General Motors to invest $650 million Lithium Americas

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Lithium Americas Corp. [LAC-TSX, NYSE] and General Motors Co. [GM-NYSE] said Tuesday they will jointly invest to develop the Thacker Pass mine in Nevada, which ranks as the largest known source of lithium in the U.S. and the third largest in the world.

General Motors will make a $650 million equity investment in Lithium Americas, marking the largest-ever investment by an automaker for the production of battery raw materials. Lithium Americas has estimated that lithium extracted and processed from the project can support production of up to 1.0 million electric vehicles annually.

Lithium Americas shares advanced on the news, rising 9.4% or $2.78 to $32.25 on volume of 598,840. The shares previously traded in a 52-week range of $50.42 and $23.80.

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.

GM’s investment will be spit between two tranches. The funds in the first tranche will be held in escrow until certain conditions are met, including the outcome of a Record of Decision ruling currently pending in the U.S. District Court. If those conditions are met, the funds will be released and GM will become a shareholder of Lithium Americas. If the funds are released, GM will own 9.9% of Lithium Americas.

The escrow release is expected to occur no later than the end of 2023. The second tranche investment is expected to be made in Lithium Americas’ U.S. focused lithium business following the separation of its U.S. and Argentina businesses.

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.

The Thackers Pass lithium project is located in Humbolt County, northern Nevada. The project is situated at the southern end of the McDermitt Caldera, approximately 100 kilometres north of Winnemucca.

Production at Thacker Pass is projected to begin in the second half of 2026.

In 2018, Lithium Americas completed a pre-feasibility study (PFS) on a two-phase project with a production capacity designed to reach 60,000 tonnes annually of battery-grade lithium carbonate (Li2C03) and 46-year mine life.

The PFS envisaged initial phase one production capacity of 30,000 tonnes annually of battery grade lithium carbonate, commencing in 2022 and increasing in phase two to 60,000 tonnes annually by 2026.

The project will be developed as an open-pit mining operation using conventional continuous mining equipment. Given the soft clay nature of the deposit, minimal blasting and crushing is anticipated. The ore will then be processed in a leaching circuit using sulfuric acid to liberate the lithium from claystone.

Following the leaching process, lithium bearing solution will be purified using crystallizers and reagents to produce battery-quality Li2CO3.

The project has been designed to avoid environmentally sensitive and rugged terrain. The flat and expansive terrain allows for a very compact footprint and allows for future potential expansions.

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