NEWS
Unlocking Thacker Pass: General Motors to Contribute Combined $625 Million in Cash and Letters of Credit to New Joint Venture with Lithium Americas
Lithium Americas Corp. (TSX:LAC) (NYSE:LAC) ("Lithium Americas" or the "Company") announced the Company and General Motors Holdings LLC ("GM") have entered into a new investment agreement ("Investment Agreement") to establish a joint venture ("JV") for the purpose of funding, developing, constructing and operating (the "JV Transaction") Thacker Pass in Humboldt County, Nevada ("Thacker Pass" or the "Project"). The JV Transaction will deliver $625 million of cash and letters of credit from GM to Thacker Pass alongside the conditional commitment for a $2.3 billion U.S. Department of Energy ("DOE") loan announced earlier this year.
Under the terms of the Investment Agreement, GM will acquire a 38% asset-level ownership stake in Thacker Pass for $625 million in total cash and letters of credit ("GM's JV Investment"), including $430 million of direct cash funding to the JV to support the construction of Phase 11 and a $195 million letter of credit facility ("LC Facility") that can be used as collateral to support reserve account requirements2 under the DOE Loan (as defined below). The JV Transaction replaces the $330 million Tranche 2 common equity investment commitment from GM under its original investment agreement with the Company ("Tranche 2") announced in January 2023.
TRANSACTION HIGHLIGHTS
• Largest ever publicly announced investment by a U.S. OEM in a lithium carbonate project highlights the strategic importance of Thacker Pass in creating a domestic supply chain for critical minerals.
• Allows Lithium Americas to secure $625 million in cash and letters of credit, while avoiding common equity dilution associated with Tranche 2.
• Builds upon an already strong relationship with GM as strategic investor and extends Phase 1 offtake to 20 years.
The JV Transaction is incremental to GM's February 2023 Tranche 1 investment of $320 million, which resulted in GM acquiring approximately 15 million common shares of Lithium Americas3. In addition to the JV Transaction, GM has agreed to extend its existing offtake agreement for up to 100% of production volumes from Phase 1 of Thacker Pass to 20 years to support the expected maturity of the DOE Loan. Upon closing of the JV, GM will also enter into an additional 20-year offtake agreement for up to 38% of Phase 24 production volumes and will retain its existing right of first offer on the remaining Phase 2 production volumes.
Under the terms of the Investment Agreement, GM will acquire a 38% asset-level ownership stake in Thacker Pass for $625 million in total cash and letters of credit ("GM's JV Investment"), including $430 million of direct cash funding to the JV to support the construction of Phase 11 and a $195 million letter of credit facility ("LC Facility") that can be used as collateral to support reserve account requirements2 under the DOE Loan (as defined below). The JV Transaction replaces the $330 million Tranche 2 common equity investment commitment from GM under its original investment agreement with the Company ("Tranche 2") announced in January 2023.
TRANSACTION HIGHLIGHTS
• Largest ever publicly announced investment by a U.S. OEM in a lithium carbonate project highlights the strategic importance of Thacker Pass in creating a domestic supply chain for critical minerals.
• Allows Lithium Americas to secure $625 million in cash and letters of credit, while avoiding common equity dilution associated with Tranche 2.
• Builds upon an already strong relationship with GM as strategic investor and extends Phase 1 offtake to 20 years.
The JV Transaction is incremental to GM's February 2023 Tranche 1 investment of $320 million, which resulted in GM acquiring approximately 15 million common shares of Lithium Americas3. In addition to the JV Transaction, GM has agreed to extend its existing offtake agreement for up to 100% of production volumes from Phase 1 of Thacker Pass to 20 years to support the expected maturity of the DOE Loan. Upon closing of the JV, GM will also enter into an additional 20-year offtake agreement for up to 38% of Phase 24 production volumes and will retain its existing right of first offer on the remaining Phase 2 production volumes.
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