Lithium Americas Shares Climb on $2.26 Billion Loan Commitment from U.S. Department of Energy
By Adriano Marchese
Lithium Americas shares were higher in early trading Thursday after the company said it received a preliminary commitment for $2.26 billion in financing from the U.S. Department of Energy to finance its lithium-processing facilities in Nevada.
Shares trading in Toronto were nearly 15% higher at 8.90 Canadian dollars ($6.61), coming down from an earlier high of C$10.30.
The Vancouver, British Columbia-based lithium company said the money will be used to finance the construction of the processing facilities at Thacker Pass, where the company plans to produce an initial 40,000 metric tons a year of battery-grade lithium carbonate.
So far, site preparation for major earthworks has been completed, including all site clearing, commissioning a water supply system, site access improvements and site infrastructure. The company is currently working on the early planning phase of construction.
Lithium Americas has estimated that the total capital cost for phase 1 of construction is now $2.93 billion. The price has been steadily creeping higher over the years, with the last price tag at $2.27 billion.
Currently from the Department of Energy, it has received a conditional commitment for the $2.26 billion loan under the Advanced Technology Vehicles Manufacturing loan program.
The new price tag at Thacker Pass reflects updated quantities and execution planning tied to the increased engineering progress, the use of union labor for construction, the development of an all-inclusive housing facility for construction workers, updated equipment pricing, and a larger project contingency, it said.
Electric vehicles are steadily growing in popularity in the U.S. and globally. Lithium Americas expects the loan to provide the cornerstone financing for the construction of the first phase of the project, which it estimates could support lithium needs for a domestic production supply chain for up to 800,000 electric vehicles annually.
The company still needs to meet technical, legal and financial conditions, as well as negotiate the definitive financing documents, before getting full funding approval.
As well as this loan commitment, Lithium Americas secured an investment of $650 million from General Motors in January of last year, one of the largest investments by an automaker in battery raw materials.
The investment would grant the company access to all of the lithium produced in phase 1 for up to 15 years, and has a right of first offer oh phase 2 production.
Together, with the DOE financing and the investment are expected to provide the majority of the capital necessary to fund the construction of phase 1, it said.
Write to Adriano Marchese at adriano.marchese@wsj.com
(END) Dow Jones Newswires
March 14, 2024 10:24 ET (14:24 GMT)
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