6-K
Lithium Argentina AG (LAR)
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: November, 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: November 16, 2021
EXHIBIT INDEX
lac-ex991_6.htm
Exhibit 99.1
CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 (Expressed in US Dollars)
LITHIUM AMERICAS CORP.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Unaudited)
(Expressed in thousands of US dollars)
| September 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 | 6 | ||||
| Investment in Cauchari-Olaroz project | 6 | ||||
| Long-term receivable from JEMSE | 6 | ||||
| Investment in Arena Minerals | 5 | ||||
| Warrants to purchase shares in Arena Minerals | 5 | ||||
| Property, plant and equipment | 7 | ||||
| Exploration and evaluation assets | |||||
| TOTAL ASSETS | |||||
| CURRENT LIABILITIES | |||||
| Accounts payable and accrued liabilities | |||||
| Current portion of long-term liabilities | 8 | ||||
| NON-CURRENT LIABILITIES | |||||
| Credit and loan facilities | 8 | ||||
| Decommissioning provision | |||||
| Other liabilities | 8 | ||||
| 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 16)
Approved for issuance on November 12, 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 September 30, | Nine Months Ended September 30, | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Note | 2021 | 2020 | 2021 | 2020 | |||||
| EXPENSES | |||||||||
| Exploration and evaluation expenditures | 12 | ) | ) | ) | ) | ||||
| General and administrative | 11 | ) | ) | ) | ) | ||||
| Equity compensation | 9 | ) | ) | ) | ) | ||||
| Share of loss of Cauchari-Olaroz project | ) | ) | ) | ) | |||||
| Share of loss of Arena Minerals | ) | ) | |||||||
| ) | ) | ) | ) | ||||||
| OTHER ITEMS | |||||||||
| Loss on JEMSE Transaction | 6 | ) | |||||||
| Gain on Cauchari-Olaroz transactions | 288 | ||||||||
| Transaction costs | ) | ) | ) | ||||||
| Foreign exchange (loss)/gain | ) | ) | |||||||
| Finance costs | ) | ) | ) | ) | |||||
| Finance and other income | |||||||||
| ) | ) | ) | ) | ||||||
| NET LOSS BEFORE TAX | ) | ) | ) | ) | |||||
| Tax expense | ) | ) | |||||||
| NET LOSS BEFORE DISCONTINUED OPERATIONS | ) | ) | ) | ) | |||||
| INCOME/(LOSS) 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<br><br><br>SHARES OUTSTANDING-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, 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 | 1,515 | ) | ||||||||||
| Equity compensation (Note 9) | - | |||||||||||
| DSUs issued in lieu of directors' fees | - | |||||||||||
| Debit to equity as a result of the 2020 Cauchari Transaction (Note 6) | - | ) | ) | |||||||||
| Net loss | - | ) | ) | |||||||||
| Other comprehensive income | - | - | ||||||||||
| Balance September 30, 2020 | 91,358 | ) | ) | |||||||||
| Balance, December 31, 2020 | 101,103 | ) | ) | |||||||||
| Shares issued on conversion of RSUs, DSUs and exercise of stock options | 682 | ) | ||||||||||
| Shares issued pursuant to the underwritten public offering (Note 9) | 18,182 | |||||||||||
| Shares issuance costs (Note 9) | - | ) | ) | |||||||||
| Equity compensation (Note 9) | - | |||||||||||
| Net loss | - | ) | ) | |||||||||
| Balance September 30, 2021 | 119,967 | ) | ) |
All values are in US Dollars.
LITHIUM AMERICAS CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Expressed in thousands of US dollars)
| Nine Months Ended September 30, | |||||
|---|---|---|---|---|---|
| Note | 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 | |||||
| Share of loss of Arena Minerals | |||||
| Gain on Cauchari-Olaroz Transactions | ) | ||||
| Loss on JEMSE transaction | |||||
| Unrealized gain on investments | ) | ||||
| Other items | ) | ||||
| Payment of interest capitalized in property, plant and equipment | ) | ||||
| 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 | 6 | ) | |||
| Repayment of loans as part of transactions | 6 | ||||
| Contribution to Investment in Cauchari-Olaroz project | ) | ) | |||
| Cash disposed as a result of transactions | ) | ||||
| Investment in Arena Minerals | 5 | ) | |||
| 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 | 9 | ||||
| Equity offering issuance costs | 9 | ) | - | ||
| Drawdowns from the credit facilities | 8 | ||||
| Finance lease repayments | ) | ) | |||
| Repayment of long-term borrowings | ) | ) | |||
| Other | 8 | ||||
| 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 14).
LITHIUM AMERICAS CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021
(Expressed in thousands of US dollars, except for per share amounts; shares and equity instruments in thousands)
| 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, 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”) (8.5%), a mining investment company owned by the government of Jujuy Province in Argentina. 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 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 and 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 NINE MONTHS ENDED SEPTEMBER 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, and the extent, duration and ongoing impacts of supply chain disruptions and inflationary pressures on the Company, its suppliers and contractors.
During the first nine months of 2021 construction activities at the Caucharí-Olaroz lithium project advanced while strictly complying with COVID-19 protocols 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.
LITHIUM AMERICAS CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021
(Expressed in thousands of US dollars, except for per share amounts; shares and equity instruments in thousands)
| 3. | SIGNIFICANT ACCOUNTING POLICIES (continued) |
|---|
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 initial fair value of $5,800.
The fair value of the long-term receivable from JEMSE was calculated by discounting the Company’s share of JEMSE’s future payments, assuming payments start after 5 years and a 10% discount rate. Estimation of the timing of payment is based on the status of construction and expected cash flows of Minera Exar (Note 6).
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 8 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 | |
|---|---|---|
| September 30, 2021 | December 31, 2020 | |
| --- | --- | --- |
| Cash | ||
| Short-term bank deposits | ||
All values are in US Dollars.
As at September 30, 2021, $2,319 of cash and short-term deposits were held in Canadian dollars (December 31, 2020 – $3,165), and $479,823 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 ARENA MINERALS |
|---|
On July 23, 2021, the Company acquired 42,857 common shares and 21,429 share purchase warrants of Arena Minerals Inc. (TSX-V: AN) (Arena Minerals) in a private placement for total consideration of CDN$6,000 ($4,794). 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. 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 if the Company maintains at least a 7.5% interest in Arena Minerals; and (ii) to appoint a nominee to the Arena Minerals board of directors if the Company maintains at least a 10% interest in Arena Minerals. At September 30, 2021, the Company owned approximately 12.6% of the issued and outstanding shares of Arena Minerals.
LITHIUM AMERICAS CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021
(Expressed in thousands of US dollars, except for per share amounts; shares and equity instruments in thousands)
| 5. | INVESTMENT IN ARENA MINERALS (continued) |
|---|
The Company has significant influence over Arena Minerals by virtue of its shareholdings and its right to appoint a nominee director to the board of Arena Minerals. As such, the investment in Arena Minerals is accounted for under the equity method of accounting. Share purchase warrants to acquire Arena Mineral’s shares are derivatives and accounted for at fair value with changes in fair value recorded in the income statement.
At the acquisition date the investment in Arena Minerals shares was recorded at $3,435 and the warrants at $1,341. For the quarter ended September 30, 2021, the Company recognized a $170 share of loss in Arena Minerals under the equity method of accounting, resulting in a balance for the investment of $3,265 at September 30, 2021.
The Arena Minerals warrants had an estimated fair value of $2,794 at September 30, 2021. The fair value of the warrants was estimated using a Black-Scholes valuation model with the following inputs: volatility of 202%, a risk-free rate 0.52%, expected dividend of 0%, and expected life 2 years. A gain on fair value of $1,453 was recognized in Finance and other income in the income statement.
| 6. | INVESTMENT IN CAUCHARI-OLAROZ PROJECT |
|---|
As at September 30, 2021 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, 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 49%/51% 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.
In addition, the Company and Ganfeng are 49% and 51% shareholders, respectively, in Exar Capital B.V. (“Exar Capital”), the company that provides financing to Minera Exar for the purpose of advancing 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 signed 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.
LITHIUM AMERICAS CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021
(Expressed in thousands of US dollars, except for per share amounts; shares and equity instruments in thousands)
| 6. | INVESTMENT IN CAUCHARI-OLAROZ PROJECT (continued) |
|---|
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 payment for shares | |
| 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 the Company’s share of JEMSE future payments to present value, assuming payments start after 5 years and using a 10% discount rate. Estimation of timing for payments is based on the status of construction and expected cash flows of Minera Exar. During the period ended September 30, 2021, the Company recognized $284 amortization of discount for the receivable.
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.
In addition, the Company and Ganfeng restructured Exar Capital to reflect the parties’ 49%/51% 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.
LITHIUM AMERICAS CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021
(Expressed in thousands of US dollars, except for per share amounts; shares and equity instruments in thousands)
| 6. | INVESTMENT IN CAUCHARI-OLAROZ PROJECT (continued) |
|---|
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 to Exar Capital, as at December 31, 2019 | |
| Loans 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 to Exar Capital prior to the 2020 Cauchari Transaction | |
| Loans 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 to Exar Capital, as at December 31, 2020 | |
| Loans to Exar Capital | |
| Initial difference between the face value and the fair value of loans to Exar Capital | ) |
| Accrued interest | |
| Loans to Exar Capital, as at September 30, 2021 |
All values are in US Dollars.
Loans by the Company and Ganfeng to Exar Capital are non-interest bearing. During the nine months ended September 30, 2021, loans were provided by the Company to Exar Capital in the amount of $52,920, and by Ganfeng in the amount of $55,080. 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.
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.
LITHIUM AMERICAS CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021
(Expressed in thousands of US dollars, except for per share amounts; shares and equity instruments in thousands)
| 6. | INVESTMENT IN CAUCHARI-OLAROZ PROJECT (continued) |
|---|
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 September 30, 2021 |
All values are in US Dollars.
Minera Exar’s Commitments and Contingencies
As at September 30, 2021, Minera Exar had the following commitments (on a 100% basis):
| • | A $200 royalty due annually in May and expiring in 2041. |
|---|---|
| • | 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, $332 in 2022 and $443 between 2023 and 2061 if these agreements are extended for the life of the project and 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 construction contracts of $3,191. |
| --- | --- |
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 payment became due and was paid on the third anniversary of the purchase option exercise date, being September 11, 2021. 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 addition, 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.
LITHIUM AMERICAS CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021
(Expressed in thousands of US dollars, except for per share amounts; shares and equity instruments in thousands)
| 6. | INVESTMENT IN CAUCHARI-OLAROZ PROJECT (continued) |
|---|
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 second 20 years for an additional payment of $7,000.
| 7. | 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 September 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 September 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 September 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 6).
^2^ “Other” category includes right of use assets with costs of $2,877 cost and accumulated depreciation of $547 as at September 30, 2021.
LITHIUM AMERICAS CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021
(Expressed in thousands of US dollars, except for per share amounts; shares and equity instruments in thousands)
| 8. | LONG-TERM LIABILITIES | |
|---|---|---|
| September 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 nine months ended September 30, 2021, the Company drew $50,120 on its $205,000 senior credit facility, comprised of $32,578 from Ganfeng and $17,542 from BCP Innovation Pte Ltd. The total drawn under the facility as at September 30, 2021, was $145,870. 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 September 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 $2,763 as at September 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 September 30, 2021.
Other Liabilities
Other liabilities consist of the $1,909 lease liabilities and the $5,703 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. These amounts are included in the mining contractor liability balance.
LITHIUM AMERICAS CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021
(Expressed in thousands of US dollars, except for per share amounts; shares and equity instruments in thousands)
| 8. | LONG-TERM LIABILITIES (continued) |
|---|
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.
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.
| 9. | 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.
Equity Incentive Plan
Restricted Share Units
During the nine months ended September 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 September 30, 2021, there was $1,217 (2020 - $672) of total unamortized compensation cost relating to unvested RSUs. During the nine months ended September 30, 2021, stock-based compensation expense related to RSUs of $1,190 was charged to expenses (2020 - $2,910) and $1,622 recorded 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 | (123 | ) | |
| Granted | 250 | ||
| Balance, RSUs outstanding as at September 30, 2021 | 2,417 |
LITHIUM AMERICAS CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021
(Expressed in thousands of US dollars, except for per share amounts; shares and equity instruments in thousands)
| 9. | SHARE CAPITAL AND EQUITY COMPENSATION (continued) |
|---|
Deferred Share Units
During the nine months ended September 30, 2021, the Company granted 18 DSUs (2020 – 110) as compensation to independent directors with a total estimated fair value of $253 (2020 – $358).
| 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 | 18 | ||
| Balance, DSUs outstanding as at September 30, 2021 | 236 |
Stock Options
No stock options were granted by the Company during the nine months ended September 30, 2021 and 2020. Stock options outstanding and exercisable as at September 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) | ||
|---|---|---|---|---|
| 4.90 - 5.00 | 579 | 0.5 | ||
| 8.05 - 11.07 | 1,103 | 1.0 | ||
| 1,682 | 0.8 |
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 | (612 | ) | ) | ||
| Expired | (9 | ) | ) | ||
| Balance, stock options outstanding as at September 30, 2021 | 1,682 |
All values are in US Dollars.
LITHIUM AMERICAS CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021
(Expressed in thousands of US dollars, except for per share amounts; shares and equity instruments in thousands)
| 9. | SHARE CAPITAL AND EQUITY COMPENSATION (continued) |
|---|
The weighted average share price at the time of exercise of options during the nine months ended September 30, 2021 was CDN$20.00 (2020 – CDN$10.80). During the nine months ended September 30, 2021, 310 (2020 – 416) options were exercised under the cashless exercise provision of the Company’s stock option plan, resulting in the issuance of 258 (2020 – 194) shares of the Company.
Performance Share Units (“PSUs”)
162 PSUs were granted by the Company during the nine months ended September 30, 2021 and none in 2020. As at September 30, 2021, there was $2,636 (2020 - $2,051) 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 | 10.0 | % | |
| Fair value per PSU granted | 19.72 |
During the nine months ended September 30, 2021, equity compensation expense related to PSUs of $2,035 was charged to operating expenses (2020 - $1,294).
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 September 30, 2021 | 1,161 |
LITHIUM AMERICAS CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021
(Expressed in thousands of US dollars, except for per share amounts; shares and equity instruments in thousands)
| 10. | 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 6). |
|---|---|
| - | Construction services contract for Cauchari-Olaroz Project with Magna Construcciones S.R.L., expenditures under which were $6,749 during the nine months ended September 30, 2021. |
| --- | --- |
During the nine months ended September 30, 2021, director’s fees paid by Minera Exar to its President, who is also a director of Lithium Americas, totaled $54 (2020 - $55).
During the nine months ended September 30, 2021, the Company paid $646, of which $300 was paid in cash and $346 in RSUs, to its former director and President, South American Operations, 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 6, 8 and 16.
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:
| September 30, 2021 | September 30, 2020 | |
|---|---|---|
| Equity compensation | ||
| Salaries, bonuses, benefits and directors' fees included in general and administrative expenses | ||
| Salaries, bonuses and benefits included in exploration and evaluation expenditures | ||
| Salaries and benefits capitalized to Investment in Cauchari-Olaroz Project | ||
All values are in US Dollars.
| September 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 NINE MONTHS ENDED SEPTEMBER 30, 2021
(Expressed in thousands of US dollars, except for per share amounts; shares and equity instruments in thousands)
| 11. | GENERAL AND ADMINISTRATIVE EXPENSES |
|---|
The following table summarizes the Company’s general and administrative expenses:
| September 30, 2021 | September 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.
| 12. | EXPLORATION AND EVALUATION EXPENDITURES |
|---|
The following table summarizes the Company’s exploration and evaluation expenditures related to Thacker Pass and other project expenditures:
| September 30, 2021 | September 30, 2020 | |
|---|---|---|
| Engineering | ||
| Consulting and salaries | ||
| Permitting and environmental | ||
| Field supplies and other | ||
| Depreciation | ||
| Drilling and geological expenses | ||
| Total exploration and evaluation expenditures |
All values are in US Dollars.
LITHIUM AMERICAS CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021
(Expressed in thousands of US dollars, except for per share amounts; shares and equity instruments in thousands)
| 13. | SEGMENTED INFORMATION |
|---|
The Company operates in three operating segments and three geographical areas. The Thacker Pass project is in the exploration and evaluation 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 6). 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 September 30, 2021 | |||||||||
| Property, plant and equipment | - | ||||||||
| Exploration and evaluation assets | - | - | - | ||||||
| Total assets | - | ||||||||
| Total liabilities | - | ) | ) | ) | |||||
| For the nine months ended September 30, 2021 | |||||||||
| Property, plant and equipment additions | |||||||||
| Income from discontinued operations | - | ||||||||
| Net income/(loss) | ) | ) | ) | ) | |||||
| Exploration and evaluation expenditures | - | ) | ) | ||||||
| Depreciation | ) | ) | ) | ||||||
| For the three months ended September 30, 2021 | |||||||||
| Property, plant and equipment additions | |||||||||
| Income from discontinued operations | |||||||||
| Net Income/(loss) | ) | ) | ) | ) | |||||
| Exploration and evaluation 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 nine months ended September 30, 2020 | ||||||||||
| Property, plant and equipment additions | ||||||||||
| Loss from discontinued operations | ) | ) | ||||||||
| Net (loss)/income | ) | ) | ) | ) | ) | |||||
| Exploration and evaluation expenditures | ) | ) | ) | |||||||
| Depreciation | ) | ) | ) | ) | ||||||
| For the three months ended September 30, 2020 | ||||||||||
| Property, plant and equipment expenditures | ||||||||||
| Loss from discontinued operations | ) | ) | ||||||||
| Net Loss | ) | ) | ) | ) | ) | |||||
| Exploration and evaluation expenditures | ) | ) | ) | |||||||
| Depreciation | ) | ) | ) | ) |
All values are in US Dollars.
LITHIUM AMERICAS CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021
(Expressed in thousands of US dollars, except for per share amounts; shares and equity instruments in thousands)
| 13. | 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 September 30, 2021 | ||||
| As at December 31, 2020 | ||||
| Revenue of the discontinued operation | ||||
| For nine months ended September 30, 2021 | - | - | - | - |
| For nine months ended September 30, 2020 | - | - |
All values are in US Dollars.
^1^Non-current assets attributed to geographical locations exclude financial and other assets.
| 14. | SUPPLEMENTAL DISCLOSURE WITH RESPECT TO CASH FLOWS |
|---|
Supplementary disclosure of the Company’s non-cash transactions is provided in the table below.
| September 30, 2021 | December 31, 2020 | |
|---|---|---|
| Change in accounts payable related to financings |
All values are in US Dollars.
| September 30, 2021 | September 30, 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 NINE MONTHS ENDED SEPTEMBER 30, 2021
(Expressed in thousands of US dollars, except for per share amounts; shares and equity instruments in thousands)
| 15. | 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. Other than warrants acquired as part of the Arena Minerals investment the Company did not have any financial instruments measured at fair value on the statement of financial position on a recurring basis. As at September 30, 2021, the fair value of financial instruments not measured at fair value approximate their carrying value. Arena Minerals warrants are a level 2 fair value hierarchy instrument (refer to Note 5).
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.
As at September 30, 2021, the Company had a cash and cash equivalents balance of $482,142 to settle current liabilities of $8,437.
LITHIUM AMERICAS CORP.
NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021
(Expressed in thousands of US dollars, except for per share amounts; shares and equity instruments in thousands)
| 15. | FINANCIAL INSTRUMENTS (continued) |
|---|
The following table summarizes the contractual maturities of the Company’s financial liabilities on an undiscounted basis:
| Years ending December 31, | |||||
|---|---|---|---|---|---|
| 2021 | 2022 | 2023 | 2024 and later | Total | |
| Credit and loan facilities¹ | |||||
| Accounts payable and accrued liabilities | - | - | - | ||
| Obligations under office leases¹ | |||||
| Other obligations¹ | |||||
| Total |
All values are in US Dollars.
^¹^Credit and loan facilities, Obligations under office leases and Other obligations include principal and interest/finance charges.
Market Risk
Market risk incorporates a range of risks. Movement in risk factors, such as market price risk and currency risk, affect the fair values of financial assets and liabilities. The Company is exposed to a foreign currency risk as disclosed below.
Foreign Currency Risk
The Company’s operations in foreign countries are subject to currency fluctuations and such fluctuations may affect the Company’s financial results. The Company reports its financial results in United States dollars (“US$”) 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 September 30, 2021, the Company held $2,319 in CDN$ 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 $232 at September 30, 2021.
| 16. | SUBSEQUENT EVENTS |
|---|
Subsequent to quarter end, the Company received a $7,350 drawdown from its Credit Facility to fund development expenditures on the Cauchari-Olaroz Project.
On November 1, the Company submitted an unconditional offer to acquire all outstanding shares of Millennial Lithium Corp. (“Millennial”) at a price of CDN$4.70 per share, payable in a combination of Lithium Americas common shares and cash of CDN$0.001 per Millennial share, for total consideration of approximately $400,000. The Board of Directors of Millennial has determined that the offer constitutes a “superior proposal” as such term is defined under an existing arrangement agreement between Millennial and Contemporary Amperex Technology Co., Ltd. (“CATL”) dated September 28, 2021. CATL has a right to match the offer made by the Company, which is open for acceptance by CATL until 4:30 pm Pacific Time on November 16, 2021. See the respective news releases issued by the Company and Millennial on November 1, 2021 for further details.
| 23 |
|---|
lac-ex992_287.htm
Exhibit 99.2
MANAGEMENT’S DISCUSSION AND ANALYSIS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021
LITHIUM AMERICAS CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021
(expressed in US dollars, unless stated otherwise)
BACKGROUND
This Management Discussion and Analysis (“MD&A”) of Lithium Americas Corp. (“Lithium Americas”, the “Company”, or “LAC”), prepared as of November 12, 2021, should be read in conjunction with the Company’s unaudited condensed consolidated interim financial statements and the notes thereto for the nine months ended September 30, 2021 (“Q3 2021 financial statements”), and the audited consolidated financial statements and notes thereto for the year ended December 31, 2020 (“2020 annual financial statements”). Refer to Notes 2 and 3 of the Q3 2021 financial statements and Notes 2 and 3 of the 2020 annual financial statements for disclosure of the Company’s significant accounting policies. All amounts are expressed in US dollars, unless otherwise stated. References to CDN$ 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 a 51% and the Company with a 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 NINE MONTHS ENDED SEPTEMBER 30, 2021
(expressed in US dollars, unless stated otherwise)
HIGHLIGHTS
Caucharí-Olaroz
| • | Construction activities at Caucharí-Olaroz continue to advance, targeting first production by mid-2022 on the initial 40,000 tonnes per annum (“tpa”) lithium carbonate equivalent (“LCE”) operation. |
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| • | As of September 30, 2021, $519 million has been spent or 81% of the $641 million budget, with the majority of remaining budget committed. |
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| • | Over 1,200 workers are on site, with over 97% of the total workforce having received at least their first COVID-19 vaccine dose and over 60% have received two doses. |
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| • | With all major equipment on site, focus is on construction of the chemical and processing plants. |
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| • | In early October, commissioning of the lime plant started to lime concentrated brine to support production ramp up. The project has sufficient brine inventory to support production ramp up. |
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| • | Development planning for a second stage expansion of at least 20,000 tpa LCE continues to advance. |
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Thacker Pass
| • | In October 2021, Nevada Department of Environmental Protection made a preliminary determination to issue three remaining key state-level permits: Water Pollution Control Permit, Mine Reclamation Permit and Class II Air Permit. The Record of Decision appeal process remains on track with the hearing date set for Q1 2022. |
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| • | Phase 1 of the Feasibility Study was increased to target 40,000 tpa lithium carbonate (from 30,000-35,000 tpa). A potential Phase 2 expansion scenario to target total capacity of 80,000 tpa is being incorporated. |
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| • | Updated the Measured and Indicated (“M&I”) Resource estimate to 13.7 million tonnes (“Mt”) LCE at 2,231 parts per million lithium (“ppm Li”). |
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| • | Early-works construction expected to commence in H1 2022, includes site access, site preparation, water line and additional infrastructure to condense and de-risk the overall construction schedule. |
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| • | Discussions continue with potential strategic partners and customers. |
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| • | An integrated pilot plant to support increased scale and ongoing optimization work and to provide product samples for potential customers is expected to be operational in the first half of 2022. |
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Corporate
| • | As at September 30, 2021, the Company had $482 million in cash and cash equivalents. |
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| • | As at September 30, 2021, the Company had $134 million in available credit, with $146 million drawn from the $205 million senior credit facility and $25 million drawn from its $100 million unsecured, limited recourse, subordinated loan facility. This available credit is expected to fully fund the Company’s share of the remaining capital expenditure at Cauchari-Olaroz. |
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| • | In July, the Company completed a strategic investment in Arena Minerals Inc. (TSX-V: AN) of $5 million for an approximate 12.9% equity interest (14.6% on a fully diluted basis). |
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| • | In early September, the Company was approved as an IRMA (Initiative for Responsible Mining Assurance) Pending Member which means that the Company commits to have the proposed project audited against the new draft IRMA Ready Standard for exploration and development within 12 months of its availability for application. |
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LITHIUM AMERICAS CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021
(expressed in US dollars, unless stated otherwise)
| • | In September, the Company was recognized on TSX30 2021 ranking as one of the top 30 performers on the TSX. |
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| • | On October 1, 2021 Jose Francesconi joined the team and is responsible for overseeing projects and technical services in Argentina. Mr. Francesconi brings over thirty years of execution experience for large capital projects and was previously the Operations Director, Argentina for Worley, and the Associate Engineering Director of Dow Engineering. |
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| • | On November 1, the Company submitted an unconditional offer to acquire all outstanding shares of Millennial Lithium Corp. (“Millennial”) at a price of C$4.70 per share, payable in Lithium Americas common shares and cash of C$0.001 per Millennial share for total consideration of approximately US$400 million. |
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LITHIUM AMERICAS CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021
(expressed in US dollars, unless stated otherwise)
PROJECT PROGRESS IN Q3 2021
Caucharí-Olaroz, Jujuy Province, Argentina
FIGURE A COMMISSIONING OF THE LIME PLANT COMMENCED IN OCTOBER TO SUPPORT PRODUCTION RAMP-UP
FIGURE B FOCUS IS ON CONSTRUCTION OF THE CHEMICAL AND PROCESSING PLANTS
LITHIUM AMERICAS CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE NINE MONTHS ENDED SEPTEMBER 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 lifted a number of restrictions, particularly limitations on international travel. COVID 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 97% of our total site workers have received their first vaccination and over 60% have received two doses of the vaccine.
Health and Safety
The Total Recordable Incident Frequency rate (“TRIFR”) for Caucharí-Olaroz for the nine months ending September 30, 2021 was 4.69 per 200,000 hours worked. As of the end of October, the project team has achieved 3 million total man hours without a lost time injury incident.
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 96% complete. Currently, there are 39 production wells drilled and one in progress. As of the date of this MD&A, approximately 18.5 million cubic meters (“m^3^”) of brine have been pumped into the ponds for initial evaporation and process testing. Commissioning of liming of concentrated brine to support ramp-up started in October 2021.
Infrastructure
| • | The access roads and platforms for the wells are 100% complete. |
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| • | Construction of the warehouse buildings is 100% complete. |
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| • | Gas pipeline construction is 100% complete. |
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| • | Lime plant construction was completed and commissioning started in October 2021. |
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| • | The 33 kV power line is more than 94% complete and the 13.2 kV distribution line is 100% complete. |
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| • | Construction of the water pipeline is over 87% complete. |
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Lithium Carbonate Plant
| • | Critical, long-lead-time equipment is currently under fabrication or has been delivered to site, reducing supply chain risks. |
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| • | Solvent extraction (SX) plant, including equipment installation, is over 70% complete. |
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| • | Solid-liquid separation (SSL) plant is over 80% complete. The filter presses were installed in early July. |
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| • | Potassium chloride (KCl) plant is over 60% complete. |
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| • | The civil works contractors are at site working on the rest of the lithium carbonate plant (the dilution plant, purification, carbonation and substation). |
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Capital Expenditures
| • | As of September 30, 2021, $519 million has been spent or 81% of the $641 million budget, with the majority of remaining budget committed. |
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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
LITHIUM AMERICAS CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021
(expressed in US dollars, unless stated otherwise)
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.
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.
Project Financing and Liquidity
As of September 30, 2021, the Company’s 49% share of the remaining capital is fully funded from $134 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.
Partnership Process and Feasibility Study
Partnership Process
The Company expects to provide an update on timing of the Feasibility Study by early 2022, to align with the strategic partnership process and ongoing engineering work.
Lithium Americas has retained Greenhill & Co. to act as financial advisor for the Thacker Pass strategic partnership process.
Feasibility Study for Phases 1 and 2
Lithium Americas continues to advance the ongoing Feasibility Study targeting an increased initial production capacity to 40,000 tpa of lithium carbonate (“Phase 1”) from 30,000-35,000 tpa, previously. The increased target capacity reflects optimizations to the mine plan and leaching efficiencies, maintaining the same proposed 3,000 tonnes per day (“tpd”) sulfuric acid plant and water usage.
In addition, the Company plans to include an expansion scenario to target total capacity of 80,000 tpa of lithium carbonate. The addition of a 40,000 tpa expansion (“Phase 2”), is designed to demonstrate Thacker Pass’ ability to scale production and align with potential customers’ and partners’ longer-term demands. The Phase 2 expansion scenario would entail additional time required to amend and meet permitting requirements beyond Phase 1.
The Company is continuing to optimize engineering to complete the capital cost estimate which is expected to substantially increase due to increased production capacity, incorporation of Phase 2 as well as the impact of inflationary pressure, permit requirements and an increase in purification processing equipment to produce high quality lithium carbonate.
To meet potential customer and partner needs, the Company continues to also advance engineering to consider an option for a 20,000 tpa lithium hydroxide chemical conversion plant.
Process Engineering and Design
Mine Plan and Processing Optimization
Over the past year, Lithium Americas has grown the engineering and technical team and continues to further optimize the mine plan and process. Optimization work is focused on maximizing lithium carbonate production in Phase 1 without increasing the size of the proposed 3,000 tpd sulfuric acid plant or water usage. Improvements
LITHIUM AMERICAS CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021
(expressed in US dollars, unless stated otherwise)
include a mine plan focused on the illite clay and processing technologies to increase yield. When compared to smectite clay, illite clay displays higher leaching efficiencies and generally has higher lithium concentrations, as well as contains fewer impurities such as magnesium and calcium. Work is ongoing towards improving lithium recovery from smectite clay. Process changes completed include ore beneficiation, magnesium sulfate crystallization and improvements to the lithium carbonate circuit.
The Company is targeting total Phase 2 production capacity of 80,000 tpa within the same mining footprint as the permitted pit boundary. The team is advancing the mine engineering and combining the Phase 1 optimization and process improvements to achieve this increased production level.
Lithium Technical Development Center Collaboration with UNR
Working in collaboration with University of Nevada, Reno (“UNR”), the existing process testing facility will be relocated to a new facility in Reno and expanded to run the full Thacker Pass flowsheet to produce lithium carbonate samples. This Lithium Technical Development Center will also perform tests on other lithium deposits such as spodumene and brine. The integrated pilot plant is expected to be in operation in the first half of 2022 to support ongoing optimization work, confirm certain assumptions in the design and operational parameters and provide product samples for potential customers.
Regulatory and Permitting
Federal Permits
The Record of Decision (“ROD”) was received in January 2021 from the Bureau of Land Management (“BLM”). The total disturbance footprint for Thacker Pass under the ROD amounts to approximately 5,695 acres. Meanwhile the boundaries of Thacker Pass Plan of Operations lands consist of 17,933 acres of land, encompassing both the project and exploration area.
In February 2021, claims were filed against the BLM to appeal the issuance of the ROD. Injunction requests over the Company’s plan to begin cultural assessment and pre-construction work were denied in Q3 2021, and subsequently, a motion to reconsider was denied on November 8, 2021. A court hearing on the appeal is expected to take place in Q1 2022.
State Permits
In October 2021, Nevada Department of Environmental Protection (“NDEP”) made a preliminary determination to issue three remaining key state-level permits with a 30-day public comment period. Preliminary determination for the Class II Air Quality Operating Permit was released on October 18, and for the Water Pollution Control and Mine Reclamation Permits on October 28. The Company expects to have final versions of these permits by year end.
The Water Pollution Control 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.
The Company expects that early-works on the water line could begin as early as in Q1 2022, once permits are received. Other early-works are expected to begin in H1 2022, including site access, site preparation and additional infrastructure, to condense and de-risk the overall construction schedule.
Water Rights
A decision on the Company’s water rights transfer application by the state engineer to transfer the Company’s existing water rights, which is expected to provide sufficient water for all of Phase 1, is anticipated by Q1 2022.
LITHIUM AMERICAS CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021
(expressed in US dollars, unless stated otherwise)
Environmental and Social Responsibility
Respecting the rights, culture, aspirations and interests of the local communities directly affected by the development and operation of Thacker Pass and working collaboratively towards mutually beneficial relationships remains a key priority for the Company. The Company continues to engage with local tribal and community members to keep them informed of plans for the project, identify and resolve issues, and provide employment and training opportunities that will be available prior to proposed construction and operations.
Fort McDermitt Paiute and Shoshone Tribe Benefits Agreement
The Company has presented a benefits agreement to the Fort McDermitt Paiute and Shoshone Tribe.
Community Engagement
Through engagement with the community, the Company continues to enthusiastically participate in the 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 continues to meet approximately every two weeks, and the Company is committed to quickly resolving community issues and building healthy relations for years to come.
The Company partnered with Cashman Equipment-Winnemucca to host a two-day Heavy Equipment Operator Training in Fort McDermitt. Fort McDermitt tribal members and residents of McDermitt and Orovada learned safety pre-check and how to safely operate a loader, excavator, dump truck and dozer. Participants earned Level 1 Operators Certification for each of the four pieces of equipment they trained on.
Socioeconomic and Environmental Study with UNR
Lithium Americas has a long-standing relationship with UNR, originally partnering with UNR’s Department of Agriculture, Veterinary and Rangeland Sciences to establish the Great Basin Sagebrush Restoration Fund in 2017. The Company has recently formalized a relationship with the Department of Mining and Metallurgical Engineering at UNR’s Mackay School of Earth Sciences and Engineering to assess the socioeconomic and environmental footprint for Thacker Pass. Professor Ehsan Vahidi, Ph.D. will run the two-year program, which will include development of a life cycle inventory database, quantifying the environmental performance of lithium production from claystone ore and analysis of socioeconomic impacts from activity at Thacker Pass with other lithium production facilities around the world.
Updated Mineral Resource Estimate
On October 7, 2021 the Company announced an expanded and updated Mineral Resource estimate for Thacker Pass of 13.7 million tonnes (Mt) of lithium carbonate equivalent grading 2,231 parts per million (“ppm”) lithium of measured and indicated (“M&I”), and 4.4 Mt of lithium carbonate equivalent (“LCE”) grading 2,112 ppm of inferred resources. The updated Mineral Resource estimate incorporates the Southwest Basin area of the project, change in cut-off grade and additional drilling since the 2018 M&I resource of 6.0 Mt LCE at 2,917 ppm Li and inferred resource of 2.3 Mt at 2,932 ppm. Lithium Americas affirms that the updated Mineral Resource estimate in its October 7, 2021 news release filed on SEDAR does not constitute a material change and does not affect the integrity of the Resources and Reserves used in the preliminary feasibility study for Thacker Pass, “Technical Report on the Pre-Feasibility Study for the Thacker Pass Project, Humboldt County, Nevada, USA dated effective date August 1, 2018 (the “PFS”). The PFS remains the current technical report for Thacker Pass.
LITHIUM AMERICAS CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021
(expressed in US dollars, unless stated otherwise)
SELECTED FINANCIAL INFORMATION
Quarterly Information
Selected consolidated financial information is presented as follows:
| (in US$ millions) | 2021 | 2020 | 2019 | |||||||||||||
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| Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | |||||||||
| Total assets | ||||||||||||||||
| Property, plant and equipment | ||||||||||||||||
| Working capital | ||||||||||||||||
| Total liabilities | ||||||||||||||||
| Expenses | ) | ) | ) | ) | ) | ) | ) | ) | ||||||||
| Net loss for the period | ) | ) | ) | ) | ) | ) | ) | ) | ||||||||
| Basic and diluted loss 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. |
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| 2. | Working capital is the difference between current assets and current liabilities. |
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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.
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 $40 million in cash received upon repayment of loans as part of the transaction with Ganfeng which closed on August 26, 2020 (“2020 Caucharí Transaction”).
LITHIUM AMERICAS CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021
(expressed in US dollars, unless stated otherwise)
Results of Operations – Net Income Analysis
Nine Months Ended September 30, 2021 Compared to the Nine Months Ended September 30, 2020
The following table summarizes the key items that resulted in an increase in the loss for the nine months ended September 30, 2021 (“9m 2021”) versus the nine months ended September 30, 2020 (“9m 2020”), as well as certain offsetting items:
| Financial results | Nine Months Ended September 30, | Change | ||||
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| (in US$ million) | 2021 | 2020 | ||||
| Exploration and evaluation expenditures | ) | ) | ) | |||
| General and administrative | ) | ) | ) | |||
| Equity compensation | ) | ) | ||||
| Loss on JEMSE transaction | ) | ) | ||||
| Share of loss of Cauchari-Olaroz project | ) | ) | ) | |||
| Gain on Cauchari-Olaroz transactions | ) | |||||
| Share of loss of Arena Minerals | ) | ) | ||||
| 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 during the nine months of 2021 is primarily attributable to:
| - | an increase in Thacker Pass exploration and evaluation expenditures related to feasibility study preparation; |
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| - | the loss on the JEMSE transaction; |
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| - | an increase in general and administrative expenses due to an increase in insurance, legal and consulting fees; |
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| - | increased finance costs (finance costs were capitalized in the comparative period and capitalization ceased upon closing the 2020 Caucharí Transaction in Q3 2020); and |
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| - | 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). |
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Higher expenses were partially offset by:
| - | a decrease in equity compensation due to the timing of annual equity grants; |
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| - | a decrease in transaction costs following closing of the 2020 Caucharí Transaction; and |
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| - | 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. |
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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 and borrowings. The change in functional currency was accounted for on a prospective basis, with no impact of this change on prior year comparative information.
Expenses
Exploration and evaluation expenditures for the nine months ended September 30, 2021, of $25.9 million (2020 – $13.0 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-Q3 2021 and the timing of permitting and other expenditures on the project.
LITHIUM AMERICAS CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021
(expressed in US dollars, unless stated otherwise)
Equity compensation for the nine months ended September 30, 2021 of $3.2 million (2020 - $4.2 million) is a non-cash expense and consists of $1.2 million (2020 - $2.9 million) fair market value of RSUs, and the $2.0 million (2020 - $1.3 million) fair value of PSUs vested during the period. Lower equity compensation during the nine months ended September 30, 2021 was mainly due to the timing of equity awards.
Included in General and Administrative expenses during the nine months ended September 30, 2021, of $7.2 million (2020 - $5.0 million) are:
| - | Office and administrative expenses of $2.1 million (2020 - $0.9 million), which increased as a result of higher insurance costs due to tight insurance market conditions. |
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| - | Professional fees of $1.8 million (2020 - $0.8 million) consisting mainly of legal fees of $0.4 million (2020 - $0.3 million), and consulting fees of $1.2 million (2020 - $0.4 million). Professional fees were higher due to increased corporate activities. |
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| - | Salaries and benefits of $2.4 million (2020 - $2.8 million) decreased mainly due to the timing of annual bonus payments. |
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Other Items
Finance and other income during the nine months ended September 30, 2021 was $5.3 million (2020 - $0.5 million) and includes mainly interest income on the Company’s loans to Exar Capital and cash and cash equivalents.
Three Months Ended September 30, 2021 versus Three Months Ended September 30, 2020
The following table summarizes the key items that resulted in an increase in net loss for the three months ended September 30, 2021 (“Q3 2021”) versus the three months ended September 30, 2020 (“Q3 2020”), as well as certain offsetting items:
| Financial results | Three Months Ended September 30, | Change | ||||
|---|---|---|---|---|---|---|
| (in US$ million) | 2021 | 2020 | ||||
| Exploration and evaluation expenditures | ) | ) | ) | |||
| General and administrative | ) | ) | ) | |||
| Equity compensation | ) | ) | ) | |||
| Share of loss of Cauchari-Olaroz project | ) | ) | ) | |||
| Gain on Cauchari-Olaroz transactions | ) | |||||
| Share of loss of Arena Minerals | ) | ) | ||||
| Transaction costs | ) | |||||
| Foreign exchange (loss)/gain | ) | ) | ||||
| Finance costs | ) | ) | ) | |||
| Finance and other income | ||||||
| Loss from discontinued operations | ) | |||||
| Tax expense | ) | |||||
| Net loss | ) | ) | ) |
All values are in US Dollars.
Higher net loss in Q3 2021 is primarily attributable to:
| - | an increase in Thacker Pass exploration and evaluation expenditures related to feasibility study preparation; |
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| - | an increase in general and administrative expenses due to an increase in insurance, legal and consulting fees; |
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| - | increased finance costs (finance costs were capitalized in the comparative period and capitalization ceased upon closing the 2020 Caucharí Transaction in Q3 2020); |
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| - | 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 |
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| - | foreign exchange loss. |
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LITHIUM AMERICAS CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021
(expressed in US dollars, unless stated otherwise)
Higher costs in Q3 2021 were partially offset by a higher finance income.
Expenses
Exploration and evaluation expenditures for Q3 2021 of $12.4 million (2020 – $3.3 million) include expenditures incurred for the Thacker Pass project. The increase in the Company’s exploration and evaluation expenditures is mostly due to higher feasibility study-related costs incurred during Q3 2021 and the timing of permitting and other expenditures on the project.
Equity compensation for Q3 2021 of $0.9 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 $0.6 million (2020 - $0.4 million) fair value of PSUs vested during the period.
General and Administrative expenses during Q3 2021 were $2.3 million (2020 - $1.4 million), an increase due to increased corporate activities.
Other Items
Finance and other income during the Q3 2021 was $3.0 million (2020 - $0.4 million) and includes mainly interest income on the Company’s loans to Exar Capital and cash and cash equivalents.
LIQUIDITY AND CAPITAL RESOURCES
| Cash Flow Highlights | Nine Months Ended September 30, | |||
|---|---|---|---|---|
| (in US$ 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 September 30, 2021, the Company had cash and cash equivalents of $482.1 million and working capital of $476.1 million, compared to cash and cash equivalents of $71.9 million and working capital of $69.4 million (excluding assets held for sale of $4.0 million) as at September 30, 2020.
During the nine months ended September 30, 2021, the Company drew $50.1 million from the $205 million senior credit facility to fund the Company’s share of Caucharí-Olaroz project construction expenses, with $59 million remaining undrawn as at September 30, 2021. In addition, as at September 30, 2021, $75 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 $134.4 million in available credit and loan facilities as at September 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
LITHIUM AMERICAS CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021
(expressed in US dollars, unless stated otherwise)
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 expenditures for Thacker Pass 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 nine months ended September 30, 2021, was $36.7 million compared to $23.8 million during the nine months ended September 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 $56.8 million during the nine months ended September 30, 2021, compared to $27.2 million during the nine months ended September 30, 2020. During the nine months ended September 30, 2021, payments for property, plant and equipment were $0.4 million (2020 – $61.3 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 nine months ended September 30, 2021, the Company provided $52.9 million in loans to Exar Capital, invested $4.8 million in common stock of Arena Minerals, contributed $1.6 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 September 30, 2021, the Company used approximately $17.9 million of $96.8 million net proceeds from the ATM Program for general corporate and working capital purposes.
Underwritten Public Offering
On January 22, 2021, the Company closed an underwritten public offering (the “Underwritten Public Offering”) of 18.2 million common shares, including 2.3 million common shares under an over-allotment option, at a price of $22.00 per share, for approximate gross proceeds to the Company of $400 million. Total net proceeds of the offering, after deducting underwriters’ fees and other expenses, were approximately $377 million.
As of September 30, 2021, the Company used approximately $30.5 million of the net proceeds from the Underwritten Public Offering including $22.1 million on pre-construction and engineering costs on Thacker Pass Project and $8.4 million on interest expense on Senior Credit Facility. The balance of funds has not been deployed to date.
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
LITHIUM AMERICAS CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021
(expressed in US dollars, unless stated otherwise)
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 and Limited Recourse Loan Facility
During the nine months ended September 30, 2021, the Company received $50.1 million from its drawdowns under the $205 million senior credit facility with $59 million undrawn as at September 30, 2021. During the comparative period ended September 30, 2020 the company drew $36.7 million under its facilities including $12 million under the senior facility and $24.7 million under the limited recourse loan facility. Subsequent to quarter end, the Company drew an additional $7.4 million under the $205 million senior credit facility to fund development expenditures at Caucharí-Olaroz.
As at September 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%).
INVESTMENT IN ARENA MINERALS
On July 26, 2021, the Company acquired 42.9 million common shares and 21.5 million share purchase warrants of Arena Minerals Inc. (TSX-V: AN) (Arena Minerals) in a private placement for total consideration of CDN$6 million (US$4.8 million). 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. 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 if the Company maintains at least a 7.5% interest in Arena Minerals; and (ii) to appoint a nominee to the Arena Minerals board of directors if the Company maintains at least a 10% interest in Arena Minerals. On September 30, 2021, the Company owned approximately 12.6% of the issued and outstanding shares of Arena Minerals.
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 | 120.2 million |
|---|---|
| Restricted Share Units (RSUs) | 2.4 million |
| Deferred Share Units (DSUs) | 0.2 million |
| Stock Options | 1.7 million |
| Performance Share Units (PSUs) | 1.1 million |
| Fully diluted number of common shares | 125.6 million |
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.
LITHIUM AMERICAS CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021
(expressed in US dollars, unless stated otherwise)
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 6 of the Company’s Q3 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 $6.7 million during the nine months ended September 30, 2021 (on a 100% basis). |
| --- | --- |
During the nine months ended September 30, 2021, Minera Exar paid director’s fees to its President, who is also a director of the Company, of $54 thousand (2020 - $55 thousand) (on a 100% basis). During the nine months ended September 30, 2021, the Company paid $0.6 million, of which $0.3 million was paid in cash and $0.3 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.
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 6, 8 and 16 of the Company’s financial statements for the nine months ended September 30, 2021 filed on SEDAR.
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 millions):
| September 30, 2021 | September 30, 2020 | |
|---|---|---|
| Equity compensation | ||
| Salaries, bonuses, benefits and directors' fees included in general and administrative expenses | ||
| Salaries, bonuses and benefits included in exploration and evaluation expenditures | ||
| Salaries and benefits capitalized to Investment in Cauchari-Olaroz project | ||
All values are in US Dollars.
Amounts due to directors and the executive management team as at September 30, 2021 include $0.2 million due to the independent directors for Q3 2021 directors’ fees (in USD millions):
| September 30, 2021 | December 31, 2020 | |
|---|---|---|
| Total due to directors and executive team |
All values are in US Dollars.
LITHIUM AMERICAS CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021
(expressed in US dollars, unless stated otherwise)
CONTRACTUAL OBLIGATIONS
As at September 30, 2021, the Company had the following contractual obligations (undiscounted, in USD million):
| 2021 | 2022 | 2023 | 2024 and later | Total | |
|---|---|---|---|---|---|
| Credit facility¹ | |||||
| 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 6 of the Company’s financial statements for the nine months ended September 30, 2021 and Notes 5 and 7 of the Company’s 2020 annual financial statements (filed on SEDAR), most of which will be incurred in the 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.
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, as well as 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 15 “Financial instruments” of the Company’s financial statements for the nine months ended September 30, 2021 available on SEDAR.
OFF-BALANCE SHEET ARRANGEMENTS
The Company’s off-balance sheet arrangements related to its exploration and evaluation assets are disclosed in Note 6 of the Company’s financial statements for the nine months ended September 30, 2021.
LITHIUM AMERICAS CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021
(expressed in US dollars, unless stated otherwise)
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 September 30, 2021. The Company’s $1.4 million reclamation bond payable to the BLM was guaranteed by a third-party insurance company.
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 nine months ended September 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, and the extent, duration and ongoing impacts of supply chain disruptions and inflationary pressures on the Company, its suppliers and contractors.
In the first nine months of 2021 construction activities at the Caucharí-Olaroz lithium project advanced while strictly complying with COVID-19 protocols 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 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 and loans 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. As consideration for this interest, JEMSE will reimburse its $23. 5 million 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 initial fair value of $5.8 million. The fair value of the long-term receivable from JEMSE was calculated by discounting the Company’s share of JEMSE’s future payments, assuming payments start after 5 years and a 10% discount rate. Estimation of the timing of payment is based on the status of construction and expected cash flows of Minera Exar.
LITHIUM AMERICAS CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021
(expressed in US dollars, unless stated otherwise)
MILLENNIAL LITHIUM OFFER
On November 1, the Company submitted an unconditional offer to acquire all outstanding shares of Millennial Lithium Corp. (“Millennial”) at a price of C$4.70 per share, payable in Lithium Americas common shares and cash of C$0.001 per Millennial share for total consideration of approximately US$400 million. The Board of Directors of Millennial has determined that the offer constitutes a “superior proposal” as defined by an existing agreement dated September 28, 2021 between Millennial and Contemporary Amperex Technology Co., Ltd. (“CATL”). CATL has a right to match the offer made by the Company until 4:30 pm Pacific Time on November 16, 2021. See the respective news releases issued by the Company and Millennial on November 1, 2021 for further details.
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
There were no changes to the Company’s directors and management in Q3 2021. Subsequent to quarter end, on October 1, 2021 Jose Francesconi joined the team and is responsible for overseeing development and construction of Company projects in Latin America, including the Caucharí-Olaroz project. Prior to joining Lithium Americas, Mr. Francesconi was the Operations Director, Argentina for Worley, a global engineering services firm, and served as a board member representative for Argentina. Prior to that, he was the Associate Engineering Director of Dow Engineering, part of the Dow Chemical group, and held various leadership roles with Dow Chemical. Mr. Francesconi holds a degree in chemical engineering from Universidad Nacional del Sur in Argentina.
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 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.
LITHIUM AMERICAS CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021
(expressed in US dollars, unless stated otherwise)
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 third 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 September 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 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
LITHIUM AMERICAS CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021
(expressed in US dollars, unless stated otherwise)
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, extent of early works 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, and for any expansion programs; expected outcome and timing of environmental surveys, permit applications and regulatory authorizations, and other environmental matters; expectations regarding the sufficiency of brine inventory; the expected outcome 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; timing to start operations at and successful results and samples to be generated from the Company’s integrated pilot plant; 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 anticipated benefits of such investment; expectations concerning the offer to Millennial; and the potential for partnership and financing scenarios for the Thacker Pass project.
LITHIUM AMERICAS CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021
(expressed in US dollars, unless stated otherwise)
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, advancements and changes; |
|---|---|
| • | 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; |
| --- | --- |
| • | 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
LITHIUM AMERICAS CORP.
MANAGEMENT’S DISCUSSION AND ANALYSIS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021
(expressed in US dollars, unless stated otherwise)
“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 or remain funded; 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; water risk; 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; Common Share price volatility; cybersecurity risks and threats; CATL not exercising its match right under its existing agreement with Millennial; the performance of the Company’s shares through to completion of the transactions contemplated by the offer made to Millennial being stable; the approval of Millennial shareholders of the transaction; changes to the Company’s current and future business plans and the strategic alternatives available to the Company; favourable treatment of the transaction under applicable anti-competition laws; and stock market conditions generally. 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.
| 23 |
|---|
lac-ex993_9.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 September 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 July 1, 2021 and ended on September 30, 2021 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR. |
| --- | --- |
| Date: November 15, 2021 | |
| --- | |
| “Jonathan Evans” | |
| Jonathan Evans | |
| Chief Executive Officer |
2
lac-ex994_8.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 September 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 July 1, 2021 and ended on September 30, 2021 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR. |
| --- | --- |
Date: November 15, 2021
“Eduard Epshtein”
Eduard Epshtein
Chief Financial Officer
2
lac-ex995_7.htm
Exhibit 99.5
| NEWS RELEASE |
|---|
Lithium Americas Reports Third Quarter 2021 Results
November 15, 2021 - Vancouver, Canada: Lithium Americas Corp. (TSX: LAC) (NYSE: LAC) (“Lithium Americas” or the “Company”) has reported unaudited financial and operating results for the third quarter ended September 30, 2021.
HIGHLIGHTS
Caucharí-Olaroz
| • | Construction activities at Caucharí-Olaroz continue to advance, targeting first production by mid-2022 on the initial 40,000 tonnes per annum (“tpa”) lithium carbonate equivalent (“LCE”) operation. |
|---|---|
| • | As of September 30, 2021, $519 million has been spent or 81% of the $641 million budget, with the majority of remaining budget committed. |
| --- | --- |
| • | Over 1,200 workers are on site, with over 97% of the total workforce having received at least their first COVID-19 vaccine dose and over 60% have received two doses. |
| --- | --- |
| • | With all major equipment on site, focus is on construction of the chemical and processing plants. |
| --- | --- |
| • | In early October, commissioning of the lime plant started to lime concentrated brine to support production ramp up. The project has sufficient brine inventory to support production ramp up. |
| --- | --- |
| • | Development planning for a second stage expansion of at least 20,000 tpa LCE continues to advance. |
| --- | --- |
Thacker Pass
| • | In October 2021, Nevada Department of Environmental Protection made a preliminary determination to issue three remaining key state-level permits: Water Pollution Control Permit, Mine Reclamation Permit and Class II Air Permit. The Record of Decision appeal process remains on track with the hearing date set for Q1 2022. |
|---|---|
| • | Phase 1 of the Feasibility Study was increased to target 40,000 tpa lithium carbonate (from 30,000-35,000 tpa). A potential Phase 2 expansion scenario to target total capacity of 80,000 tpa is being incorporated. |
| --- | --- |
| • | Updated the Measured and Indicated (“M&I”) Resource estimate to 13.7 million tonnes (“Mt”) LCE at 2,231 parts per million lithium (“ppm Li”). |
| --- | --- |
| • | Early-works construction expected to commence in H1 2022, includes site access, site preparation, water line and additional infrastructure to condense and de-risk the overall construction schedule. |
| --- | --- |
| • | Discussions continue with potential strategic partners and customers. |
| --- | --- |
| • | An integrated pilot plant to support increased scale and ongoing optimization work and to provide product samples for potential customers is expected to be operational in the first half of 2022. |
| --- | --- |
Corporate:
| • | As at September 30, 2021, the Company had $482 million in cash and cash equivalents. |
|---|---|
| • | As at September 30, 2021, the Company had $134 million in available credit, with $146 million drawn from the $205 million senior credit facility and $25 million drawn from its $100 million |
| --- | --- |
| unsecured, limited recourse, subordinated loan facility. This available credit is expected to fully fund the Company’s share of the remaining capital expenditure at Caucharí-Olaroz. | |
|---|---|
| • | In July, the Company completed a strategic investment in Arena Minerals Inc. (TSX-V: AN) of $5 million for an approximate 12.9% equity interest (14.6% on a fully diluted basis). |
| --- | --- |
| • | In early September, the Company was approved as an IRMA (Initiative for Responsible Mining Assurance) Pending Member which means that the Company commits to have the proposed project audited against the new draft IRMA Ready Standard for exploration and development within 12 months of its availability for application. |
| --- | --- |
| • | In September, the Company was recognized on the TSX30 2021 as one of the top 30 performers on the TSX. |
| --- | --- |
| • | On October 1, 2021 Jose Francesconi joined the team and is responsible for overseeing projects and technical services in Argentina. Mr. Francesconi brings over thirty years of execution experience for large capital projects and was previously the Operations Director, Argentina for Worley, and the Associate Engineering Director of Dow Engineering. |
| --- | --- |
| • | On November 1, the Company submitted an unconditional offer to acquire all outstanding shares of Millennial Lithium Corp. (“Millennial”) at a price of C$4.70 per share, payable in Lithium Americas common shares and cash of C$0.001 per Millennial share for total consideration of approximately US$400 million. |
| --- | --- |
TECHNICAL INFORMATION
The Technical Information in this news release has been reviewed and approved by Rene LeBlanc, PhD, SME, Chief Technical Officer of Lithium Americas, and a Qualified Person as defined by National Instrument 43-101.
FINANCIAL RESULTS
Selected consolidated financial information is presented as follows:
| (in US$ million except per share information) | Quarter ended September 30, | |
|---|---|---|
| 2021 | 2020 | |
| Expenses | ||
| Net loss | ||
| (Loss)/income per share – basic |
All values are in US Dollars.
| (in US$ million) | As at September 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 nine months ended September 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 $50.1 million.
The higher net loss in Q3 2021 compared to Q3 2020 is primarily attributable to higher Thacker Pass expenditures.
Click here to view the Company’s third 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; the estimated amount and grade of mineral resources for the Thacker Pass project; expected outcome and timing of environmental surveys and analysis, permit applications and other environmental matters; expected environmental impact of the project, and quality of the technology utilized to minimize such impact; 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, product quality of production and sufficiency of brine inventory 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 Jujuy Energia y Mineria Sociedad del Estado (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, including timing for pilot plant operations and expectations concerning the outcome of such operations; the timing and extent of early works construction for the Thacker Pass project; the potential for partnership and financing scenarios for the Thacker Pass project; expected benefits of the Arena Minerals investment; and expectations concerning the offer to Millennial.
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; technological advancements and changes; 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; preparation of a development plan and feasibility study for lithium production at the Thacker Pass project; CATL not exercising the Match Right under the CATL Agreement; the performance of the Company’s shares through to completion of the transactions contemplated by the Offer being stable; the approval of Millennial shareholders of the transaction; changes to the Company’s current and future business plans and the strategic alternatives available to the Company; favourable treatment of the transaction under applicable anti-competition laws; and stock market conditions generally.
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.