanding common shares.

Pursuant to the debt facility, Bangchak has agreed to loan Lithium Americas $80-million to fund a portion of the company's share of Cauchari-Olaroz's construction costs.

The debt facility has a six-year term, carries an 8% interest rate for the first three years, 8.5% in year four, 9% in year five and 9.5% in year six on the principal amount drawn.

Further, Lithium Americas has agreed to grant Bangchak a security interest in its corporate assets, other than its stake in Cauchari-Olaroz, as a condition to first drawdown on the debt facility and in addition to other customary conditions.

As consideration for providing the debt facility, Bangchak has an offtake contract to buy 20% of Lithium Americas' share of the first stage of production from Cauchari-Olaroz for 20 years following the commencement of commercial production at market prices.

Stage 1 of Cauchari-Olaroz is expected to produce 25 000 t/y of battery-grade lithium carbonate for a period of 40 years.

Pursuant to the transaction, the parties executed an investor rights agreement in which a nominee of Bangchak is entitled to be appointed to the board of directors. In accordance with that right, the company  appointed Bangchak's CEO to the board of directors.

Bangchak is a global emerging leader in the green energy industry. The company's core business, petroleum refining, spans procurement of crude oil from domestic and overseas sources and refining it into various standard products. The company's strategy is to grow its green energy business, including solar power and biofuel production and distribution, and to create value for investors in a manner that enhances national energy security and promotes social and environmental stewardship.

Bangchak is headquartered in Bangkok and is publicly listed on the Stock Exchange of Thailand with a current equity market capitalisation of about $1.3-billion.

Lithium Americas, together with SQM, is developing Cauchari-Olaroz, through its 50% interest in Minera Exar. In addition, Lithium Americas owns 100% of the Lithium Nevada project (formerly Kings Valley project), and RheoMinerals, a supplier of rheology modifiers for oil-based drilling fluids, coatings and specialty chemicals.

Edited by Creamer Media Reporter

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