As the Separation was completed before the closing of the Tranche 2 Investment, the Tranche 2 agreement between GM and Old LAC was terminated on October 3, 2023 and replaced by a corresponding subscription agreement between GM and New LAC (the “Tranche 2 Investment Agreement”) (see Note 10) such that the Tranche 2 Investment proceeds would be received by the Company. On October 15, 2024, the Company and GM entered into a new investment agreement (“GM Investment Agreement”) to establish a joint venture (“JV”) for the purpose of funding, developing, constructing and operating Thacker Pass (“JV Transaction”). The JV Transaction will deliver $625 million of cash and letters of credit from GM to Thacker Pass. Under the terms of the GM Investment Agreement, GM will acquire a 38% asset-level ownership stake in Thacker Pass. The Company and GM terminated the Tranche 2 Investment Agreement concurrently with the execution of the GM Investment Agreement.

As part of the Separation, an investors rights agreement and an agreement to supply GM with lithium carbonate production from Thacker Pass Phase 1 and a right of first offer ("ROFO") on Phase 2 production (the “Offtake Agreement”) were assigned by Old LAC to the Company. 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 Transaction, GM will also enter into an additional 20 year offtake agreement for up to 38% of Thacker Pass Phase 2 production and will retain its existing ROFO on the remaining Phase 2 production volumes.

On March 12, 2024, the Company received a conditional commitment (“Conditional Commitment”) from the U.S. Department of Energy (“DOE”) for a $2.26 billion loan under the Advanced Technology Vehicles Manufacturing (“ATVM”) Loan Program (the “DOE Loan”), for financing the construction of the processing facilities at Thacker Pass. On October 28, 2024, the Company and the DOE closed the $2.26 billion DOE Loan. The Company is required to meet certain conditions precedent in advance of first draw under the DOE Loan.

On August 5, 2024, the Company received approval for a $11.8 million grant from the U.S. Department of Defense to support an upgrade of local power infrastructure and to help build a transloading facility.

To date, the Company has not generated significant revenues from operations and has relied on equity financing to fund operations. The underlying values of exploration and evaluation assets, property, plant and equipment and the investment in Thacker Pass are dependent on the existence of economically recoverable reserves, securing and maintaining title and beneficial interest in the properties, and the ability of the Company to obtain the necessary financing to complete development, and to attain future profitable operations.

Prior to October 3, 2023, LAC North America did not operate as a separate legal entity. The assets, liabilities, results of operations and cash flows prior to October 3, 2023 were those specifically identifiable to LAC North America including assets, liabilities and expenses relating to Thacker Pass, specified investments, transactions and balances arising from the GM investment, as well as an allocation of certain costs relating to the management of those relevant assets, liabilities and results of operations. Such costs were allocated from the shared corporate expenses of Old LAC based on the estimated level of involvement of Old LAC management and employees with LAC North America.

During the comparative period ended September 30, 2023, Old LAC costs were allocated to LAC North America for corporate administrative expenses and employment costs of Old LAC employees primarily relating to Old LAC employees who provided services including accounting and finance, legal, information technology, human resources, marketing, investor relations, contract support, treasury, administrative and other corporate head office services.

The expenses and cost allocations have been determined on a basis considered by Old LAC to be a reasonable reflection of the utilization of services provided to or the benefit received by LAC North America during the comparative period ended September 30, 2023 presented relative to the total costs incurred by Old LAC.

The Interim Financials are expressed in US dollars (“USD”), the Company’s presentation and functional currency. The accounting policies are the same as those applied in the Company’s 2023 Annual Financials.

Prepayments of $6,860 at September 30, 2024 related to the non-current portion of project insurance for Thacker Pass and deposits on equipment, are included in Other assets. Prepayments of $15,315 at December 31, 2023 related to housing units and related transportation costs, as well as the non-current portion of project insurance for Thacker Pass, were included in Other assets.

Pursuant the Tranche 2 Investment agreement, GM would purchase common shares of New LAC subject to the satisfaction of certain conditions precedent, including the condition that the Company secured, subject to certain conditions, sufficient funding to complete the development of Phase 1 for Thacker Pass (the “Funding Condition”). The subscription agreement called for an aggregate purchase price of up to $329,852, with the number of shares to be determined using a price equal to the lower of (a) the 5-day volume weighted average share price (which is determined as of the date the notice that the certain conditions have been met) and (b) $17.36 per share.The GM Tranche 2 Agreements were treated as a derivative because the GM Tranche 2 Agreements could result in the issuance of a variable number of shares for the fixed subscription price. The derivative was initially measured at fair value and subsequently carried at fair value through profit and loss.

The Company recorded the GM Tranche 2 Agreements derivative on January 30, 2023, at an initial fair value of $33,194 and the net proceeds of Tranche 1 investment were recorded in Net former parent investment. Financial advisory fees of $16,803 and other transaction costs of $174 were paid in connection with the closing of the first tranche. The $1,760 portion of the transaction costs related to the GM Tranche 2 Agreements derivative were expensed. Transactions costs of $15,217 attributable to the GM Tranche 1 proceeds were recorded in the Net former parent investment.

The fair value of the derivative as of January 30, 2023, was determined using a Monte Carlo simulation with the following Old LAC’s inputs: volatility of 58.34%, share price of $21.99, a risk-free rate of 4.77%, and an expected dividend of 0%. The fair value of the derivative as of December 31, 2023, was estimated with the following inputs: volatility of 71.26%, share price of $6.40, a risk-free rate of 5.54%, and an expected dividend of 0%. The fair value of the derivative as of September 30, 2024, was estimated with the following inputs: volatility of 81.16%, share price of $2.70, a risk-free rate of 4.63%, and an expected dividend of 0%. A gain on change in the fair value of the derivative for the period from December 31, 2023, to September 30, 2024 of $138 (2023 - gain of $32,824) was recognized in the Condensed Consolidated Interim Statement of Comprehensive Loss for the nine months ended September 30, 2024.

Valuation of the derivative is sensitive to changes in the Company's share price and the assumed volatility of common shares. The change in fair value of the GM derivative liability for the nine months ended September 30, 2024, and year ended December 31, 2023, were driven by underlying valuation assumptions. A reduction/increase of the Company's share price by 10% at September 30, 2024, would result in a corresponding reduction/increase of the derivative value by 20% and 24% respectively.

As a result of the signing of the GM Investment Agreement on October 15, 2024, the Company and GM agreed to terminate the Tranche 2 Investment Agreement concurrently with the execution of the GM Investment Agreement.

Offtake Agreement

As part of the Arrangement, the Offtake Agreement was assigned to New LAC.

Pursuant to the Offtake Agreement, GM may purchase up to 100% of Thacker Pass Phase 1 production at a price based on prevailing market rates. The term of the arrangement for Phase 1 production was ten years, subject to a five-year extension at GM’s option, which will be extended to 20 years to support the expected maturity of the DOE Loan. The Company has also granted GM a ROFO on Thacker Pass Phase 2 production.

Upon closing of the JV Transaction, GM will also enter into an additional 20-year offtake agreement for up to 38% of production volumes from Phase 2 and will retain its existing ROFO on the remaining balance of Phase 2 production volumes.