General Motors (NYSE:GM), the United States’ largest carmaker, has agreed to inject US$625 million ($934.9 million) into Vancouver-based Lithium Americas‘ (TSX:LAC) Thacker Pass Project in Nevada.
The pair have entered into a new investment agreement to establish a joint venture (JV) to fund, develop, build and operate the project.
GM will acquire a 38% stake in Thacker Pass in exchange for the investment, which will be settled via a US$430 million cash payment and US$195 million letter of credit.
Goldman Sachs and Evercore Group are acting as financial advisors while Vinson & Elkins and Cassels Brock & Blackwell are acting as legal counsel to Lithium Americas.
Meanwhile, GM is being advised on the financial front by Morgan Stanley and its legal counsel is Mayer Brown and Osler, Hoskin & Harcourt.
This new agreement follows GM’s previous cash injection of US$320 million and the inking of an offtake agreement with Old LAC, now known as Lithium Americas after the company acquired ownership of Old LAC’s North American assets.
The original deal was supposed to be a two tranche investment totalling US$650 million, but Lithium Americas and GM agreed to negotiate an alternative additional investment.
Lithium Americas says it is the largest ever publicly announced investment by a US original equipment manufacture in a lithium carbonate project, which highlights the strategic importance of Thacker Pass in creating a domestic supply chain for critical minerals.
Jeff Morrison, Senior Vice President of GM’s Global Purchasing and Supply Chain, says sourcing critical electric vehicle raw materials, like lithium, from suppliers in the US is expected to help the company manage battery cell costs, deliver value to its customers and investors, and create jobs.
The JV transaction is an increase over GM’s initial investment of $320 million, which resulted in the company acquiring around 15 million shares in Lithium Americas.
GM has also agreed to extend its existing offtake agreement for up to 100% of production from phase one of Thacker Pass to 20 years.
This will support the expected maturity of a previously announced US$2.3 billion loan agreed to by the US Department of Energy (DOE) for construction contingency, ramp-up and sustaining capital.
Lithium Americas received a conditional commitment for the loan in March 2024 under the Advanced Technology Vehicles Manufacturing Loan Program.
Prior to making the first draw on the DOE Loan, expected around mid-2025, Lithium Americas is required to fund about $195 million – either through cash or letters of credit – for reserve accounts associated with the loan.
The GM facility will be used to fund the DOE’s reserve accounts.
On closing of the JV, GM will also enter into an additional 20-year offtake agreement for up to 38% of phase-two production volumes and will retain its existing right of first offer on the remaining phase-two production volumes.
Lithium Americas CEO Jonathan Evans says the company’s relationship with GM has been significantly strengthened with the JV agreement as the two companies continue to pursue a mutual goal to develop a robust domestic lithium supply chain by advancing the development of Thacker Pass.
“Today’s joint venture announcement is a win-win for GM and Lithium Americas. GM’s JV investment demonstrates their continued support and helps us to unlock the previously announced $2.3 billion DOE loan,” he says.
“We will be working closely with GM to advance towards the final investment decision, which we are targeting by the end of the year.”
Dual-listed Lithium Americas, which has a market capitalisation of C$986.7 million on the Toronto Stock Exchange and is also listed on the New York Stock Exchange, will retain a 62% interest in Thacker Pass and manage the project.
Thacker Pass is expected to produce 40,000 tonnes per annum of battery grade lithium carbonate in phase one and increasing output to 80,000 tonnes per annum in phase two.
The project, which sits in Humboldt County in northern Nevada, is estimated to have enough resources to support at least a 40-year mine life.
Lithium Americas says it is continuing to focus on de-risking project execution by advancing detailed engineering, project planning and procurement packages.
While the lithium price is languishing, investment in the space is continuing as evidenced by the JV deal between GM and Lithium Americas as well as news this week from Argentina-focused Galan Lithium (ASX:GLN) that it has banked $13.3 million in a fully subscribed entitlement offer.
US and Canada battery grade lithium carbonate is currently fetching US$13,000 to US$14,000 a tonne, according to Fastmarkets.
Write to Angela East at Mining.com.au
Images: Lithium Americas
