Lithium Americas up 5.8% on GM joint venture update

Lithium Americas Corp. [LAC-TSX, NYSE] has closed its previously announced joint venture with General Motors Co. [GM-NYSE] to fund, develop and construct and operate the Thacker Pass lithium project in Humbolt County, Nevada.

The project aims to supply battery-quality lithium carbonate for the North American critical minerals supply chain.

Lithium Americas now holds a 62% interest in Thacker Pass and will manage the project. GM has acquired a 38% interest in Thacker Pass for US$625 million in total cash and letters of credit, comprised of US$430 million in direct cash funding to the joint venture to support the construction of Phase 1.0 and a US$195 million letter of credit facility.

As part of closing, GM has funded US$330 million of cash into the JV alongside US$138 million of funding from Lithium Americas. The remaining US$100 million cash contribution from GM, and Lithium Americas’ US$181 million contribution is to be contributed at the final investment decision for Phase 1.

“Together, Lithium Americas and GM are focused on bringing Thacker Pass to production to significantly improve domestic output of critical lithium supply to reduce dependence on foreign suppliers and to start creating new jobs and bringing economic activity to Northern Nevada,’’ said Lithium Americas CEO Jonathan Evans.

“We are targeting to announce the final investment decision in early 2025,’’ he said. “Our engineering, procurement and construction management contractor, Bechtel, and other major contractors have been ramping up work at site to de risk the construction schedule, as we continue to target completion in late 2027.’’

Lithium Americas shares advanced on the news, rising 5.8% or 25 cents to $4.52. The shares trade in a 52-week range of $10.59 and $2.87.

Thacker Pass ranks as one of the largest known sources of lithium in the U.S. and among the top five largest in the world.

GM’s $650 million equity investment in Lithium Americas marks the largest-ever investment by an automaker for the production of battery raw materials.

Thacker Pass is targeting 80,000 tonnes annually of battery-quality lithium carbonate production capacity in two phases of 40,000 tonnes per year respectively.  Phase 1 production is expected to commence in 2027.

In the fourth quarter of 2022, Bechtel Corp. was awarded an engineering, procurement and construction management contract for the construction of Thacker Pass Phase 1

Under the deal, GM is set to receive exclusive access to Phase 1 production. Material sourced form Lithium Americas will help support electric vehicle eligibility for consumer incentives under the U.S. clean energy tax credits.

Lithium is a key material in lithium-ion batteries and stands up well to repeated charging and discharging (including enabling fast-charging), delivers higher energy density and offers more usable capacity than other battery types.

Lithium carbonate from Thacker Pass will be used in GM’s proprietary Ultium battery cells.