Lithium Argentina AG 6-K, filed Aug 6, 2021
Lithium Argentina AG (LAR)
About this 6-K
Lithium Argentina AG filed this 6-K on August 6, 2021.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a-16 OR 15d-16
UNDER THE SECURITIES EXCHANGE ACT OF 1934
For the month of: August, 2021
Commission file number: 001-38350
Lithium Americas Corp.
(Translation of Registrant’s name into English)
900 West Hastings Street, Suite 300, Vancouver, British Columbia, Canada V6C 1E5
(Address of Principal Executive Office)
Indicate by check mark whether the registrant files or will file annual reports under cover:
Form 20-F [ ] Form 40-F [X]
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): [ ]
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): [ ]
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| Lithium Americas Corp. | |
|---|---|
| (Registrant) | |
| By: | “Jonathan Evans” |
| Name: | Jonathan Evans |
| Title: | Chief Executive Officer |
Dated: August 5, 2021
EXHIBIT INDEX
lac-ex991_7.htm
Exhibit 99.1
(
Lithium Americas CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2021 (Expressed in US Dollars)
LITHIUM AMERICAS CORP.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Unaudited)
(Expressed in thousands of US dollars)
| June 30, | December 31, | ||||
|---|---|---|---|---|---|
| Note | 2021 | 2020 | |||
| CURRENT ASSETS | |||||
| Cash and cash equivalents | 4 | ||||
| Receivables, prepaids and deposits | |||||
| Deferred financing costs | |||||
| Assets held for sale | |||||
| NON-CURRENT ASSETS | |||||
| Restricted cash | |||||
| Loans to Exar Capital | 5 | ||||
| Investment in Cauchari-Olaroz project | 5 | ||||
| Long-term receivable from JEMSE | 5 | ||||
| Property, plant and equipment | 6 | ||||
| Exploration and evaluation assets | |||||
| TOTAL ASSETS | |||||
| CURRENT LIABILITIES | |||||
| Accounts payable and accrued liabilities | |||||
| Current portion of long-term liabilities | 7 | ||||
| LONG-TERM LIABILITIES | |||||
| Credit and loan facilities | 7 | ||||
| Decommissioning provision | |||||
| Other liabilities | 7 | ||||
| TOTAL LIABILITIES | |||||
| SHAREHOLDERS’ EQUITY | |||||
| Share capital | |||||
| Contributed surplus | |||||
| Accumulated other comprehensive loss | ) | ) | |||
| Deficit | ) | ) | |||
| TOTAL SHAREHOLDERS’ EQUITY | |||||
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY |
All values are in US Dollars.
Subsequent events (Note 15)
Approved for issuance on August 4, 2021
On behalf of the Board of Directors:
| “Fabiana Chubbs” | “George Ireland” |
|---|---|
| Director | Director |
LITHIUM AMERICAS CORP.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(Unaudited)
(Expressed in thousands of US dollars, except for per share amounts; shares in thousands)
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Note | 2021 | 2020 | 2021 | 2020 | |||||
| EXPENSES | |||||||||
| Exploration expenditures | 11 | ) | ) | ) | ) | ||||
| General and administrative | 10 | ) | ) | ) | ) | ||||
| Equity compensation | 8 | ) | ) | ) | ) | ||||
| Share of loss of Cauchari-Olaroz project | ) | ) | |||||||
| ) | ) | ) | ) | ||||||
| OTHER ITEMS | |||||||||
| Loss on JEMSE transaction | 5 | ) | ) | ||||||
| Transaction costs | ) | ) | ) | ) | |||||
| Foreign exchange gain/(loss) | ) | ||||||||
| Finance costs | ) | ) | |||||||
| Finance and other income | |||||||||
| ) | ) | ) | |||||||
| NET LOSS BEFORE TAX | ) | ) | ) | ) | |||||
| Tax expense | ) | ) | |||||||
| NET LOSS BEFORE DISCONTINUED OPERATIONS | ) | ) | ) | ) | |||||
| (LOSS)/INCOME FROM DISCONTINUED OPERATIONS | ) | ) | ) | ||||||
| NET LOSS | ) | ) | ) | ) | |||||
| OTHER COMPREHENSIVE (LOSS)/INCOME | |||||||||
| ITEMS THAT MAY BE RECLASSIFIED SUBSEQUENTLY TO NET (LOSS)/INCOME | |||||||||
| Unrealized (loss)/income on translation to reporting currency | ) | ||||||||
| TOTAL COMPREHENSIVE LOSS | ) | ) | ) | ) | |||||
| BASIC AND DILUTED LOSS PER SHARE FROM CONTINUING OPERATIONS | ) | ) | ) | ) | |||||
| BASIC AND DILUTED LOSS PER SHARE | ) | ) | ) | ) | |||||
| WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING-<br><br><br>BASIC AND DILUTED |
All values are in US Dollars.
LITHIUM AMERICAS CORP.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(Unaudited)
(Expressed in thousands of US dollars and shares in thousands)
| Share capital | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Number | Amount | Contributed<br>surplus | Accumulated<br>other<br>comprehensive<br>income/(loss) | Deficit | Shareholders’<br>equity | |||||||
| of Shares | ||||||||||||
| Authorized share capital:<br><br><br>Unlimited common shares without par value | ||||||||||||
| Balance December 31, 2019 | 89,843 | ) | ) | |||||||||
| Shares issued on conversion of RSUs, DSUs and exercise of stock options | 800 | ) | ||||||||||
| Equity compensation (Note 8) | - | |||||||||||
| Net loss | - | ) | ) | |||||||||
| Other comprehensive income | - | - | ||||||||||
| Balance June 30, 2020 | 90,643 | ) | ) | |||||||||
| Balance, December 31, 2020 | 101,103 | ) | ) | |||||||||
| Shares issued on conversion of RSUs and exercise of stock options | 580 | ) | ||||||||||
| Shares issued pursuant to the underwritten public offering (Note 8) | 18,182 | |||||||||||
| Shares issuance costs (Note 8) | - | ) | ) | |||||||||
| Equity compensation (Note 8) | - | |||||||||||
| Net loss | - | ) | ) | |||||||||
| Balance June 30, 2021 | 119,865 | ) | ) |
All values are in US Dollars.
LITHIUM AMERICAS CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Expressed in thousands of US dollars)
| Six Months Ended June 30, | ||||
|---|---|---|---|---|
| 2021 | 2020 | |||
| OPERATING ACTIVITIES | ||||
| Net loss | ) | ) | ||
| Items not affecting cash and other items: | ||||
| Equity compensation | ||||
| Depreciation | ||||
| Foreign exchange (gain)/loss | ) | |||
| Share of loss of Cauchari-Olaroz project | ||||
| Loss on JEMSE transaction | ||||
| Other items | ) | |||
| Changes in non-cash working capital items: | ||||
| Increase in receivables, prepaids and deposits | ) | ) | ||
| Decrease in inventories | ||||
| Increase in accounts payable and accrued liabilities | ||||
| Net cash used in operating activities | ) | ) | ||
| INVESTING ACTIVITIES | ||||
| Loans to Exar Capital (Note 5) | ) | |||
| Contribution to Investment in Cauchari-Olaroz project | ) | |||
| Proceeds from sale of assets held for sale | ||||
| Additions to exploration and evaluation assets | ) | |||
| Release of restricted cash | ||||
| Additions to property, plant and equipment | ) | ) | ||
| Net cash used in investing activities | ) | ) | ||
| FINANCING ACTIVITIES | ||||
| Proceeds from stock option exercises | ||||
| Proceeds from the underwritten public offering (Note 8) | ||||
| Equity offering issuance costs (Note 8) | ) | - | ||
| Drawdowns from the credit facilities (Note 7) | ||||
| Finance lease repayments | ) | ) | ||
| Repayment of long-term borrowings | ) | ) | ||
| Other (Note 7) | ||||
| Net cash provided by financing activities | ||||
| EFFECT OF FOREIGN EXCHANGE ON CASH | ) | |||
| CHANGE IN CASH AND CASH EQUIVALENTS | ) | |||
| CASH AND CASH EQUIVALENTS - BEGINNING OF THE PERIOD | ||||
| CASH AND CASH EQUIVALENTS - END OF THE PERIOD |
All values are in US Dollars.
Supplemental disclosure with respect to cash flows (Note 13).
| 1. | NATURE OF OPERATIONS |
|---|---|
| Lithium Americas Corp. (“Lithium Americas” or the “Company”) is a Canadian-based resource company focused on the advancement of two significant lithium projects: the Cauchari-Olaroz project (“Cauchari-Olaroz”), located in Jujuy Province of Argentina, and the Thacker Pass project (“Thacker Pass”), located in north-western Nevada, USA. Cauchari-Olaroz is a lithium brine project and is owned by a legal entity in Argentina, Minera Exar S.A. (“Minera Exar”). Minera Exar is owned by the Company (44.8%), Ganfeng Lithium Co. Ltd. (“Ganfeng”) (46.7%) and Jujuy Energia y Mineria Sociedad del Estado (“JEMSE”), a mining investment company owned by the government of Jujuy Province in Argentina (8.5%). Thacker Pass is a sedimentary-based lithium property located in the McDermitt Caldera in Humboldt County, Nevada, and is 100% owned by the Company’s wholly owned subsidiary, Lithium Nevada Corp. (“Lithium Nevada”). | |
| --- |
The Company’s common shares are listed on the Toronto Stock Exchange and the New York Stock Exchange under the symbol “LAC”.
The Company’s head office and principal address is Suite 300, 900 West Hastings Street, Vancouver, British Columbia, Canada, V6C 1E5.
To date, the Company has not generated significant revenues from operations and has relied on equity and other financings to fund operations. The underlying values of exploration and evaluation assets, property, plant and equipment and the investment in Cauchari-Olaroz project are dependent on the existence of economically recoverable reserves, maintaining title and beneficial interest in the properties, and the ability of the Company to obtain the necessary financing to complete permitting, development, and to attain future profitable operations.
| 2. | BASIS OF PREPARATION AND PRESENTATION |
|---|
These condensed consolidated interim financial statements have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”) applicable to the preparation of interim financial statements, including International Accounting Standard (“IAS”) 34, Interim Financial Reporting. These condensed consolidated interim financial statements should be read in conjunction with the annual consolidated financial statements for the year ended December 31, 2020, which have been prepared in accordance with IFRS.
These condensed consolidated interim financial statements are expressed in US dollars, the Company’s presentation currency. The Company has used the same accounting policies and methods of computation as in the consolidated financial statements for the year ended December 31, 2020.
LITHIUM AMERICAS CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2021
(Expressed in thousands of US dollars, except for per share amounts; shares and equity instruments in thousands)
| 3. | SIGNIFICANT ACCOUNTING POLICIES |
|---|
Critical Accounting Estimates and Judgments
The preparation of these condensed consolidated interim financial statements in conformity with IFRS applicable to the preparation of interim financial statements requires judgments, estimates, and assumptions that affect the amounts reported. Those estimates and assumptions concerning the future may differ from actual results. Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
The nature and amount of significant estimates and judgments made by management in applying the Company’s accounting policies and the key sources of estimation uncertainty are substantially the same as those that management applied to the consolidated financial statements for the year ended December 31, 2020 other than below.
COVID-19 Uncertainty
In March 2020, the World Health Organization declared a global pandemic related to COVID-19. Many countries, including Canada, the United States and Argentina, where the Company operates, announced mandatory emergency measures and restrictions on businesses and individuals to mitigate the spread of the virus. The outbreak and the related mitigation measures have had and will continue to have an adverse impact on global economic conditions as well as on the Company’s activities. The effects of the pandemic will ultimately depend on many factors that are out of the Company’s control, including but not limited to, the severity, extent and duration of the pandemic or any resurgences in the future, the availability of approved vaccines and the timing for completion of vaccine distribution programs around the globe.
In the first half of 2021 construction activities at the Caucharí-Olaroz lithium project advanced while strictly complying with COVID-19 protocols, as developed by Minera Exar and approved by authorities in Jujuy province where the project is located. Construction costs related to the Caucharí-Olaroz lithium project continue to be capitalized in accordance with the Company’s policy, including costs arising from construction of the project during the pandemic such as testing and quarantining of employees, rental of additional camp facilities in order to comply with social distancing requirements, and other additional contractors’ costs as a result of COVID-19 restrictions.
Functional Currency
Items included in the financial statements of the Company and each of the Company’s subsidiaries are measured using the currency of the primary economic environment in which each entity operates (the “functional currency”). Effective January 1, 2021, the functional currency of Lithium Americas changed from the Canadian dollar to the US dollar as a result of the significant US dollar proceeds from equity offerings and increasing US dollar denominated expenditures. The change in functional currency was accounted for on a prospective basis, with no impact of this change on prior year comparative information.
Long-Term Receivable from JEMSE
In Q2 2021 JEMSE completed the exercise of its ownership right to an 8.5% interest in Minera Exar. As consideration for this interest, JEMSE will reimburse its $23,496 pro rata (8.5%) share of the equity financing for the construction of the Cauchari-Olaroz project to the Company and Ganfeng through the assignment of one-third of the dividends otherwise payable to JEMSE in future periods. As a result of JEMSE exercising its right, the Company recognized a reduction in its ownership interest in Minera Exar in exchange for a long-term receivable from JEMSE with an estimated fair value of $5,800.
LITHIUM AMERICAS CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2021
(Expressed in thousands of US dollars, except for per share amounts; shares and equity instruments in thousands)
| 3. | SIGNIFICANT ACCOUNTING POLICIES (continued) |
|---|
The fair value of the long-term receivable from JEMSE was calculated by discounting the Company’s $10,512 share of JEMSE’s future payments, assuming payments start after 5 years and a 10% discount rate. Estimation of timing for payment is based on the status of construction and expected cash flows of Minera Exar (Note 5).
Newly Adopted Accounting Standards and Amendments
The Company adopted Interest Rate Benchmark Reform - Phase 2: Amendments to IFRS 9, IAS 39, IFRS 4 and IFRS 16 (the "Phase 2 Amendments") effective on January 1, 2021. Interest rate benchmark reform ("Reform") refers to a global reform of interest rate benchmarks, which includes the replacement of some interbank offered rates with alternative benchmark rates.
The Phase 2 Amendments provide a practical expedient requiring the effective interest rate to be adjusted when accounting for changes in the basis for determining the contractual cash flows of financial assets and liabilities that relate directly to the Reform, rather than applying modification accounting which might have resulted in a gain or loss. In addition, the Phase 2 Amendments require disclosures to assist users in understanding the effect of the Reform on the Company's financial instruments and risk management strategy. The Company’ senior Credit Facility and Limited Recourse Loan Facility as defined in Note 7 are indexed to London interbank offered rates ("LIBOR") that have not yet transitioned to alternative benchmark rates at the end of the current reporting period.
| 4. | CASH AND CASH EQUIVALENTS | |
|---|---|---|
| June 30, 2021 | December 31, 2020 | |
| --- | --- | --- |
| Cash | ||
| Short-term bank deposits | ||
All values are in US Dollars.
As at June 30, 2021, $3,322 of cash and short-term deposits were held in Canadian dollars (December 31, 2020– $3,165), $501,919 of cash and short-term deposits were held in US dollars (December 31, 2020– $144,905). Cash and short-term deposits earn interest between 0.2%-0.4%.
| 5. | INVESTMENT IN CAUCHARI-OLAROZ PROJECT |
|---|
As at June 30, 2021, upon closing of the JEMSE transaction as described below, the Company, Ganfeng and JEMSE are 44.8%, 46.7% and 8.5% shareholders, respectively, of Minera Exar, the company that holds the Cauchari-Olaroz project located in the Jujuy province of Argentina. The Company and Ganfeng are parties to a shareholders’ agreement concerning management of the project and are entitled to share in the project’s production on a 49%/51% basis. Construction costs are also shared on the same pro rata basis between the Company and Ganfeng. The shareholders’ agreement regulates key aspects of governance of the project, which provides the Company with significant influence over Minera Exar and strong minority shareholder protective rights.
LITHIUM AMERICAS CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2021
(Expressed in thousands of US dollars, except for per share amounts; shares and equity instruments in thousands)
| 5. | INVESTMENT IN CAUCHARI-OLAROZ PROJECT (continued) |
|---|
In addition, the Company and Ganfeng are 49% and 51% shareholders, respectively, in Exar Capital B.V. (“Exar Capital”), the company in the Netherlands that provides financing to Minera Exar for the purpose of advancing the construction of the Cauchari-Olaroz project (the investment in Minera Exar and Exar Capital together, the “Investment in Cauchari-Olaroz project”). Minera Exar and Exar Capital are accounted for using the equity method of accounting.
JEMSE Transaction
JEMSE acquired an 8.5% (4.2% from the Company and 4.3% from Ganfeng) equity interest in Minera Exar on April 4, 2021 (the “JEMSE Transaction”). The right to acquire the 8.5% interest (the “Acquisition Right”) was originally granted under a letter of intent in 2012 to comply with Province of Jujuy regulations regarding government participation in mineral projects.
Pursuant to closing the JEMSE Transaction, JEMSE has agreed to reimburse the Company and Ganfeng its $23,496 pro rata (8.5%) share of the equity financing for the construction of the Cauchari-Olaroz project in past years through the assignment of one-third of the dividends otherwise payable to JEMSE in future periods.
The annual distribution of dividends by Minera Exar to all shareholders, including JEMSE, will only be considered once all commitments of Minera Exar related to Cauchari-Olaroz project debt have been met.
Upon closing of the JEMSE Transaction, the Company recognized a long-term receivable from JEMSE of $5,800 and a $4,712 loss which was calculated as follows:
| Fair value of the Company's 49% of JEMSE's 23,496 future payment | |
| Carrying value of the Company's disposed share of Investment in Minera Exar | ) |
| Loss on the 2021 JEMSE Transaction | ) |
All values are in US Dollars.
The long-term receivable from JEMSE is estimated by discounting $10,512, the Company’s share of JEMSE future payment to present value, assuming payments start after 5 years and using a 10% discount rate. Estimation of timing for payment is based on the status of construction and expected cash flows of Minera Exar.
2020 Cauchari Transaction
On August 27, 2020, the Company closed a transaction with Ganfeng whereby Ganfeng subscribed, through a wholly-owned subsidiary, for newly issued shares of Minera Exar, for cash consideration of $16,327, increasing its interest in the Cauchari-Olaroz project from 50% to 51%, with Lithium Americas holding the remaining 49% interest.
LITHIUM AMERICAS CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2021
(Expressed in thousands of US dollars, except for per share amounts; shares and equity instruments in thousands)
| 5. | INVESTMENT IN CAUCHARI-OLAROZ PROJECT (continued) |
|---|
In addition, the Company and Ganfeng restructured Exar Capital to reflect the parties’ 51%/49% proportionate ownership of Minera Exar. As part of this restructuring, Ganfeng provided $40,000 to Exar Capital in non-interest-bearing loans, repayable in 2029 (with a right for an additional one-year extension by the Company or Ganfeng) and contributed $689 to Exar Capital’s equity to increase its interest from 37.5% to 51%. Proceeds of the loans from Ganfeng were used by Exar Capital to repay $40,000 of loans owed to Lithium Americas (the Minera Exar and Exar Capital transactions together, the “2020 Cauchari Transaction”).
Upon closing of the 2020 Cauchari Transaction, Ganfeng became the controlling shareholder of Minera Exar and Exar Capital while Lithium Americas received fulsome minority shareholder protective rights. The Company retains significant influence over Minera Exar and Exar Capital and, as a result, is equity accounting for these investments from the closing of the 2020 Cauchari Transaction. Prior to closing the transaction, the Company had been consolidating its 50% share of the Cauchari-Olaroz project and accounting for its investment as a joint operation.
Loans to Minera Exar and Exar Capital
The Company has entered into loan agreements with Minera Exar and Exar Capital to fund construction of the Cauchari-Olaroz project. Changes in the loans’ balances are summarized below.
| Loans from the Company to Exar Capital, as at December 31, 2019 | |
| Loans from the Company to Exar Capital | |
| Initial difference between the face value and the fair value of loans to Exar Capital | ) |
| Elimination of loans as a result of Joint Operation accounting | ) |
| Accrued interest | |
| Loans from the Company to Exar Capital prior to the 2020 Cauchari Transaction | |
| Loans from the Company to Exar Capital after the 2020 Cauchari Transaction | |
| Initial difference between the face value and the fair value of loans to Exar Capital | ) |
| Reversal of elimination of loans as a result of the 2020 Cauchari Transaction | |
| Derecognition of share of loans from Exar Capital to Minera Exar as a result of the 2020 Cauchari Transaction | ) |
| Repayment of loans as a result of the 2020 Cauchari Transaction | ) |
| Gain on early repayment of the 40,000 loans | |
| Accrued interest | |
| Loans from the Company to Exar Capital, as at December 31, 2020 | |
| Loans from the Company to Exar Capital | |
| Initial difference between the face value and the fair value of loans to Exar Capital | ) |
| Accrued interest | |
| Loans from the Company to Exar Capital, as at June 30, 2021 |
All values are in US Dollars.
Loans by the Company and Ganfeng to Exar Capital are non-interest bearing. During the six months ended June 30, 2021, non-interest bearing loans were provided by the Company to Exar Capital in the amount of $30,870, and by Ganfeng in the amount of $32,130. Such loans funded the respective 49% and 51% shares of Cauchari-Olaroz construction costs. The Company accounts for its loans initially at fair value and subsequently at amortized cost.
LITHIUM AMERICAS CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2021
(Expressed in thousands of US dollars, except for per share amounts; shares and equity instruments in thousands)
| 5. | INVESTMENT IN CAUCHARI-OLAROZ PROJECT (continued) |
|---|
The fair value of the loans at inception was calculated using a discounted cash flow valuation method applying market interest rates. The difference between the face value and the fair value of the loans provided was recognized as part of the Investment in the Cauchari-Olaroz project.
Investment in Cauchari-Olaroz Project
Changes in the Investment in Cauchari-Olaroz Project are summarized below:
| Minera Exar<br>S.A. | Exar Capital<br>B.V. | Total | ||||
|---|---|---|---|---|---|---|
| Investment in Cauchari-Olaroz project, as at December 31, 2019 | ||||||
| Recognition of Investment in Cauchari-Olaroz project | ||||||
| Contribution to Investment in Cauchari-Olaroz project | ||||||
| Share of income of Cauchari-Olaroz project | ||||||
| Elimination of unrealized gain on intercompany transactions | ) | ) | ||||
| Investment in Cauchari-Olaroz project, as at December 31, 2020 | ||||||
| Contribution to Investment in Cauchari-Olaroz project | ||||||
| Share of income of Cauchari-Olaroz project | ||||||
| Elimination of unrealized gain on intercompany transactions | ) | ) | ||||
| Share of decrease in Minera Exar net assets as a result of the JEMSE Transaction | ) | ) | ||||
| Investment in Cauchari-Olaroz project, as at June 30, 2021 |
All values are in US Dollars.
Minera Exar’s Commitments and Contingencies
As at June 30, 2021, Minera Exar had the following commitments (on a 100% basis):
| • | A $200 royalty due annually in May and expiring in 2041. |
|---|---|
| • | Seven agreements to provide aboriginal programs to communities located in the Cauchari-Olaroz project area, having terms ranging from five to thirty years, and annual fee payments of $260 in 2021, $350 in 2022 and $443 between 2023 and 2061 if these agreements are extended for the life of the project provided that such annual fees are subject to change from time to time based on negotiations between the parties. Minera Exar’s obligations to make the payments are subject to continued development of the project and commencement and continuation of production at the project. |
| --- | --- |
| • | Commitments related to contracts for the construction of evaporation ponds and other construction contracts of $4,433. |
| --- | --- |
LITHIUM AMERICAS CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2021
(Expressed in thousands of US dollars, except for per share amounts; shares and equity instruments in thousands)
| 5. | INVESTMENT IN CAUCHARI-OLAROZ PROJECT (continued) |
|---|
Los Boros Option Agreement
On September 11, 2018, Minera Exar exercised a purchase option agreement (“Option Agreement”) with Grupo Minero Los Boros (“Los Boros”), entered into on March 28, 2016, for the transfer of title to Minera Exar of certain mining properties that comprised a portion of the Cauchari-Olaroz project.
Under the terms of the Option Agreement, Minera Exar paid $100 upon signing and exercised the purchase option for total consideration of $12,000 to be paid in sixty quarterly installments of $200. The first installment becomes due upon the earlier occurrence of the following two conditions: (i) the third anniversary of the purchase option exercise date, being September 11, 2021; or (ii) the beginning of commercial exploitation with a minimum production of 20,000 tons of lithium carbonate equivalent. As security for the transfer of title of the mining properties, Los Boros granted to Minera Exar a mortgage over the mining properties for $12,000. In accordance with the Option Agreement, on November 27, 2018, Minera Exar paid Los Boros a $300 royalty which was due within 10 days of the start date of construction of the commercial plant.
Pursuant to the Option Agreement, a 3% net profit interest royalty (the “Los Boros Royalty”) is payable to Los Boros by Minera Exar annually within 10 business days after calendar year end, in Argentinian pesos, for a period of 40 years.
Minera Exar has the right to cancel the first 20 years of the Los Boros Royalty in exchange for a one-time payment of $7,000 and the next 20 years for an additional payment of $7,000.
LITHIUM AMERICAS CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2021
(Expressed in thousands of US dollars, except for per share amounts; shares and equity instruments in thousands)
| 6. | PROPERTY, PLANT AND EQUIPMENT | ||||||
|---|---|---|---|---|---|---|---|
| Cauchari-Olaroz1 | Equipment<br>and machinery | Other2 | Total | ||||
| --- | --- | --- | --- | --- | --- | --- | --- |
| Cost | |||||||
| As at December 31, 2019 | |||||||
| Additions | |||||||
| Capitalization of interest | |||||||
| Deconsolidation | ) | ) | |||||
| Disposals | ) | ) | |||||
| Foreign exchange | |||||||
| As at December 31, 2020 | |||||||
| Additions | |||||||
| Disposals | ) | ) | |||||
| As at June 30, 2021 |
All values are in US Dollars.
| Cauchari-Olaroz1 | Equipment<br>and machinery | Other2 | Total | ||||
|---|---|---|---|---|---|---|---|
| Accumulated depreciation | |||||||
| As at December 31, 2019 | |||||||
| Depreciation for the period | |||||||
| Deconsolidation of Minera Exar fixed assets | ) | ) | |||||
| Disposals | ) | ) | |||||
| As at December 31, 2020 | |||||||
| Depreciation for the period | |||||||
| Disposals | ) | ) | |||||
| As at June 30, 2021 |
All values are in US Dollars.
| Cauchari-Olaroz1 | Equipment<br>and machinery | Other2 | Total | |
|---|---|---|---|---|
| Net book value | ||||
| As at December 31, 2020 | ||||
| As at June 30, 2021 |
All values are in US Dollars.
^1^Prior to closing the 2020 Cauchari Transaction, this includes the Company’s 50% share of the Cauchari-Olaroz project construction costs and project-related costs incurred directly by the Company (Note 5).
^2^ Other category includes right of use assets with $1,087 cost and $428 accumulated depreciation as at June 30, 2021.
LITHIUM AMERICAS CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2021
(Expressed in thousands of US dollars, except for per share amounts; shares and equity instruments in thousands)
| 7. | LONG-TERM LIABILITIES | |
|---|---|---|
| June 30, 2021 | December 31 2020 | |
| --- | --- | --- |
| Current portion of long-term liabilities | ||
| Accrued interest | ||
| Other liabilities | ||
| Long-term liabilities | ||
| Credit facility (net of financing costs) | ||
| Limited Recourse Loan Facility | ||
| Other liabilities | ||
All values are in US Dollars.
Credit Facility
During the six months ended June 30, 2021, the Company drew $28,070 on its $205,000 senior credit facility, comprised of $18,246 from Ganfeng and $9,824 from BCP Innovation Pte Ltd. The total drawn under the facility as at June 30, 2021, was $123,820. The credit facility has a term of six years from August 8, 2018, with an interest rate of 8.0% for the first three years that increases to 8.5% in year four, 9.0% in year five and 9.5% in year six. Repayments of borrowings made under the credit facility must start on August 8, 2022, being the fourth anniversary of the first drawdown date, in an amount equal to 75% of Minera Exar’s Free Cash Flow (as defined in the credit facility agreement).
As security for the facility, the Company granted to the lenders a first priority security interest in all assets except those that represent its ownership interest in the Cauchari-Olaroz project.
Limited Recourse Loan Facility
In October 2018, Ganfeng provided Lithium Americas with a $100,000 unsecured, limited recourse, subordinated loan facility (the “Limited Recourse Loan Facility”) bearing an interest rate of 6-month LIBOR plus 5.5% (subject to an aggregate maximum interest rate of 10% per annum). The loan facility is repayable in an amount of 50% of Minera Exar’s Free Cash Flows (as defined in the credit facility agreement).
Repayment will start once the Company’s obligations to repay the $205,000 senior credit facility are met. As at June 30, 2021, the Company had drawn $20,000 on the $100,000 Limited Recourse Loan Facility to fund development expenditures on the Cauchari-Olaroz project and an additional $4,708 to fund the payment of interest under the $205,000 senior credit facility. Accrued interest under the facility, included in long-term liabilities, was $2,319 as at June 30, 2021.
The $205,000 senior credit facility and the Limited Recourse Loan Facility contain operating and reporting covenants, which the Company was in compliance with as at June 30, 2021.
Other Liabilities
Other liabilities consist of lease liabilities and the $5,210 mining contractor liability. During Q2 2019, Lithium Nevada entered into a mining design, consulting and mining operations agreement with a mining contractor for its Thacker Pass project. In accordance with the agreement, Lithium Nevada received $3,500 from the mining contractor in seven consecutive equal quarterly instalments, of which $1,500 was received in 2019 and $2,000 was received in 2020 and included in the mining contractor liability balance. Lithium Nevada will pay a success fee to the mining contractor of $4,650 payable upon achieving commercial mining milestones or repay $3,500 without interest if a final project construction decision is not made by 2024.
LITHIUM AMERICAS CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2021
(Expressed in thousands of US dollars, except for per share amounts; shares and equity instruments in thousands)
| 7. | LONG-TERM LIABILITIES (continued) |
|---|
The mining contractor has also been providing mining design and consulting services, which are accrued and included in the mining contractor liability and are payable on the earlier of December 31, 2024 or 90 days after the start of production at the Thacker Pass project.
| 8. | SHARE CAPITAL AND EQUITY COMPENSATION |
|---|
Share Capital
On January 22, 2021, Lithium Americas closed an underwritten public offering of 18,182 shares, including 2,273 shares following the exercise in full by the underwriters of their over-allotment option. The shares were issued at a price of $22.00 each for gross proceeds to the Company of approximately $400,000 (and net proceeds of $377,391 after deducting costs of $22,609).
Equity Incentive Plan
Restricted Share Units
During the six months ended June 30, 2021, the Company granted 250 (2020 – 788) RSUs to its employees and consultants. The total estimated fair value of the RSUs was $3,366 (2020 - $2,018) based on the market value of the Company’s shares on the grant date. As at June 30, 2021, there was $1,517 (2020 - $901) of total unamortized compensation cost relating to unvested RSUs. During the six months ended June 30, 2021, stock-based compensation expense related to RSUs of $917 was charged to operating expenses (2020 - $2,646) and $1,622 was charged against accrued liabilities.
A summary of changes to the number of outstanding RSUs is as follows:
| Number of RSUs<br><br><br>(in 000's) | |||
|---|---|---|---|
| Balance, RSUs outstanding as at December 31, 2019 | 2,388 | ||
| Converted into shares | (886 | ) | |
| Granted | 810 | ||
| Forfeited | (22 | ) | |
| Balance, RSUs outstanding as at December 31, 2020 | 2,290 | ||
| Converted into shares | (45 | ) | |
| Granted | 250 | ||
| Balance, RSUs outstanding as at June 30, 2021 | 2,495 |
LITHIUM AMERICAS CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2021
(Expressed in thousands of US dollars, except for per share amounts; shares and equity instruments in thousands)
| 8. | SHARE CAPITAL AND EQUITY COMPENSATION (continued) |
|---|
Deferred Share Units
During the six months ended June 30, 2021, the Company granted 12 DSUs (2020 – 91) as compensation to independent directors with a total estimated fair value of $162 (2020 – $268).
| Number of DSUs<br><br><br>(in 000's) | |||
|---|---|---|---|
| Balance, DSUs outstanding as at December 31, 2019 | 228 | ||
| Granted | 121 | ||
| Converted into shares | (131 | ) | |
| Balance, DSUs outstanding as at December 31, 2020 | 218 | ||
| Granted | 12 | ||
| Balance, DSUs outstanding as at June 30, 2021 | 230 |
Stock Options
No stock options were granted by the Company during the six months ended June 30, 2021 and 2020. Stock options outstanding and exercisable as at June 30, 2021 are as follows:
| Range of Exercise Prices<br>CDN | Weighted<br><br><br>Average<br><br><br>Remaining<br><br><br>Contractual<br><br><br>Life (years) | Weighted<br>Average<br>Exercise<br>Price (CDN | ) | ||
|---|---|---|---|---|---|
| 4.55 - 5.00 | 609 | 1.3 | |||
| 8.05 - 11.07 | 1,103 | 1.7 | |||
| 1,712 | 1.6 |
All values are in US Dollars.
A summary of changes to stock options outstanding is as follows:
| Number<br><br><br>of Options<br><br><br>(in 000's) | Weighted Average<br>Exercise Price,<br>(CDN) | ||||
|---|---|---|---|---|---|
| Balance, stock options outstanding as at December 31, 2019 | 3,731 | ||||
| Exercised | (1,233 | ) | ) | ||
| Expired | (195 | ) | ) | ||
| Balance, stock options outstanding as at December 31, 2020 | 2,303 | ||||
| Exercised | (582 | ) | ) | ||
| Expired | (9 | ) | ) | ||
| Balance, stock options outstanding as at June 30, 2021 | 1,712 |
All values are in US Dollars.
LITHIUM AMERICAS CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2021
(Expressed in thousands of US dollars, except for per share amounts; shares and equity instruments in thousands)
| 8. | SHARE CAPITAL AND EQUITY COMPENSATION (continued) |
|---|
The weighted average share price at the time of exercise of options during the six months ended June 30, 2021 was CDN$20.00 (2020 – CDN$6.88). During the six months ended June 30, 2021, 280 (2020 – 111) options were exercised under the cashless exercise provision of the Company’s stock option plan, resulting in the issuance of 233 (2020 – 82) shares of the Company.
Performance Share Units (“PSUs”)
162 PSUs were granted by the Company during the six months ended June 30, 2021 and none in 2020. As at June 30, 2021, there was $3,154 (2020 - $2,394) of total unamortized compensation cost relating to unvested PSUs.
The fair value of the PSUs is estimated on the date of grant using a valuation model based on Monte Carlo simulation with the following assumptions used for the grants made during the period:
| January 4, | ||
|---|---|---|
| 2021 | ||
| Number of PSUs granted | 162 | |
| Risk-free interest rate | 0.17% | |
| Dividend rate | 0% | |
| Annualized volatility | 76.0% | |
| Peer Group average volatility | 72.2% | |
| Estimated forfeiture rate | 10% | |
| Fair value per PSU granted | 19.72 | |
| Total fair value of PSUs granted, prior to forfeiture rate adjustment | 3,200 |
During the six months ended June 30, 2021, equity compensation expense related to PSUs of $1,383 was charged to operating expenses (2020 - $856).
A summary of changes to the number of outstanding PSUs is as follows:
| Number of PSUs<br><br><br>(in 000's) | |||
|---|---|---|---|
| Balance, PSUs outstanding as at December 31, 2019 | 1,010 | ||
| Cancelled | (11 | ) | |
| Balance, PSUs outstanding as at December 31, 2020 | 999 | ||
| Granted | 162 | ||
| Balance, PSUs outstanding as at June 30, 2021 | 1,161 |
LITHIUM AMERICAS CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2021
(Expressed in thousands of US dollars, except for per share amounts; shares and equity instruments in thousands)
| 9. | RELATED PARTY TRANSACTIONS |
|---|
Minera Exar, the Company’s equity-accounted investee, has entered into the following transactions with companies controlled by the family of its President, who is also a director of Lithium Americas:
| - | Los Boros Option Agreement, entered into with Grupo Minero Los Boros on March 28, 2016, for the transfer to Minera Exar of title to certain mining properties that comprised a portion of the Cauchari-Olaroz project (refer to Note 5). |
|---|---|
| - | Construction services contract for Cauchari-Olaroz project with Magna Construcciones S.R.L., expenditures under which were $3,884 during the six months ended June 30, 2021. |
| --- | --- |
During the six months ended June 30, 2021, director’s fees paid by Minera Exar to its President, who is also a director of Lithium Americas, totaled $37 (2020 - $37).
During the six months ended June 30, 2021, the Company paid $646, of which $300 was paid in cash and $346 in RSUs, to its former President, South American Operations and a former director, in accordance with his employment agreement. Concurrently, the parties entered into a 12-month advisory consulting agreement with a monthly fee of $14.
The amounts due to related parties arising from such transactions are unsecured, non-interest bearing and have no specific terms of payment. Transactions with Ganfeng, a related party of the Company by virtue of its position as a shareholder and a lender to the Company, are disclosed in Notes 5, 7 and 15.
Compensation of Key Management
Key management includes the directors of the Company and the executive management team. The remuneration of directors and members of the executive management team was as follows:
| June 30, 2021 | June 30, 2020 | |
|---|---|---|
| Equity compensation | ||
| Salaries, bonuses, benefits and directors' fees included in general and administrative expenses | ||
| Salaries, bonuses and benefits included in exploration expenditures | ||
| Salaries and benefits capitalized to Investment in Cauchari-Olaroz project | ||
All values are in US Dollars.
| June 30, 2021 | December 31, 2020 | |
|---|---|---|
| Total due to directors and executive team |
All values are in US Dollars.
LITHIUM AMERICAS CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2021
(Expressed in thousands of US dollars, except for per share amounts; shares and equity instruments in thousands)
| 10. | GENERAL AND ADMINISTRATIVE EXPENSES |
|---|
The following table summarizes the Company’s general and administrative expenses:
| June 30, 2021 | June 30, 2020 | |
|---|---|---|
| Salaries, benefits and directors' fees | ||
| Office and administration | ||
| Professional fees | ||
| Regulatory and filing fees | ||
| Travel | ||
| Investor relations | ||
| Depreciation | ||
All values are in US Dollars.
| 11. | EXPLORATION EXPENDITURES |
|---|
The following table summarizes the Company’s exploration expenditures related to Thacker Pass and other project expenditures:
| June 30, 2021 | June 30, 2020 | |
|---|---|---|
| Engineering | ||
| Consulting and salaries | ||
| Permitting and environmental | ||
| Field supplies and other | ||
| Depreciation | ||
| Drilling and geological expenses | ||
| Total exploration expenditures |
All values are in US Dollars.
LITHIUM AMERICAS CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2021
(Expressed in thousands of US dollars, except for per share amounts; shares and equity instruments in thousands)
| 12. | SEGMENTED INFORMATION |
|---|
The Company operates in three operating segments and three geographical areas. The Thacker Pass project is in the exploration stage and the Cauchari-Olaroz project is in the development stage. From August 16, 2019 to August 27, 2020, the Cauchari-Olaroz project was accounted for as a joint operation. From closing of the 2020 Cauchari Transaction, the project is accounted for using the equity method (Note 5). The Organoclay segment, classified as a discontinued operation, was wound up in 2019 and its assets were sold in Q1 2021.
The Company’s reportable segments are summarized in the following tables:
| Organoclay | Thacker<br>Pass | Cauchari-<br>Olaroz | Corporate | Total | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| As at June 30, 2021 | ||||||||||
| Property, plant and equipment | - | |||||||||
| Exploration and evaluation assets | - | - | - | |||||||
| Total assets | - | |||||||||
| Total liabilities | - | ) | ) | ) | ||||||
| For the six months ended June 30, 2021 | ||||||||||
| Property, plant and equipment additions | ||||||||||
| Income from discontinued operations | - | |||||||||
| Net income/(loss) | ) | ) | ) | ) | ||||||
| Exploration expenditures | - | ) | ) | |||||||
| Depreciation | ) | ) | ) | |||||||
| For the three months ended June 30, 2021 | ||||||||||
| Property, plant and equipment additions | ||||||||||
| Loss from discontinued operations | ) | ) | ||||||||
| Net loss | ) | ) | ) | ) | ) | |||||
| Exploration expenditures | ) | ) | ||||||||
| Depreciation | ) | ) | ) |
All values are in US Dollars.
| Organoclay | Thacker Pass | Cauchari-<br>Olaroz | Corporate | Total | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| As at December 31, 2020 | ||||||||||
| Property, plant and equipment | ||||||||||
| Assets held for sale | - | - | - | |||||||
| Exploration and evaluation assets | - | - | - | |||||||
| Total assets | ||||||||||
| Total liabilities | ) | ) | ) | ) | ||||||
| For the six months ended June 30, 2020 | ||||||||||
| Property, plant and equipment additions | ||||||||||
| Loss from discontinued operations | ) | ) | ||||||||
| Net (loss)/income | ) | ) | ) | ) | ) | |||||
| Exploration expenditures | ) | ) | ) | |||||||
| Depreciation | ) | ) | ) | ) | ||||||
| For the three months ended June 30, 2020 | ||||||||||
| Property, plant and equipment expenditures | ||||||||||
| Loss from discontinued operations | ) | ) | ||||||||
| Net Loss | ) | ) | ) | ) | ) | |||||
| Exploration expenditures | ) | ) | ) | |||||||
| Depreciation | ) | ) | ) | ) |
All values are in US Dollars.
LITHIUM AMERICAS CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2021
(Expressed in thousands of US dollars, except for per share amounts; shares and equity instruments in thousands)
| 12. | SEGMENTED INFORMATION (continued) |
|---|
The Company’s non-current assets and revenues of the discontinued operation are segmented geographically as follows:
| Canada | United States | Argentina | Total | |
|---|---|---|---|---|
| Non-current assets ^(1)^ | ||||
| As at June 30, 2021 | ||||
| As at December 31, 2020 | ||||
| Revenue of the discontinued operation | ||||
| For six months ended June 30, 2021 | - | - | - | - |
| For six months ended June 30, 2020 | - | - |
All values are in US Dollars.
^1^Non-current assets attributed to geographical locations exclude deferred income tax assets and financial and other assets.
| 13. | SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS |
|---|
Supplementary disclosure of the Company’s non-cash transactions is provided in the table below.
| June 30, 2021 | December 31, 2020 | |
|---|---|---|
| Change in accounts payable related to financings |
All values are in US Dollars.
| Six months ended June 30, | ||
|---|---|---|
| 2021 | 2020 | |
| Interest paid | ||
| Income taxes paid | - | - |
All values are in US Dollars.
LITHIUM AMERICAS CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2021
(Expressed in thousands of US dollars, except for per share amounts; shares and equity instruments in thousands)
| 14. | FINANCIAL INSTRUMENTS |
|---|
Financial instruments recorded at fair value on the consolidated statements of financial position and presented in fair value disclosures are classified using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels:
Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities;
Level 2 – Inputs other than quoted prices that are observable for assets or liabilities, either directly or indirectly; and
Level 3 – Inputs for assets and liabilities that are not based on observable market data.
The fair value hierarchy requires the use of observable market inputs whenever such inputs exist. A financial instrument is classified in the lowest level of the hierarchy for which a significant input has been considered in measuring fair value. The Company did not have any financial instruments measured at fair value on the statement of financial position on a recurring basis. As at June 30, 2021, the fair value of financial instruments not measured at fair value approximate their carrying value.
The Company may be exposed to risks of varying degrees of significance which could affect its ability to achieve its strategic objectives. The Company manages risks to minimize potential losses. The main objective of the Company’s risk management process is to ensure that the risks are properly identified and that the capital base is adequate in relation to those risks. The principal risks which impact the Company’s financial instruments are described below.
Credit Risk
Credit risk is the risk of loss associated with a counterparty’s inability to fulfill its payment obligations. Financial instruments that potentially subject the Company to a concentration of credit risk consist primarily of cash, cash equivalents, receivables, long-term receivable from JEMSE, and loans to Exar Capital. The Company’s maximum exposure to credit risk for cash, cash equivalents, receivables, long-term receivable from JEMSE, and loans to Exar Capital is the amount disclosed in the consolidated statements of financial position. The Company limits its exposure to credit loss by placing its cash and cash equivalents with major financial institutions and invests only in short-term obligations that are guaranteed by the Canadian government or by Canadian and US chartered banks with expected credit losses estimated to be de minimis. The Company and its subsidiaries, including its investee Minera Exar, may from time to time make short-term investments into Argentinian government securities, financial instruments guaranteed by Argentinian banks and other Argentine securities. These investments may or may not realize short term gains or losses.
Management believes that the credit risk concentration with respect to financial instruments included in cash, cash equivalents, receivables, long-term receivable from JEMSE, and loans to Exar Capital is minimal.
Liquidity Risk
Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company’s approach to managing liquidity is to evaluate current and expected liquidity requirements under both normal and stressed conditions to estimate and maintain sufficient reserves of cash and cash equivalents to meet its liquidity requirements in the short and long term. As the industry in which the Company operates is very capital intensive, the majority of the Company’s spending or that of its investees is related to its capital programs. The Company prepares annual budgets, which are regularly monitored and updated as considered necessary.
LITHIUM AMERICAS CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2021
(Expressed in thousands of US dollars, except for per share amounts; shares and equity instruments in thousands)
| 14. | FINANCIAL INSTRUMENTS (continued) |
|---|
As at June 30, 2021, the Company had a cash and cash equivalents balance of $505,241 to settle current liabilities of $8,961.
The following table summarizes the contractual maturities of the Company’s financial liabilities on an undiscounted basis:
| Years ending December 31, | |||||
|---|---|---|---|---|---|
| 2021 | 2022 | 2023 | 2024 and later | Total | |
| Credit and loan facilities¹ | |||||
| Accounts payable and accrued liabilities | - | - | - | ||
| Obligations under office leases¹ | |||||
| Other obligations¹ | |||||
| Total |
All values are in US Dollars.
^¹^Credit and loan facilities, Obligations under office leases and Other obligations include principal and interest/finance charges.
Market Risk
Market risk incorporates a range of risks. Movement in risk factors, such as market price risk and currency risk, affect the fair values of financial assets and liabilities. The Company is exposed to a foreign currency risk as disclosed below.
Foreign Currency Risk
The Company’s operations in foreign countries are subject to currency fluctuations and such fluctuations may affect the Company’s financial results. The Company reports its financial results in United States dollars (“US$”) and incurs expenditures in Canadian dollars (“CDN$”) and US$ with the majority of the expenditures being incurred in US$ by the Company’s subsidiaries and investees. The Company and its subsidiaries and associates have a US$ functional currency. As at June 30, 2021, the Company held $3,322 in CDN$ denominated cash and cash equivalents. Strengthening/(weakening) of a US$ exchange rate versus CDN$ by 10% would have resulted in a foreign exchange (loss)/gain for the Company of $332 at June 30, 2021.
LITHIUM AMERICAS CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED JUNE 30, 2021
(Expressed in thousands of US dollars, except for per share amounts; shares and equity instruments in thousands)
| 15. | SUBSEQUENT EVENTS |
|---|
On July 12, 2021, the Company announced that it has entered into an agreement to acquire 42,857,143 subscription receipts of Arena Minerals (TSX-V: AN) in a private placement at CDN$0.14 per subscription receipt for total consideration of CDN$6,000 (US$4,800). Pursuant to the agreement, Lithium Americas has the right (i) to participate in future Arena Minerals financings to maintain its pro rata ownership interest in Arena Minerals; and (ii) to appoint a nominee to the Arena Minerals board of directors. These rights are conditioned on Lithium Americas maintaining an ownership interest in Arena Minerals of 7.5% and 10.0% of Arena Minerals’ share capital, respectively.
On July 26, 2021, each subscription receipt was exchanged for one common share of Arena Minerals, and one-half of one common share purchase warrant. Each warrant entitles the holder to acquire one common share of Arena Minerals at CDN$0.25 for a period of 24 months from the date of issuance. On closing, the Company expects to own approximately 12.9% (14.6% on a fully diluted basis) of the issued and outstanding shares of Arena Minerals.
Subsequent to quarter end, the Company received a $7,350 drawdown from its Credit Facility to fund development expenditures on the Cauchari-Olaroz project.
| 23 |
|---|
lac-ex992_9.htm
Exhibit 99.2
LITHIUM AMERICAS MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE SIX MONTHS ENDED JUNE 30, 2021
LITHIUM AMERICAS CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE SIX MONTHS ENDED JUNE 30, 2021
(expressed in US dollars, unless stated otherwise)
BACKGROUND
This Management’s Discussion and Analysis (“MD&A”) of Lithium Americas Corp. (“Lithium Americas”, the “Company”, or “LAC”), prepared as of August 4, 2021, should be read in conjunction with the Company’s unaudited condensed consolidated interim financial statements and the notes thereto for the six months ended June 30, 2021 (“first half 2021 financial statements”), and the audited consolidated financial statements and notes thereto for the year ended December 31, 2020 (“2020 annual financial statements”). Refer to Notes 2 and 3 of the first half 2021 financial statements and Notes 2 and 3 of the 2020 annual financial statements for disclosure of the Company’s significant accounting policies. All amounts are expressed in US dollars, unless otherwise stated. References to CDN$ are to Canadian dollars. This MD&A contains “forward-looking statements,” and readers should read the cautionary note contained in the section entitled “Forward-Looking Statements” of this MD&A regarding such forward-looking statements.
OUR BUSINESS
Lithium Americas Corp. is a Canadian-based resource company focused on the advancement of two significant lithium projects: the Caucharí-Olaroz project (“Caucharí-Olaroz”), located in Jujuy Province of Argentina, and the Thacker Pass project (“Thacker Pass”), located in north-western Nevada, USA. Caucharí-Olaroz is a lithium brine project and is owned by a legal entity in Argentina, Minera Exar S.A. (“Minera Exar”). Thacker Pass is a sedimentary-based lithium property located in the McDermitt Caldera in Humboldt County, Nevada, and is wholly owned by the Company’s subsidiary, Lithium Nevada Corp. (“Lithium Nevada”).
The Company’s head office and principal address is Suite 300, 900 West Hastings Street, Vancouver, British Columbia, Canada, V6C 1E5. The Company trades in Canada on the Toronto Stock Exchange (“TSX”) and in the United States on the New York Stock Exchange (“NYSE”) under the symbol “LAC”. The Company operates in the United States through its wholly owned subsidiary, Lithium Nevada. In Argentina and the Netherlands, the Company operates through equity investees Minera Exar and Exar Capital B.V. respectively, which are governed by a shareholders’ agreement between the Company and Ganfeng Lithium Co. Ltd. (“Ganfeng”) (together the “Caucharí Partners”) that provides Ganfeng with 51% and the Company with 49% interest. The Caucharí Partners collectively own 91.5% of Minera Exar (Caucharí-Olaroz) and 100% of Exar Capital B.V. (a Netherlands entity that provides funding to Minera Exar). Additional information relating to the Company, including the Company’s Annual Information Form (“AIF”), is available on SEDAR at www.sedar.com.
LITHIUM AMERICAS CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE SIX MONTHS ENDED JUNE 30, 2021
(expressed in US dollars, unless stated otherwise)
HIGHLIGHTS
Project development and operations
Caucharí-Olaroz
| • | Construction activities at Caucharí-Olaroz remain on track to achieve first production by mid-2022 on the initial 40,000 tonnes per annum (“tpa”) operation. |
|---|---|
| • | As of June 30, 2021, capital expenditures committed were $545 million (85% of the $641 million budget), of which $471 million (73% of the budget) has been spent. |
| --- | --- |
| o | The Company’s share of the remaining capital expenditure is expected to be fully funded from available credit. |
| --- | --- |
| • | Over 1,200 workers are on site, with over 60% of the total workforce having received at least their first dose of the COVID-19 vaccine. |
| --- | --- |
| • | Evaporation ponds are on track to begin liming in the second half of 2021, with sufficient brine inventory to support production ramp up. |
| --- | --- |
| • | With all major equipment on site, focus is on construction of the chemical and processing plants: |
| --- | --- |
| o | Solid-liquid separation plant is over 73% complete. |
| --- | --- |
| o | Solvent extraction (SX) plant is 65% complete. |
| --- | --- |
| o | Potassium chloride (KCl) plant is over 67% complete. |
| --- | --- |
| • | In May, the Company announced in partnership with Ganfeng, the approval to commence development planning for a second stage expansion of at least an additional 20,000 tpa of lithium carbonate equivalent (“LCE”). |
| --- | --- |
Thacker Pass
| • | Results of a Feasibility Study on the first phase of Thacker Pass (for at least 30,000-35,000 tpa of lithium carbonate) (“Phase 1”) are expected by year end. |
|---|---|
| • | Engineering is underway to consider a 20,000 tpa lithium hydroxide chemical conversion plant, to provide flexibility to meet potential customer and partner needs. |
| --- | --- |
| • | The Company continues to evaluate partnership and financing opportunities for Thacker Pass to advance and de-risk the project. |
| --- | --- |
| • | The process testing facility in Reno, Nevada, continues to operate with enhanced COVID-19 protocols in place and has produced over 30,000 kg of lithium sulphate solution. |
| --- | --- |
| • | In February 2021, claims were filed against the Bureau of Land Management (“BLM”) to appeal the issuance of a Record of Decision (“ROD”) for Thacker Pass. The Company has been advised a final ruling is expected by January 2022. |
| --- | --- |
| • | Construction remains on target to begin in early 2022, following the receipt of remaining state permits and water right transfers, and resolution of the appeal (see Regulatory & Permitting section for additional details). |
| --- | --- |
Corporate
| • | As at June 30, 2021, the Company had $505 million in cash and cash equivalents. |
|---|---|
| • | As at June 30, 2021, the Company had $156 million in undrawn credit, with $124 million drawn from the $205 million senior credit facility and $25 million drawn from its $100 million unsecured, limited recourse, subordinated loan facility. |
| --- | --- |
| • | On June 10, 2021, Kelvin Dushnisky and Jinhee Magie joined the Company’s Board. Mr. Dushnisky previously served as the CEO and a member of the Board of Directors of AngloGold Ashanti Ltd. and as a |
| --- | --- |
LITHIUM AMERICAS CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE SIX MONTHS ENDED JUNE 30, 2021
(expressed in US dollars, unless stated otherwise)
| President and member of the Board of Barrick Gold Corp. Ms. Magie is currently the Chief Financial Officer and Senior Vice President of Lundin Mining Corporation. | |
|---|---|
| • | In July 2021, the Company completed a strategic investment in Arena Minerals Inc. (TSX-V: AN) (“Arena Minerals”) of $5 million for an approximate 12.9% equity interest (14.6% on a fully diluted basis). |
| --- | --- |
| • | The Company engaged a consultant to provide an estimate of the carbon footprint and water impact for Thacker Pass and Caucharí-Olaroz. |
| --- | --- |
LITHIUM AMERICAS CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE SIX MONTHS ENDED JUNE 30, 2021
(expressed in US dollars, unless stated otherwise)
PROJECT PROGRESS IN Q2 2021
Caucharí-Olaroz, Jujuy Province, Argentina
FIGURE A CEMENTING OF THICKENER FIGURE B SX PLANT
LITHIUM AMERICAS CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE SIX MONTHS ENDED JUNE 30, 2021
(expressed in US dollars, unless stated otherwise)
COVID-19
As of the date of this MD&A, mining and construction activities are permissible in the Province of Jujuy, subject to meeting certain health protocols and other requirements. National authorities have imposed several restrictions, particularly the closure of international borders. These restrictions and requirements continue to impact the team’s ability to resume full construction activities as they limit the ability of certain service providers and the workforce to travel to and from the site and the ability to use full construction camp capacity.
The vaccination campaign is progressing in the Province of Jujuy and in Argentina in general. To date, over 60% of our total workers have received their first vaccination.
Health and Safety
The Total Recordable Incident Frequency rate (“TRIFR”) for Caucharí-Olaroz for the six months ending June 30, 2021 was 4.52 per 200,000 hours worked.
Construction Progress
Evaporation Ponds and Production Wells
Earthworks for the 12 km^2^ of planned solar evaporation ponds are 100% complete, and liner installation is approximately 90% complete. Currently, there are 35 production wells drilled and four in progress. As of the date of this MD&A, approximately 16.5 million cubic meters (“m^3^”) of brine have been pumped into the ponds for initial evaporation and process testing. Liming of concentrated brine is anticipated to start in the second half of 2021.
Infrastructure
| • | The access roads and platforms for the wells are 100% complete. |
|---|---|
| • | Construction of the warehouse buildings is 100% complete. |
| --- | --- |
| • | Gas pipeline construction is over 95% complete. |
| --- | --- |
| • | Lime plant construction was completed in Q1 2021 and piping work is more than 95% complete. |
| --- | --- |
| • | The 33 kV power line is more than 70% complete and the 13.2 kV distribution line is more than 94% complete. |
| --- | --- |
| • | Construction of the water pipeline is over 60% complete. |
| --- | --- |
Lithium Carbonate Plant
| • | Critical, long-lead-time equipment is currently under fabrication or has been delivered to site, reducing supply chain risks. |
|---|---|
| • | Solvent extraction SX plant, including equipment installation, is 65% complete. |
| --- | --- |
| • | Solid-liquid separation plant is over 73% complete. The filter presses were installed in early July. |
| --- | --- |
| • | Potassium chloride KCl plant is over 67% complete. The evaporator crystallizer vaporheads were installed in June. |
| --- | --- |
| • | The civil works contractors are at site working on the rest of the lithium carbonate plant (the dilution plant, purification, carbonation and substation). |
| --- | --- |
Capital Expenditures
| • | As of June 30, 2021, committed capital expenditures totaled $545 million or 85% of the capital expenditure budget of $641 million, of which $471 million has been spent or 73% of budget. |
|---|
JEMSE Arrangement
On April 4, 2021, Jujuy Energia y Mineria Sociedad del Estado (“JEMSE”), a mining investment company owned by the government of Jujuy Province in Argentina, completed the exercise of its right to acquire an 8.5% equity interest in Minera Exar. JEMSE will reimburse its $23.5 million pro rata (8.5%) share of the equity financing to fund construction of the Caucharí-Olaroz project to the Caucharí Partners (Lithium Americas and Ganfeng) through the assignment of one-third of the dividends otherwise payable to JEMSE in future periods. In addition, JEMSE’s right to future dividends is subordinate to Minera Exar’s obligation to service its debt, including intercompany loan repayments and interest, used by the Caucharí Partners to finance construction.
LITHIUM AMERICAS CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE SIX MONTHS ENDED JUNE 30, 2021
(expressed in US dollars, unless stated otherwise)
The Caucharí Partners are responsible for funding 100% of Caucharí-Olaroz construction costs and are to receive 100% of the output of Caucharí-Olaroz proportionate to their respective 49%/51% interests. All decisions with respect to the Caucharí-Olaroz project require approval of the Caucharí Partners.
Upon closing of the transaction, the Company recognized a long-term receivable from JEMSE of $5.8 million and a $4.7 million loss (refer to Note 5 of the Company’s first half 2021 financial statements).
Project Financing and Liquidity
As of June 30, 2021, the Company’s 49% share of the remaining capital is fully funded from $156 million of undrawn credit and loan facilities provided by Ganfeng and BCP Innovation Pte Ltd. See further details on the project financings in the section entitled “Liquidity and Capital Resources” below and in the above sections under “Our Business”, and “Highlights”.
Thacker Pass, Nevada, USA
COVID-19
The Company has abided by all state-wide COVID-19 restrictions and protocols. Our staff continue to work from Company offices or home in compliance with social distancing practices.
Regulatory & Permitting
On January 15, 2021, the BLM issued the ROD approving the proposed project and exploration plan for Thacker Pass. The total disturbance footprint for Thacker Pass under the ROD amounts to approximately 5,695 acres. Meanwhile the boundaries of Thacker Pass lands consist of 17,933 acres of land, encompassing both the project and exploration area.
In February 2021, several third parties commenced a proceeding against the BLM challenging the issuance of the ROD. If the claim is successful, the ROD may be declared invalid, which in turn may disrupt Thacker Pass. Potential sources of disruption may include, among other things, a delay in the project whereby BLM would complete additional procedural steps and potentially request modification of aspects of the proposed development approach underlying the ROD in order for the BLM to reissue the ROD. The Company believes that the federal permitting process was conducted thoroughly and completely by the BLM, and the BLM is defending its ROD decision with the Company supporting as intervenor in the proceedings. The final briefing in the case is scheduled to conclude in December 2021 and a final ruling is expected by early 2022.
As of the date of this MD&A, the cultural resources mitigation plan and State dam safety permit have been approved. Third parties have commenced a proceeding that challenges the cultural mitigation plan on the project. A request for a preliminary injunction to halt the approved pre-construction cultural mitigation plan covering an approximate half-acre area of land, was filed in connection with this process and was subsequently denied on July 23, 2021. On July 21, 2021, additional groups filed a petition to intervene, and a ruling is expected in late August 2021. The Company is awaiting results of these rulings before proceeding with the cultural mitigation plan activities. Construction remains on target to begin in early 2022, following the receipt of remaining state-level permits and water right transfers, and resolution of the appeal.
The Company filed for a Water Pollution Control Permit with the Nevada Department of Environment Protection. The Company anticipates that this permit will initially limit mining operations to areas lying above the regional water table. The Company contemplates that the expected Phase 1 will focus on extracting ore from a proposed ‘west-pit area’ that is near surface and above the water table. During the early stages of mining, additional studies will be performed on operational field conditions to determine the best water management options before mining extends below the water table. The Company expects that, as part of long-term mine planning, it will be most efficient from both an economic and environmental management perspective to extract ore from deeper sources and will accordingly seek formal state authorization of a final mitigation approach for mining below the water table.
LITHIUM AMERICAS CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE SIX MONTHS ENDED JUNE 30, 2021
(expressed in US dollars, unless stated otherwise)
Community Engagement
Throughout the project definition and design process, the Company has regularly engaged with stakeholders. Through transparent engagement with the local community, the Company is now part of a Negotiating Work Group (‘Work Group”) along with selected members of the Thacker Pass Concerned Citizens Group (“TPCCG”). The purpose of the Work Group is to develop agreements supported by scientific data and community buy-in to guide the construction and operations of Thacker Pass. The Work Group focuses its discussions on identifying solutions that protect the safety and well-being of community members. The Work Group meets every two weeks, and the Company is committed to quickly resolving community issues and building constructive relations for years to come. Issues being addressed include air quality, water, environmental monitoring, traffic, community benefits, and other issues that are important to the community. A professional facilitator firm, Collaborative Decision Resources, is helping to ensure constructive and progressive dialogue continues with the Work Group. Meetings with the broader community are also being held approximately monthly.
The Company, together with the members from the Fort McDermitt Paiute and Shoshone Tribe continue planning for an 80-hour BuildNV Core Construction training course. Graduates obtain an OSHA 10 safety card and receive certification from the National Center for Construction Education & Research (NCCER). The curriculum is set by the NCCER and taught by a Great Basin College certified instructor. The Company is committed to hiring locally to the greatest extent possible and providing the training required to provide employment opportunities to the local community.
The Company continues to engage with local tribal members to keep them informed of plans for the project, including employment and training opportunities that will be available prior to proposed construction and operations.
Financing and Partnership Strategy
The Company continues to evaluate partnership and financing opportunities for Thacker Pass to advance and de-risk the project.
SELECTED FINANCIAL INFORMATION
Quarterly Information
Selected consolidated financial information is presented as follows:
| (in US$ millions) | 2021 | 2020 | 2019 | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | Q3 | |||||||||
| Total assets | ||||||||||||||||
| Property, plant and equipment | ||||||||||||||||
| Working capital | ||||||||||||||||
| Total liabilities | ||||||||||||||||
| Expenses | ) | ) | ) | ) | ) | ) | ) | ) | ||||||||
| Net (loss)/income for the period | ) | ) | ) | ) | ) | ) | ) | |||||||||
| Basic (loss)/income per common share | ) | ) | ) | ) | ) | ) | ) |
All values are in US Dollars.
Notes:
| 1. | Quarterly amounts added together may not equal to the total reported for the period due to rounding or reclassifications. |
|---|---|
| 2. | Diluted income per share in Q3 2019 was $0.75. In other periods diluted loss per share equals basic loss per share. |
| --- | --- |
| 3. | Working capital is the difference between current assets and current liabilities. |
| --- | --- |
Changes in the Company’s total assets, working capital, liabilities and results were driven mainly by financings, transactions, increases in loans and contributions to Caucharí-Olaroz, expenses in the period and the Company’s share of results of Caucharí-Olaroz.
LITHIUM AMERICAS CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE SIX MONTHS ENDED JUNE 30, 2021
(expressed in US dollars, unless stated otherwise)
In Q1 2021, total assets and working capital increased primarily due to the $377 million in net proceeds raised from the underwritten equity offering.
In Q4 2020, total assets and working capital increased primarily due to $97 million in net proceeds from an at-the-market equity program.
In Q3 2020, total assets, property, plant and equipment and liabilities decreased primarily as a result of derecognizing the Company’s 50% share of Minera Exar’s assets and liabilities and Exar Capital’s borrowings partially offset with $40 million in cash received upon repayment of loans as part of the transaction with Ganfeng which closed on August 26, 2020 (“2020 Caucharí Transaction”).
Net income in Q3 2019 is primarily a result of a gain on closing of the 2019 transaction with Ganfeng of $75 million.
Results of Operations – Net Income Analysis
Six Months Ended June 30, 2021 Compared to the Six Months Ended June 30, 2020
The following table summarizes the key items that resulted in an increase in the loss for the six months ended June 30, 2021 (H1 2021) versus the six months ended June 30, 2020 (H1 2020), as well as certain offsetting items:
| Financial results | Six Months Ended June 30, | Change | ||||
|---|---|---|---|---|---|---|
| (in US$ million) | 2021 | 2020 | ||||
| Exploration expenditures | ) | ) | ) | |||
| General and administrative | ) | ) | ) | |||
| Equity compensation | ) | ) | ||||
| Loss on JEMSE transaction | ) | ) | ||||
| Share of loss of Caucharí-Olaroz project | ) | ) | ||||
| Transaction costs | ) | ) | ||||
| Foreign exchange gain/(loss) | ) | |||||
| Finance costs | ) | ) | ||||
| Finance and other income | ||||||
| Income/(loss) from discontinued operations | ) | |||||
| Tax expense | ) | |||||
| Net Loss | ) | ) | ) |
All values are in US Dollars.
Higher net loss in H1 2021 is primarily attributable to:
| - | an increase in Thacker Pass exploration expenditures related to feasibility study preparation; |
|---|---|
| - | the loss on the JEMSE transaction; |
| --- | --- |
| - | an increase in general and administrative expenses; |
| --- | --- |
| - | increased finance costs (finance costs were capitalized in the comparative period and capitalization ceased upon closing the 2020 Caucharí Transaction in Q3 2020); and |
| --- | --- |
| - | share of loss on the Caucharí-Olaroz project (as the Company transitioned to equity accounting for the investment in the project upon closing the 2020 Caucharí Transaction in Q3 2020). |
| --- | --- |
Higher expenses were partially offset by:
| - | a decrease in equity compensation due to the timing of annual equity grants; |
|---|---|
| - | a decrease in transaction costs following closing of the 2020 Caucharí Transaction; and |
| --- | --- |
| - | a foreign exchange gain versus a loss in the comparative period due to a change in the functional currency of the Company from the Canadian dollar to the US dollar and higher finance income from interest on cash at bank and loans to Exar Capital. |
| --- | --- |
Effective January 1, 2021, the functional currency of Lithium Americas changed from the Canadian dollar to the US dollar as a result of the significant US proceeds from equity offerings and increasing US dollar denominated expenditures. The change in functional currency was accounted for on a prospective basis, with no impact of this change on prior year comparative information.
LITHIUM AMERICAS CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE SIX MONTHS ENDED JUNE 30, 2021
(expressed in US dollars, unless stated otherwise)
Expenses
Exploration expenditures for the six months ended June 30, 2021, of $13.5 million (2020 – $9.7 million) include expenditures incurred for the Thacker Pass project. The increase in the Company’s exploration expenditures is mostly due to higher feasibility study-related costs incurred during Q2 2021 and the timing of permitting and other expenditures on the project.
Equity compensation for the six months ended June 30, 2021 of $2.3 million (2020 - $3.5 million) is a non-cash expense and consists of $0.9 million (2020 - $2.6 million) fair market value of RSUs, and the $1.4 million (2020 - $0.9 million) fair value of PSUs vested during the period. Lower equity compensation during the six months ended June 30, 2021 was mainly due to the timing of grants – the 2019 annual equity compensation for management and directors was granted in Q1 2020 while the 2020 equity compensation was granted in Q4 2020.
Included in General and Administrative expenses during the six months ended June 30, 2021, of $4.9 million (2020 - $3.6 million) are:
| - | Office and administrative expenses of $1.4 million (2020 - $0.6 million), which increased as a result of higher insurance costs due to tight insurance market conditions. |
|---|---|
| - | Professional fees of $1.2 million (2020 - $0.6 million) consisting mainly of legal fees of $0.2 million (2020 - $0.2 million), and consulting fees of $0.9 million (2020 - $0.3 million). The increase is due to the costs of professional consultants related to corporate strategy and other items. |
| --- | --- |
| - | Salaries and benefits of $1.6 million (2020 - $2.1 million) decreased mainly due to the timing and the amount of annual bonus payments in the periods. |
| --- | --- |
Other Items
During the six months ended June 30, 2021, the Company recognized a foreign exchange gain of $0.2 million (2020 – loss of $1.1 million). The gain this year was a result of changing the functional currency for the parent entity from the Canadian dollar to the US dollar and the impact of a strengthening Canadian dollar relative to the US dollar on Canadian monetary balances.
Finance and other income during the six months ended June 30, 2021 was $2.4 million (2020 - $0.2 million) and includes mainly interest income on the Company’s loans to Exar Capital and cash and cash equivalents.
Three Months Ended June 30, 2021 Compared to the Three Months Ended June 30, 2020
The following table summarizes the key items that resulted in an increase in net loss for the three months ended June 30, 2021 (Q2 2021) versus the three months ended June 30, 2020 (Q2 2020), as well as certain offsetting items:
| Financial results | Three Months Ended June 30, | Change | ||||
|---|---|---|---|---|---|---|
| (in US$ million) | 2021 | 2020 | ||||
| Exploration expenditures | ) | ) | ) | |||
| General and administrative | ) | ) | ) | |||
| Equity compensation | ) | ) | ) | |||
| Loss on JEMSE transaction | ) | ) | ||||
| Share of loss of Caucharí-Olaroz project | ) | ) | ||||
| Transaction costs | ) | ) | ) | |||
| Foreign exchange gain | ) | |||||
| Finance costs | ) | ) | ||||
| Finance and other income | ||||||
| Loss from discontinued operations | ) | |||||
| Tax expense | ) | |||||
| Net Loss | ) | ) | ) |
All values are in US Dollars.
LITHIUM AMERICAS CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE SIX MONTHS ENDED JUNE 30, 2021
(expressed in US dollars, unless stated otherwise)
Higher net loss in Q2 2021 is primarily attributable to:
| - | an increase in Thacker Pass exploration expenditures related to feasibility study preparation; |
|---|---|
| - | the loss on the JEMSE transaction; |
| --- | --- |
| - | an increase in general and administrative expenses; |
| --- | --- |
| - | increased finance costs (finance costs were capitalized in the comparative period and capitalization ceased upon closing the 2020 Caucharí Transaction in Q3 2020); |
| --- | --- |
| - | the share of loss on the Caucharí-Olaroz project (as the Company transitioned to equity accounting for the investment in the project upon closing the 2020 Caucharí Transaction); and |
| --- | --- |
| - | a lower foreign exchange gain. |
| --- | --- |
Higher costs in Q2 2021 were partially offset by a higher finance income.
Expenses
Exploration expenditures for Q2 2021 of $8.8 million (2020 – $4.3 million) include expenditures incurred for the Thacker Pass project. The increase in the Company’s exploration expenditures is mostly due to higher feasibility study-related costs incurred during Q2 2020 and the timing of permitting and other expenditures on the project.
Equity compensation for Q2 2021 of $1.0 million (2020 - $0.7 million) is a non-cash expense and consists of the $0.3 million (2020 - $0.3 million) fair market value of RSUs, and $0.7 million (2020 - $0.4 million) fair value of PSUs vested during the period.
Included in General and Administrative expenses during Q2 2021 of $2.6 million (2020 - $1.5 million) are:
| - | Office and administrative expenses of $0.6 million (2020 - $0.3 million), which increased as a result of higher insurance costs. |
|---|---|
| - | Professional fees of $0.7 million (2020 - $0.3 million) consisting mainly of legal fees of $0.2 million (2020 - $0.1 million), and consulting fees of $0.4 million (2020 - $0.2 million). The increase is due to the costs of professional consultants related to corporate strategy and other items. |
| --- | --- |
| - | Salaries and benefits of $0.7 million (2020 - $0.8 million) which were consistent with the prior period. |
| --- | --- |
Other Items
During Q2 2021, the Company recognized a foreign exchange gain of $0.1 million (2020 – $1.3 million). The lower gain versus last year was a result of changing the functional currency for the parent entity from the Canadian dollar to the US dollar and the impact of a strengthening Canadian dollar relative to the US dollar on Canadian monetary balances. Finance and other income during the Q2 2021 was $1.2 million (2020 - $0.05 million) and includes mainly interest income on the Company’s loans to Exar Capital and cash and cash equivalents.
LIQUIDITY AND CAPITAL RESOURCES
| Cash Flow Highlights | Six Months Ended June 30, | |||
|---|---|---|---|---|
| (in US$ million) | 2021 | 2020 | ||
| Cash used in operating activities | ) | ) | ||
| Cash used in investing activities | ) | ) | ||
| Cash provided by financing activities | ||||
| Effect of foreign exchange on cash | ) | |||
| Change in cash and cash equivalents | ) | |||
| Cash and cash equivalents - beginning of the period | ||||
| Cash and cash equivalents - end of the period |
All values are in US Dollars.
As at June 30, 2021, the Company had cash and cash equivalents of $505.2 million and working capital of $499.4 million, compared to cash and cash equivalents of $49.7 million and working capital of $39.8 million (excluding assets held for sale of $4.0 million) as at June 30, 2020.
LITHIUM AMERICAS CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE SIX MONTHS ENDED JUNE 30, 2021
(expressed in US dollars, unless stated otherwise)
In the first half of 2021, the Company drew $28.1 million from the $205 million senior credit facility to fund the Company’s share of Caucharí-Olaroz project construction expenses, with $81.2 million remaining undrawn as at June 30, 2021. In addition, as at June 30, 2021, $75.3 million remains undrawn under the Company’s $100 million unsecured, limited recourse, subordinated loan facility available for the Company’s general corporate purposes.
Liquidity Outlook
Lithium Americas’ share of outstanding construction costs for Caucharí-Olaroz is expected to be fully-funded with the $156.5 million in available credit and loan facilities as at June 30, 2021. The Company has flexibility to use its own funds for its share of outstanding construction costs for Caucharí-Olaroz, subject to the use of proceeds restrictions of the recent equity offerings.
Thacker Pass project permitting and feasibility study costs are expected to be funded from available cash on hand. The Company continues to evaluate partnership and financing opportunities for Thacker Pass to advance and de-risk the project. Proceeds from closing the 2020 Caucharí Transaction, the at-the-market equity program (“ATM Program”) and the Underwritten Public Offering (as defined below) are expected to provide the Company with sufficient financial resources to fund Thacker Pass expenditures and general and administrative expenditures until financing of Thacker Pass is complete or at least for the next eighteen to twenty-four months.
The timing and the amount of Lithium Nevada expenditures are within the control of the Company due to its direct and sole ownership. Pursuant to the agreements governing the Caucharí-Olaroz project, decisions regarding capital budgets for the project require agreement between Lithium Americas and its partner, Ganfeng.
The Company continues to develop its projects and does not generate revenues from operations. The Company’s capital resources are determined by the status of the Company’s projects, and its ability to compete for investor support of its projects. The Company’s access to future financing is always uncertain. There can be no assurance that the Company will be successful in having continued access to significant equity and/or debt funding. Except as disclosed, the Company does not know of any trends, demands, commitments, events or uncertainties that will result in, or that are reasonably likely to result in, its liquidity and capital resources either materially increasing or decreasing at present or in the foreseeable future. The Company does not engage in currency hedging to offset any risk of currency fluctuations.
Operating Activities
Cash used in operating activities during the six months ended June 30, 2021, was $20.0 million compared to $16.6 million during the six months ended June 30, 2020. The significant components of operating activities are discussed in the Results of Operations section above.
Investing Activities
Investing activities used net cash of $28.6 million during the six months ended June 30, 2021, compared to $51.9 million during the six months ended June 30, 2020. During the six months ended June 30, 2021, payments for property, plant and equipment were $0.1 million (2020 – $51.9 million); payments in the comparative period included the Company’s 50% share of the capital expenditures on the Caucharí-Olaroz project before closing the 2020 Caucharí Transaction. During the six months ended June 30, 2021, the Company provided $30.9 million in loans to Exar Capital, contributed $1.4 million to its investment in the Caucharí-Olaroz project and received $4.0 million net proceeds from disposal of assets held for sale.
Financing Activities
ATM Program and Underwritten Public Offering
ATM Program
As of June 30, 2021, the Company used approximately $11.0 million of $96.8 million net proceeds from the ATM Program for general corporate and working capital purposes.
LITHIUM AMERICAS CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE SIX MONTHS ENDED JUNE 30, 2021
(expressed in US dollars, unless stated otherwise)
Underwritten Public Offering
On January 22, 2021, the Company closed the underwritten public offering of shares of its common stock (the “Common Shares”) (the “Underwritten Public Offering”) and issued 18.2 million Common Shares, including 2.3 million Common Shares following the exercise by the underwriters of their over-allotment option. The Common Shares were issued at a price of $22.00 each, for gross proceeds to the Company of approximately $400 million. Total net proceeds of the offering, after deducting underwriters’ fees and other expenses, were approximately $377 million.
As of June 30, 2021, the Company used approximately $11.0 million of the net proceeds from the Underwritten Public Offering as follows:
| Principal Purpose^(^^1)^ | Estimated Amount to be Expended | Approximate Amount Expended | ||
|---|---|---|---|---|
| (USD million) | Per Prospectus Supplement dated January 20, 2021 | As at June 30, 2021 | ||
| Pre-construction and Engineering costs on Thacker Pass Project | 23.2 | 11.0 | ||
| Development Costs on Thacker Pass Project^(^^2)^ | 272.1 | - | ||
| Interest Expense on Senior Credit Facility | 20.0 | - | ||
| General corporate and working capital purposes^(^^3)^ | 61.7 | - | ||
| Total | 377.0 | 11.0 |
Notes:
| (1) | Expenditures are based on budgeted and forecasted costs over the course of 2021 and 2022, with the exception of the development costs at Thacker Pass, which may involve expenditures over a longer term depending on the development timetable established by the Company. |
|---|---|
| (2) | A decision to incur expenditures on development of the Thacker Pass project are subject to several factors, including results of the upcoming feasibility study, the extent and terms of third-party financing that the Company secures for development costs and the Company having made a development decision on the project. The Company may, in its discretion, alternately elect to allocate some or all of these proceeds to repayment of amounts owing under the senior credit facility or to general corporate purposes. |
| --- | --- |
| (3) | Funds included in general corporate and working capital purposes may be allocated to corporate expenses, business development and other business opportunities. |
| --- | --- |
Although the Company intends to expend the net proceeds from the Underwritten Public Offering as set forth above, there may be circumstances where, for sound business reasons, a reallocation of funds may be prudent or necessary, and may vary materially from that set forth above. In addition, management of the Company will have broad discretion with respect to the actual use of the net proceeds from the Underwritten Public Offering.
The actual amount that the Company spends in connection with each of the intended uses of proceeds may vary significantly from the amounts specified above, and will depend on a number of factors, including those listed under the heading “Risk Factors” in the offering prospectus supplement and the accompanying prospectus (available under the Company profile on www.sedar.com and www.edgar.com) and set out in the documents incorporated by reference therein.
Senior Credit Facility
During the six months ended June 30, 2021, the Company received $28.1 million (2020 – $34.2 million) from its drawdowns under the $205 million senior credit facility with $81.2 million undrawn as at June 30, 2021. Subsequent
LITHIUM AMERICAS CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE SIX MONTHS ENDED JUNE 30, 2021
(expressed in US dollars, unless stated otherwise)
to quarter end, the Company drew an additional $7.4 million under this facility to fund development expenditures at Caucharí-Olaroz.
Limited Recourse Loan Facility
As at June 30, 2021, the Company had $75.3 million undrawn and available from the $100 million unsecured, limited recourse, subordinated loan facility (the “Limited Recourse Loan Facility”) provided by Ganfeng, repayable from 50% of Minera Exar’s cash flows and bearing an interest rate of 6-month LIBOR plus 5.5% (subject to an aggregate maximum per annum rate of 10%).
CURRENT SHARE DATA
Issued and outstanding securities of the Company as at the date of this MD&A were as follows:
| Common Shares issued and outstanding | 119,924,317 |
|---|---|
| Restricted Share Units (RSUs) | 2,436,387 |
| Deferred Share Units (DSUs) | 236,089 |
| Stock Options | 1,711,875 |
| Performance Share Units (PSUs) | 1,161,214 |
Each of the classes of convertible securities is convertible to Common Shares on a one-for-one basis, except for PSUs. The number of shares issuable upon vesting of PSUs depends on the performance of the Company’s shares compared to a prescribed peer group of companies and can vary from zero to up to two times the number of PSUs granted.
RELATED PARTY TRANSACTIONS
Minera Exar, the Company’s equity accounted investee, entered into the following transactions with companies controlled by the family of its President, who is also a director of Lithium Americas:
| - | Los Boros Option Agreement, entered into with Grupo Minero Los Boros on March 28, 2016, for the transfer to Minera Exar of title to certain mining properties that comprised a portion of the Caucharí-Olaroz project (refer to Note 5 of the Company’s Q2 2021 unaudited condensed consolidated interim financial statements filed on SEDAR). |
|---|---|
| - | Expenditures under the construction services contract for the Caucharí-Olaroz project with Magna Construcciones S.R.L., were $3.9 million during the six months ended June 30, 2021 (on a 100% basis). |
| --- | --- |
During the six months ended June 30, 2021, Minera Exar paid director’s fees to its President, who is also a director of the Company, of $37 thousand (2020 - $37 thousand) (on a 100% basis). During the six months ended June 30, 2021, the Company paid $0.7 million, of which $0.3 million was paid in cash and $0.4 million in RSUs, to a former director and its former President, South American Operations pursuant to an employment agreement that has since been replaced with a 12-month advisory consulting agreement with a monthly fee of $14 thousand and agreed that no director fees will be paid for the duration of this agreement.
The amounts due to related parties arising from the above transactions are unsecured, non-interest bearing and have no specific terms of payment.
Transactions with Ganfeng, a related party of the Company by virtue of its position as a shareholder and a lender to the Company, are disclosed in Notes 5, 7 and 15 of the Company’s first half 2021 financial statements filed on SEDAR.
LITHIUM AMERICAS CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE SIX MONTHS ENDED JUNE 30, 2021
(expressed in US dollars, unless stated otherwise)
Compensation of Key Management
Key management includes the directors of the Company and the executive management team. The remuneration of directors and members of the executive management team was as follows (in USD million):
| (USD million) | Six Months EndedJune 30, 2021 | Six Months Ended <br>June 30, 2020 |
|---|---|---|
| Equity compensation | ||
| Salaries, bonuses, benefits and directors' fees included in general and administrative expenses | ||
| Salaries, bonuses and benefits included in exploration expenditures | ||
| Salaries and benefits capitalized to Investment in Caucharí-Olaroz project | ||
All values are in US Dollars.
Amounts due to directors and the executive management team as at June 30, 2021 consist of $0.1 million due to the independent directors for Q2 2021 directors’ fees.
| (USD million) | June 30, 2021 | December 31, 2020 |
|---|---|---|
| Total due to directors and executive team |
All values are in US Dollars.
CONTRACTUAL OBLIGATIONS
As at June 30, 2021, the Company had the following contractual obligations (undiscounted, in USD million):
| (USD million) | 2021 | 2022 | 2023 | 2024 and later | Total |
|---|---|---|---|---|---|
| Credit and loan facilities¹ | |||||
| Accounts payable and accrued liabilities | - | - | - | ||
| Obligations under office leases¹ | |||||
| Other obligations¹ | |||||
| Total |
All values are in US Dollars.
^¹^ Credit and loan facilities, Obligations under office leases and Other obligations include principal and interest/finance charges.
^2^ Amounts added together may not equal to the total reported for the period due to rounding
The Company’s commitments related to construction activities, royalties, option payments and annual fees to the aboriginal communities are disclosed in Note 5 of the Company’s first half 2021 financial statements and Notes 5 and 7 of the Company’s 2020 annual financial statements (filed on SEDAR), most of which will be incurred in future if the Company continues to hold the subject property, continues construction or starts production.
FINANCIAL INSTRUMENTS
Financial assets and liabilities are recognized when the Company becomes a party to the contractual provisions of the instrument. Financial assets are derecognized when the rights to receive cash flows from the assets have expired or have been transferred and the Company has transferred substantially all risks and rewards of ownership.
All of the Company’s financial instruments are classified into financial assets and liabilities measured at amortized cost. All financial instruments are initially measured in the statement of financial position at fair value plus transaction costs that are directly attributable to the acquisition or issue of the financial asset or financial liability.
LITHIUM AMERICAS CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE SIX MONTHS ENDED JUNE 30, 2021
(expressed in US dollars, unless stated otherwise)
Financial assets are measured at amortized cost if they are held for the collection of contractual cash flows where those cash flows solely represent payments of principal and interest. The Company’s intent is to hold these financial assets in order to collect contractual cash flows. The contractual terms give rise to cash flows on specified dates that are solely payments of principal and interest on the principal amount outstanding.
The Company assesses on a forward-looking basis the expected credit losses associated with its financial assets carried at amortized cost. The impairment methodology applied depends on whether there has been a significant increase in credit risk.
The Company and its subsidiaries, including its investee Minera Exar, may from time to time make short-term investments into Argentinian government securities, financial instruments guaranteed by Argentinian banks and other Argentine securities. These investments may or may not realize short term gains or losses.
For additional details about the Company’s financial instruments please refer to the Note 14 “Financial instruments” of the Company’s first half 2021 financial statements available on SEDAR.
OFF-BALANCE SHEET ARRANGEMENTS
The Company’s off-balance sheet arrangements related to its exploration and evaluation assets are disclosed in Notes 5 and 7 of the Company’s first half 2021 financial statements.
DECOMMISSIONING PROVISION AND RECLAMATION BOND
The carrying value of the liability for decommissioning that arose to date as a result of exploration activities is $0.3 million for Thacker Pass, as at June 30, 2021. The Company’s $1.4 million reclamation bond payable to the BLM was guaranteed by a third-party insurance company. The bond guarantee is renewed annually and was previously secured by the Company’s $0.15 million restricted cash which was released in Q1 2021.
CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS
Please refer to the Company’s annual MD&A for the year ended December 31, 2020, for Critical Accounting Estimates and Judgements disclosure and Accounting Policies disclosure. The nature and amount of significant estimates and judgements made by management in applying the Company’s accounting policies and the key sources of estimation uncertainty as well as accounting policies applied during the six months ended June 30, 2021, were substantially the same as those that management applied to the consolidated financial statements as at and for the year ended December 31, 2020, other than as described below.
COVID-19 Uncertainty
In March 2020, the World Health Organization declared a global pandemic related to COVID-19. Many countries, including Canada, the United States and Argentina, where the Company operates, announced mandatory emergency measures and restrictions on businesses and individuals to mitigate the spread of the virus. The outbreak and the related mitigation measures have had and will continue to have an adverse impact on global economic conditions as well as on the Company’s activities. The effects of the pandemic will ultimately depend on many factors that are out of the Company’s control, including but not limited to, the severity, extent and duration of the pandemic or any resurgences in the future, the availability of approved vaccines and the timing for completion of vaccine distribution programs around the globe.
During the six months ended June 30, 2021, construction activities at Caucharí-Olaroz advanced while strictly complying with COVID-19 protocols, as developed by Minera Exar and approved by authorities in Jujuy province where the project is located. Construction costs related to Caucharí-Olaroz continue to be capitalized in accordance with the Company’s policy, including costs arising from construction of the project during the pandemic such as testing and quarantining of employees, rental of additional camp facilities in order to comply with social distancing requirements, and other additional contractors’ costs as a result of COVID-19 restrictions.
LITHIUM AMERICAS CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE SIX MONTHS ENDED JUNE 30, 2021
(expressed in US dollars, unless stated otherwise)
Functional Currency
Items included in the financial statements of the Company and each of the Company’s subsidiaries are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). Effective January 1, 2021, the functional currency of Lithium Americas changed from the Canadian dollar to the US dollar as a result of the significant US proceeds from equity offerings and increasing amounts of expenditures denominated in US dollars. The change in functional currency was accounted for on a prospective basis, with no impact of this change on prior year comparative information.
Long-Term Receivable from JEMSE
In Q2 2021, JEMSE completed the exercise of its ownership right to an 8.5% interest in Minera Exar and will reimburse its $23.5 million pro rata (8.5%) share of the equity financing for the construction of the Caucharí-Olaroz project to the Company and Ganfeng through the assignment of one-third of the dividends otherwise payable to JEMSE in future periods. As a result of JEMSE exercising its right, the Company recognized a reduction in its ownership interest in Minera Exar in exchange for a long-term receivable from JEMSE with an estimated fair value of $5.8 million. The fair value of the long-term receivable from JEMSE was calculated by discounting the Company’s $10.5 million share of JEMSE’s future payments, assuming payments start after five years and a 10% discount rate. Estimation of timing for payment is based on the status of construction and expected cash flows of Minera Exar.
SUBSEQUENT EVENT
On July 12, 2021, the Company announced that it has entered into an agreement to acquire 42,857,143 subscription receipts of Arena Minerals (TSX-V: AN) in a private placement at CDN$0.14 per subscription receipt for total consideration of CDN$6.0 million (US$4.8 million). Pursuant to the agreement, Lithium Americas has the right (i) to participate in future Arena Minerals financings to maintain its pro rata ownership interest in Arena Minerals; and (ii) to appoint a nominee to the Arena Minerals board of directors. These rights are conditioned on Lithium Americas maintaining an ownership interest in Arena Minerals of 7.5% and 10.0% of Arena Minerals’ share capital, respectively.
On July 26, 2021, each subscription receipt was exchanged for one common share of Arena Minerals, and one-half of one common share purchase warrant. Each warrant entitles the holder to acquire one common share of Arena Minerals at CDN$0.25 for a period of 24 months from the date of issuance. On closing, the Company is expected to own approximately 12.9% (14.6% on a fully diluted basis) of the issued and outstanding shares of Arena Minerals.
RISKS AND UNCERTAINTIES
For risks and uncertainties faced by the Company, please refer to the following disclosure documents filed on the Company’s profile on SEDAR at www.sedar.com and EDGAR at www.edgar.com: annual MD&A for the year ended December 31, 2020 in the section entitled “Risks and Uncertainties”, as well as the Annual Information Form for the year ended December 31, 2020 in the section entitled “Risk Factors”.
CHANGES IN DIRECTORS AND MANAGEMENT
On June 10, 2021, following the Company’s Annual General Meeting of Shareholders, Kelvin Dushnisky and Jinhee Magie joined the Company’s Board of Directors while Gabriel Rubacha did not stand for re-election and ceased to be a director of the Company.
The Company’s Board now consist of nine diverse members, of which six are independent and two are women.
TECHNICAL INFORMATION AND QUALIFIED PERSON
Detailed scientific and technical information on the Caucharí-Olaroz project can be found in the NI 43-101 technical report titled “Updated Feasibility Study and Reserve Estimation to Support 40,000 tpa Lithium Carbonate Production at Caucharí-Olaroz Salars, Jujuy Province, Argentina” that was filed on SEDAR. The technical report has an
LITHIUM AMERICAS CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE SIX MONTHS ENDED JUNE 30, 2021
(expressed in US dollars, unless stated otherwise)
effective date of September 30, 2020, and was prepared by Ernest Burga, P.Eng., David Burga, P.Geo., Daniel Weber, P.G., RM-SME, Anthony Sanford, Pr.Sci.Nat., and Marek Dworzanowski, CEng, PrEng., each of whom is a “Qualified Person” for the purposes of NI 43-101.
Detailed scientific and technical information on the Thacker Pass project can be found in the NI 43-101 technical report dated August 1, 2018, entitled “Technical Report on the Pre-Feasibility Study for the Thacker Pass project, Humboldt County, Nevada, USA” that was filed on SEDAR. The Thacker Pass technical report has an effective date of August 1, 2018, and was prepared by Reza Ehsani, P.Eng., Louis Fourie, P.Geo., Andrew Hutson, FAusIMM, BE (Mining), Daniel Peldiak, P.Eng., Rob Spiering, P.Eng., John Young, B.Sc., SME-RM and Ken Armstrong, P.Eng., each of whom is a “Qualified Person” for the purposes of NI 43-101.
Copies of both reports are available on the Company’s website at www.lithiumamericas.com and on the Company’s SEDAR profile at www.sedar.com.
The scientific and technical information in this MD&A has been reviewed and approved by Dr. Rene LeBlanc, a “Qualified Person” for purposes of NI 43-101 by virtue of his experience, education and professional association. Dr. LeBlanc is the Chief Technical Officer of the Company.
DISCLOSURE CONTROLS AND PROCEDURES
Disclosure controls and procedures are designed to provide reasonable assurance that information required to be disclosed by the Company in its annual filings, interim filings or other reports filed under securities legislation is recorded, processed, summarized and reported within the time periods specified by securities regulators and include controls and procedures designed to ensure that information required to be disclosed by the Company in its annual filings, interim filings or other reports filed under securities legislation is accumulated and communicated to the issuer’s management, including its certifying officers, as appropriate to allow timely decisions regarding required disclosure. The Company’s management designed the disclosure controls and procedures to provide reasonable assurance that material information relating to the Company, including its consolidated subsidiaries, is made known to them on a timely basis. The Company’s management believes that any disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met.
CHANGES TO INTERNAL CONTROLS OVER FINANCIAL REPORTING
National Instrument 52-109 requires public companies in Canada to disclose in their MD&A any change in internal controls over financial reporting (“ICFR”) during the most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, ICFR.
Many of our corporate office staff and site administrative staff continued to work remotely in the second quarter of 2021. We continue to retain documentation in electronic form as a result of remote work, consistent with our practices in 2020. There have been no significant changes in our internal controls during the quarter ended June 30, 2021 that have materially affected, or are reasonably likely to materially affect, ICFR.
INTERNAL CONTROLS OVER FINANCIAL REPORTING
Until June 30, 2021, as a U.S. listed public company with less than $1.07 billion in gross revenue, the Company qualified as an “emerging growth company” (“EGC”) under the Jumpstart Our Business Startups Act, or the JOBS Act. As an EGC, the Company was exempt from Section 404(b) of the Sarbanes-Oxley Act of 2002, which generally requires that a public company’s registered public accounting firm provide an attestation report relating to management’s assessment of internal control over financial reporting, as defined in Rules 13a‐15(f) and 15d-15(e) under the U.S. Exchange Act.
The status of an EGC is retained until the earliest of (a) the last day of the fiscal year in which a company has annual gross revenues of $1.07 billion or more; (b) the last day of the fiscal year following the fifth anniversary of the date of the first sale of the company’s common stock pursuant to an effective registration statement under the
LITHIUM AMERICAS CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE SIX MONTHS ENDED JUNE 30, 2021
(expressed in US dollars, unless stated otherwise)
Securities Act of 1933; (c) the date on which the company has, during the previous three-year period, issued more than $1 billion in nonconvertible debt; or (d) the date on which the company is deemed to be a “large accelerated filer”, as defined in Rule 12b-2 under the U.S. Exchange Act.
As a result of the increase in the Company’s market capitalization, as of June 30, 2021, Lithium Americas was deemed to become a “large accelerated filer” and the Company engaged its registered public accounting firm to provide an attestation report relating to management’s assessment of ICFR for the year ended December 31, 2021, as defined in Rules 13a‐15(f) and 15d-15(e) under the U.S. Exchange Act.
ICFR are designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with IFRS. Management is responsible for the design of the Company’s ICFR.
The Company’s ICFR include policies and procedures that pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and disposition of assets, provide reasonable assurance that transactions are recorded as necessary to permit the preparation of the financial statements in accordance with IFRS and that receipts and expenditures are being made only in accordance with the authorization of management and directors of the Company, and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of assets that could have a material effect on the financial statements.
Due to their inherent limitations, ICFR can provide only reasonable assurance and may not prevent or detect misstatements. Furthermore, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
FORWARD-LOOKING STATEMENTS
This MD&A contains “forward-looking information” within the meaning of applicable Canadian securities legislation and “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995 (collectively referred to herein as “forward-looking information”). These statements relate to future events or the Company’s future performance. All statements, other than statements of historical fact, may be forward-looking information. Information concerning mineral resource and mineral reserve estimates also may be deemed to be forward-looking information in that it reflects a prediction of mineralization that would be encountered if a mineral deposit were developed and mined. Forward-looking information generally can be identified by the use of words such as “seek”, “anticipate”, “plan”, “continue”, “estimate”, “expect”, “may”, “will”, “project”, “predict”, “propose”, “potential”, “target”, “intend”, “could”, “might”, “should”, “believe”, “scheduled”, “implement” and similar words or expressions. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking information.
In particular, this MD&A contains forward-looking information, including, without limitation, with respect to the following matters or the Company’s expectations relating to such matters: the impacts of COVID-19 on the availability and movement of personnel, supplies and equipment and on the timing for regulatory approvals and permits, construction by Minera Exar, in which the Company has a co-ownership interest with Ganfeng, at the Caucharí-Olaroz project, and on budgets and costs and further guidance in this regard, and on third parties providing services to the Company in respect of the Thacker Pass project or to Minera Exar with respect to the Caucharí-Olaroz Project; successful development of the Caucharí-Olaroz and Thacker Pass projects, including timing, progress, construction, milestones, anticipated production, and results thereof; expectations and anticipated impact of the COVID-19 outbreak, including with regard to the health and safety of the Company’s and Minera Exar’s workforce, COVID-19 protocols and their efficacy, and impacts on timelines and budgets; statements regarding anticipated decision making with respect to Minera Exar or the Thacker Pass project; capital expenditures and programs; development of mineral resources and mineral reserves; government regulation of mining operations and treatment under governmental and taxation regimes; the realization of mineral resources and mineral reserves estimates, including whether mineral resources will ever be developed into mineral reserves and information and underlying assumptions related thereto; the timing, cost, quantity, capacity, quality and product type of future production at the Thacker Pass and Caucharí-Olaroz projects; expected outcome and timing of environmental surveys, permit applications and regulatory authorizations, and other environmental matters; the expected outcome
LITHIUM AMERICAS CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE SIX MONTHS ENDED JUNE 30, 2021
(expressed in US dollars, unless stated otherwise)
of community engagement activities with local communities for the Thacker Pass Project; the timing, outcome and expected impact of litigation concerning the Thacker Pass project; the Company’s funding requirements and ability to raise capital; budget estimates and expected expenditures to be made by the Company on its properties; the expected use of proceeds raised from prior financings; results of the Company’s engineering, design and permitting program at the Thacker Pass project, and that the Company meets deadlines and receives permits as anticipated; successful results from the Company’s testing facility and third-party tests related thereto; timing, results and completion of a feasibility study for the Thacker Pass project; the Company’s share of the expected capital expenditures for the construction of the Caucharí-Olaroz project, and expenditures for permitting and Thacker Pass feasibility study activities at the Thacker Pass project; ability to achieve capital cost efficiencies; stability and inflation related to the Argentinian peso, whether the Argentinian government implements additional foreign exchange and capital controls, and the effect of current or any additional regulations on the Company’s operations; the Company’s anticipated ownership interest in holdings of shares, warrants and other securities issued by third parties; and the potential for partnership and financing scenarios for the Thacker Pass project.
Forward-looking information does not take into account the effect of transactions or other items announced or occurring after the statements are made. Forward-looking information is based upon a number of expectations and assumptions and is subject to a number of risks and uncertainties, many of which are beyond the Company’s control, that could cause actual results to differ materially from those that are disclosed in or implied by such forward-looking information. With respect to forward-looking information listed above and incorporated by reference herein, the Company has made assumptions regarding, among other things:
| • | current technological trends; |
|---|---|
| • | successful operations under the co-ownership structure, and maintaining a cordial business relationship between the Company and Ganfeng for the Caucharí-Olaroz project; |
| --- | --- |
| • | ability of the Company to fund, advance and develop the Caucharí-Olaroz project and the Thacker Pass project, and the respective impacts of the projects when production commences; |
| --- | --- |
| • | the Company’s ability to operate in a safe and effective manner; |
| --- | --- |
| • | uncertainties relating to receiving and maintaining mining, exploration, environmental and other permits or approvals in Nevada and Argentina, and the expected outcome of any complaints or claims made or that could be made concerning the environmental permitting process in the United States for the Thacker Pass project; |
| --- | --- |
| • | pricing and demand for lithium, including that such demand is supported by growth in the electric vehicle market; |
| --- | --- |
| • | the impact of increasing competition in the lithium business, and LAC’s competitive position in the industry; |
| --- | --- |
| • | commodity prices generally, currency exchange rates, interest rates, and general economic conditions; |
| --- | --- |
| • | a stable and supportive legislative, regulatory and community environment in the jurisdictions where the Company operates; |
| --- | --- |
| • | stability and inflation of the Argentine peso, including any foreign exchange or capital controls which may be enacted in respect thereof, and the effect of current or any additional regulations on the Company’s operations; |
| --- | --- |
| • | the impact of unknown financial contingencies, including litigation costs, on the Company’s operations; |
| --- | --- |
| • | gains or losses, in each case, if any, from short-term investments in Argentine bonds and equities; |
| --- | --- |
| • | estimates of and unpredictable changes to the market prices for lithium products; |
| --- | --- |
| • | exploration, development and construction costs for the Caucharí-Olaroz project and the Thacker Pass project, including the impact of COVID-19 on such costs; |
| --- | --- |
| • | estimates of mineral resources and mineral reserves at the Company’s properties, including whether resources will ever be developed into reserves; |
| --- | --- |
| • | reliability of technical data; |
| --- | --- |
LITHIUM AMERICAS CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE SIX MONTHS ENDED JUNE 30, 2021
(expressed in US dollars, unless stated otherwise)
| • | anticipated timing and results of exploration, development and construction activities, including the impact of COVID-19 on such timing; |
|---|---|
| • | timely responses from governmental agencies responsible for reviewing and considering the Company’s permitting activities at its projects, and the timely resolution of any litigation concerning the Company’s projects; |
| --- | --- |
| • | the ability to develop and achieve production at any of the Company’s mineral exploration and development properties; |
| --- | --- |
| • | that the benefits of prior and future transactions with partners and lenders will be achieved; |
| --- | --- |
| • | the impact of COVID-19 on the Company’s business; |
| --- | --- |
| • | approval of pending patents; |
| --- | --- |
| • | accuracy of current development budget and construction estimates; and |
| --- | --- |
| • | preparation of a development plan for lithium production and a feasibility study for the Thacker Pass project. |
| --- | --- |
Although the Company believes that the assumptions and expectations reflected in such forward-looking information are reasonable, we can give no assurance that these assumptions and expectations will prove to be correct. Since forward-looking information inherently involves risks and uncertainties, undue reliance should not be placed on such information.
The Company’s actual results could differ materially from those anticipated in any forward-looking information as a result of the risk factors contained in this MD&A, including but not limited to, the factors referred to under the heading “Risks and Uncertainties” in this MD&A. Such risks also include, but are not limited to the following: the impacts of COVID-19 on the availability and movement of personnel, supplies and equipment and on the timing for regulatory approvals and permits, construction by Minera Exar, in which the Company has a co-ownership interest with Ganfeng and JEMSE, at the Caucharí-Olaroz project, and on third parties providing services to the Company in respect of the Thacker Pass project or to Minera Exar with respect to the Caucharí-Olaroz project; the Company’s mineral properties may not be developed as planned and uncertainty of whether production will commence at the Company’s mineral exploration properties or the properties in which it has an interest; cost overruns; risks associated with the Company’s ability to successfully secure adequate funding; market prices affecting the ability to develop the Company's mineral properties, and properties in which the company has an interest; risks associated with co-ownership arrangements; risk to the growth of lithium markets; lithium prices; inability to obtain required governmental permits and government-imposed limitations on operations; technology risk; inability to achieve and manage expected growth; political risk associated with foreign operations, including co-ownership arrangements with foreign domiciled partners; emerging and developing market risks; risks associated with not having production experience; operational risks; changes in government regulations; changes to environmental requirements; failure to obtain or maintain necessary licenses, permits or approvals; insurance risk; receipt and security of mineral property titles and mineral tenure risk; changes in project parameters as plans continue to be refined; changes in legislation, governmental or community policy; changes in public perception concerning mining projects generally; mining industry competition; market risk; volatility in global financial condition; uncertainties associated with estimating Mineral Resources and Mineral Reserves, including uncertainties relating to the assumptions underlying Mineral Resource and Mineral Reserve estimates; and whether Mineral Resources will ever be converted into Mineral Reserves; whether the Company is able to successfully monetize any increase in off-take from any increased development plan, and the expected benefits from prior and future transactions and borrowings; the addition of further debt on the Company’s balance sheet; risks related to investments in Argentine bonds and equities; opposition to development of the Company’s mineral properties; the outcome of any litigation concerning the Company’s mineral properties; lack of unitization and reservoir management rules; surface access risk; geological, technical, drilling or processing problems; uncertainties in estimating capital and operating costs, cash flows and other project economics; liabilities and risks, including environmental liabilities and risks inherent in mineral extraction operations; health and safety risks; risks related to the stability and inflation of the Argentine peso, including any foreign exchange or capital controls which may be enacted in respect thereof, and the effect of current and any additional regulations on the Company’s operations; risks related to unknown financial contingencies, including litigation costs, on the Company’s operations; unanticipated results of exploration activities; unpredictable weather conditions; unanticipated delays in preparing technical studies; inability to generate profitable operations; restrictive covenants in debt instruments; lack of availability of additional financing on terms acceptable to the Company and/or its co-owners for any co-ownership interests; shareholder dilution; intellectual property risk; dependency on key personnel; payment of dividends; competition for, amongst other things, capital, undeveloped lands, skilled personnel, equipment and inputs; fluctuations in currency exchange and interest rates; regulatory risk, including as a result of the Company’s dual-exchange listing and increased costs thereof; conflicts of interest;
LITHIUM AMERICAS CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE SIX MONTHS ENDED JUNE 30, 2021
(expressed in US dollars, unless stated otherwise)
Common Share price volatility; and cybersecurity risks and threats. Consequently, actual results and events may vary significantly from those included in, contemplated or implied by such statements.
Readers are cautioned that the foregoing lists of factors are not exhaustive. The forward-looking information contained in this MD&A is expressly qualified by these cautionary statements. All forward-looking information in this MD&A speaks as of the date of this MD&A. The Company does not undertake any obligation to update or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as required by law. All forward-looking information contained in this MD&A is expressly qualified in its entirety by this cautionary statement. Additional information about these assumptions and risks and uncertainties is contained in our filings with securities regulators, including our most recent AIF, which are available on SEDAR at www.sedar.com.
| 22 |
|---|
lac-ex993_10.htm
Exhibit 99.3
Form 52-109F2
Certification of Interim Filings
Full Certificate
I, Jonathan Evans, Chief Executive Officer of Lithium Americas Corp., certify the following:
| 1. | Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Lithium Americas Corp. (the “issuer”) for the interim period ended June 30, 2021. |
|---|---|
| 2. | No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings. |
| --- | --- |
| 3. | Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings. |
| --- | --- |
| 4. | Responsibility: The issuer’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer. |
| --- | --- |
| 5. | Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings |
| --- | --- |
| (a) | designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that |
| --- | --- |
| (i) | material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and |
| --- | --- |
| (ii) | information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and |
| --- | --- |
| (b) | designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP. |
| --- | --- |
| 5.1 | Control framework: The control framework the issuer’s other certifying officer and I used to design the issuer’s ICFR is Internal Control – Integrated Framework (2013 COSO Framework) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). |
| --- | --- |
| 5.2 | ICFR – material weakness relating to design: N/A |
| --- | --- |
| 5.3 | Limitation on scope of design: N/A |
| --- | --- |
| 6. | Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on April 1, 2021 and ended on June 30, 2021 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR. |
| --- | --- |
Date: August 5, 2021
| “Jonathan Evans” |
|---|
| Jonathan Evans |
| Chief Executive Officer |
2
lac-ex994_6.htm
Exhibit 99.4
Form 52-109F2
Certification of Interim Filings
Full Certificate
I, Eduard Epshtein, Chief Financial Officer of Lithium Americas Corp., certify the following:
| 1. | Review: I have reviewed the interim financial report and interim MD&A (together, the “interim filings”) of Lithium Americas Corp. (the “issuer”) for the interim period ended June 30, 2021. |
|---|---|
| 2. | No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings. |
| --- | --- |
| 3. | Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings. |
| --- | --- |
| 4. | Responsibility: The issuer’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings, for the issuer. |
| --- | --- |
| 5. | Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other certifying officer(s) and I have, as at the end of the period covered by the interim filings |
| --- | --- |
| (a) | designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that |
| --- | --- |
| (i) | material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and |
| --- | --- |
| (ii) | information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and |
| --- | --- |
| (b) | designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP. |
| --- | --- |
| 5.1 | Control framework: The control framework the issuer’s other certifying officer and I used to design the issuer’s ICFR is Internal Control – Integrated Framework (2013 COSO Framework) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). |
| --- | --- |
| 5.2 | ICFR – material weakness relating to design: N/A |
| --- | --- |
| 5.3 | Limitation on scope of design: N/A |
| --- | --- |
| 6. | Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer’s ICFR that occurred during the period beginning on April 1, 2021 and ended on June 30, 2021 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR. |
| --- | --- |
Date: August 5, 2021
| “Eduard Epshtein” |
|---|
| Eduard Epshtein |
| Chief Financial Officer |
2
lac-ex995_8.htm
Exhibit 99.5
| NEWS RELEASE |
|---|
Lithium Americas Reports Second Quarter 2021 Results
August 5, 2021 - Vancouver, Canada: Lithium Americas Corp. (TSX: LAC) (NYSE: LAC) (“Lithium Americas” or the “Company”) has reported unaudited financial and operating results for the second quarter ended June 30, 2021.
HIGHLIGHTS
Caucharí-Olaroz
| • | Construction activities at Caucharí-Olaroz remain on track to achieve first production by mid-2022 on the initial 40,000 tonnes per annum (“tpa”) operation. |
|---|---|
| • | As of June 30, 2021, capital expenditures committed were $545 million (85% of the $641 million budget), of which $471 million (73% of the budget) has been spent. |
| --- | --- |
| o | The Company’s share of the remaining capital expenditure is expected to be fully funded from available credit. |
| --- | --- |
| • | Over 1,200 workers are on site, with over 60% of the total workforce having received at least their first dose of the COVID-19 vaccine. |
| --- | --- |
| • | Evaporation ponds are on track to begin liming in the second half of 2021, with sufficient brine inventory to support production ramp up. |
| --- | --- |
| • | With all major equipment on site, focus is on construction of the chemical and processing plants: |
| --- | --- |
| o | Solid-liquid separation plant is over 73% complete. |
| --- | --- |
| o | Solvent extraction (SX) plant is 65% complete. |
| --- | --- |
| o | Potassium chloride (KCl) plant is over 67% complete. |
| --- | --- |
| • | In May, the Company announced in partnership with Ganfeng Lithium Co. Ltd., the approval to commence development planning for a second stage expansion of at least an additional 20,000 tpa of lithium carbonate equivalent (“LCE”). |
| --- | --- |
Thacker Pass
| • | Results of a Feasibility Study on the first phase of Thacker Pass (for at least 30,000-35,000 tpa of lithium carbonate) (“Phase 1”) are expected by year end. |
|---|---|
| • | Engineering is underway to consider a 20,000 tpa lithium hydroxide chemical conversion plant, to provide flexibility to meet potential customer and partner needs. |
| --- | --- |
| • | The Company continues to evaluate partnership and financing opportunities for Thacker Pass to advance and de-risk the project. |
| --- | --- |
| • | The process testing facility in Reno, Nevada, continues to operate with enhanced COVID-19 protocols in place and has produced over 30,000 kg of lithium sulphate solution. |
| --- | --- |
| • | In February 2021, claims were filed against the Bureau of Land Management to appeal the issuance of a Record of Decision for Thacker Pass. The Company has been advised a final ruling is expected by January 2022. |
| --- | --- |
| • | Construction remains on target to begin in early 2022, following the receipt of remaining state permits and water right transfers, and resolution of the appeal. |
| --- | --- |
Corporate:
| • | As at June 30, 2021, the Company had $505 million in cash and cash equivalents and $156 million in undrawn credit. |
|---|---|
| • | On June 10, 2021, Kelvin Dushnisky and Jinhee Magie joined the Company’s Board. Mr. Dushnisky previously served as the CEO and a member of the Board of Directors of AngloGold Ashanti Ltd. and as a President and member of the Board of Barrick Gold Corp. Ms. Magie is currently the Chief Financial Officer and Senior Vice President of Lundin Mining Corporation. |
| --- | --- |
| • | In July 2021, the Company completed a strategic investment in Arena Minerals Inc. (TSX-V: AN) (“Arena Minerals”) of $5 million for an approximate 12.9% equity interest (14.6% on a fully diluted basis). |
| --- | --- |
| • | The Company engaged a consultant to provide an estimate of the carbon footprint and water impact for Thacker Pass and Caucharí-Olaroz. |
| --- | --- |
FINANCIAL RESULTS
Selected consolidated financial information is presented as follows:
| (in US$ million except per share information) | Quarter ended June 30, | |
|---|---|---|
| 2021 | 2020 | |
| Expenses | ||
| Net loss | ||
| Loss per share – basic |
All values are in US Dollars.
| (in US$ million) | As at June 30, 2021 | As at December 31, 2020 |
|---|---|---|
| Cash and cash equivalents | ||
| Total assets | ||
| Total long-term liabilities |
All values are in US Dollars.
During the six months ended June 30, 2021, total assets and cash increased primarily due to the $377.4 million net proceeds raised from the underwritten public offering of common stock, partially offset by expenditures in the period. Total long-term liabilities increased primarily as a result of drawdowns on the Company’s senior credit facility of $28.1 million.
The higher net loss in Q2 2021 compared to Q2 2020 is primarily attributable to higher Thacker Pass expenditures and $4.7 million loss on the JEMSE transaction.
Click here to view the Company’s second quarter results for 2021.
About Lithium Americas:
Lithium Americas is a development-stage company focused on advancing to production a lithium brine operation in Jujuy, Argentina and a sedimentary lithium clay project in Nevada, United States. The Company trades on both the Toronto Stock Exchange and on the New York Stock Exchange, under the ticker symbol “LAC”.
For further information contact:
Investor Relations
Telephone: 778-656-5820
Email: ir@lithiumamericas.com
Website: www.lithiumamericas.com
FORWARD-LOOKING STATEMENTS
This news release contains “forward-looking information” and “forward-looking statements” (which we refer to collectively as forward-looking information) under the provisions of applicable securities legislation. All statements, other than statements of historical fact, are forward-looking information. Examples of forward-looking information in this news release include, among other things, statements related to: successful development of the Caucharí-Olaroz project and the Thacker Pass project, including timing, progress, construction, milestones, anticipated production and results thereof; expectations and anticipated impact of COVID-19 on the Company and its mineral properties; capital expenditures and programs, and the Company’s ability to fund such programs; government regulation of mining operations and treatment under governmental and taxation regimes; the timing, amount and type of future production; expected outcome and timing of environmental surveys and analysis, permit applications and other environmental matters; expected timing and outcome of litigation concerning the Thacker Pass project; expected expenditures to be made by the Company on its properties; the timing, cost, quantity, capacity and product quality of production of the Caucharí-Olaroz project, which is held and operated through an entity in Argentina co-owned by the Company, Ganfeng Lithium Co. Ltd. (“Ganfeng”) and JEMSE; successful operation of the Caucharí-Olaroz project under the co-ownership structure, and expectations concerning proposed expansion plans for the project; results of the Company’s engineering, design and permitting program at the Thacker Pass project, including the Company meeting deadlines and receiving and maintaining permits as anticipated; timing, results and completion of a feasibility study and to make a construction decision for the Thacker Pass project; the Company’s share of the expected capital expenditures for the construction of the Caucharí-Olaroz project; Company expectations as to feasibility study activities at the Thacker Pass project; and, the potential for partnership and financing scenarios for the Thacker Pass project.
Forward-looking information is based upon a number of factors and assumptions that, if untrue, could cause the actual results, performances or achievements of the Company to be materially different from future results, performances or achievements expressed or implied by such information. Such information reflects the Company’s current views with respect to future events and is necessarily based upon a number of assumptions that, while considered reasonable by the Company today, are inherently subject to significant uncertainties and contingencies. These assumptions include, among others, the following: current technological trends; a cordial business relationship between the Company and Ganfeng for the Caucharí-Olaroz project; ability of the Company to fund, advance and develop the Caucharí-Olaroz project and the Thacker Pass project, and raise additional capital as needed, and the respective impacts of the projects when production commences; the Company’s ability to operate in a safe and effective manner; uncertainties relating to receiving and maintaining mining, exploration, environmental and other permits or approvals in Nevada and Argentina, and resolving any complaints or litigation concerning such environmental permitting processes; realizing on the expected benefits from previous transactions with existing or new partners, or for debt financing; demand for lithium, including that such demand is supported by growth in the electric vehicle market; the Company’s ability to produce high purity battery grade lithium products; the impact of increasing competition in the lithium business, and LAC’s competitive position in the industry; currency exchange and interest rates; general economic conditions; a stable and supportive legislative, regulatory and community environment in the jurisdictions where the Company operates; stability and inflation of the Argentinian peso, including any foreign exchange or capital controls which may be enacted in respect thereof, and the effect of current or any additional regulations on the Company’s operations; the impact of unknown financial contingencies, including litigation costs, on the Company’s operations; gains or losses, in each case, if any, from short-term investments in Argentine bonds and equities; estimates of and unpredictable changes to the market prices for lithium products; exploration, development and construction costs for the Caucharí-Olaroz project and the Thacker Pass project; the timing, cost, quantity, capacity and product quality of production at the Thacker Pass project; successful results from the Company’s testing facility and third-party tests related thereto for the Thacker Pass project; capital costs, operating costs, and sustaining capital requirements of the Caucharí-Olaroz project and the Thacker Pass project; estimates of
mineral resources and mineral reserves, including whether mineral resources will ever be developed into mineral reserves; reliability of technical data; anticipated timing and results of exploration, development and construction activities, including the impact of COVID-19 on such timing; timely responses from governmental agencies responsible for reviewing and considering the Company’s permitting activities at the Thacker Pass project; the Company’s ability to obtain additional financing, including pursuant to an additional debt funding commitment, on satisfactory terms or at all; the ability to develop and achieve production at any of the Company’s mineral exploration and development properties; the impact of COVID-19 on the Company’s business; that pending patent applications are approved; the Company’s anticipated ownership interest in holdings of shares, warrants and other securities issued by third parties; accuracy of development budget and construction estimates; and preparation of a development plan and feasibility study for lithium production at the Thacker Pass project.
Forward-looking information also involves known and unknown risks that may cause actual results to differ materially. These risks include, among others, inherent risks in the development of capital intensive mineral projects (including as co-owners), variations in mineral resources and mineral reserves, global demand for lithium, recovery rates and lithium pricing, risks associated with successfully securing adequate financing, changes in project parameters and funding thereof, risks related to growth of lithium markets and pricing for products thereof, changes in legislation, governmental or community policy, changes in public perception concerning mining projects generally, political risk associated with foreign operations, permitting risk, including receipt of new permits and maintenance of existing permits, outcomes of litigation concerning the Company’s mineral properties, title and access risk, cost overruns, unpredictable weather and maintenance of natural resources, unanticipated delays, intellectual property risks, currency and interest rate fluctuations, operational risks, health and safety risks, and general market and industry conditions. Additional risks, assumptions and other factors are set out in the Company’s most recent annual management discussion analysis and annual information form, copies of which are available under the Company’s profile on SEDAR at www.sedar.com and on the SEC website at www.sec.gov.
Although the Company has attempted to identify important risks and assumptions, given the inherent uncertainties in such forward-looking information, there may be other factors that cause results to differ materially. Forward-looking information is made as of the date hereof and the Company does not intend, and expressly disclaims any obligation to, update or revise the forward-looking information contained in this news release, except as required by law. Accordingly, readers are cautioned not to place undue reliance on such forward-looking information.