Ganfeng Lithium will subscribe for new shares of Minera Exar in exchange for a consideration of $16m in cash
Lithium Americas and Ganfeng Lithium have signed definitive agreements for their joint venture company Minera Exar, which owns the Caucharí-Olaroz lithium project, currently under construction in Argentina.
Under the terms of the transaction, Ganfeng Lithium will subscribe for new shares of Minera Exar in exchange for a consideration of $16m in cash.
Minera Exar is expected to use the proceeds for the construction and development of Caucharí-Olaroz project. Lithium Americas and Ganfeng Lithium will hold 49% and 51% interest in Minera Exar respectively, upon completion of the transaction.
Lithium Americas president and CEO Jon Evans said: “The Transaction with Ganfeng Lithium further strengthens our balance sheet while ensuring Caucharí-Olaroz construction continues to advance as planned.
“For Lithium Americas, the Transaction reinforces our strategy of building a low-cost lithium operation in Argentina, and provides funding to advance our second flagship project, Thacker Pass, towards construction in Nevada.”
Ganfeng Lithium and Lithium Americas have agreed upon a $400m funding schedule
In addition to the share purchase, the companies have also agreed to restructure their jointly controlled entity Exar Capital, which offers funding to Minera Exar for Caucharí-Olaroz.
Ganfeng Lithium will pay $40m to Exar Capital, in non-interest-bearing loans, which are repayable in 2029, and can be extended to an additional one year.
The loan proceeds will be used to repay intercompany loans owing to Lithium Americas, with $20m to be paid on closing of the Transaction and an additional $20m payable on August 1, 2020.
In relation with the transaction, the companies have agreed to a funding schedule, including investment of up to $400m, which is in line with the 2019 approved construction plan.
Ganfeng Lithium vice-chairman and vice-president Xiaoshen Wang said: “We remain firmly committed to investing in Argentina, Caucharí-Olaroz and the team at Minera Exar.
“The Transaction provides increased financial flexibility and benefits to Ganfeng Lithium as we continue to invest in one of the largest and lowest cost sources of lithium carbonate globally alongside our partner, Lithium Americas.”