Lithium Americas to split into two companies

The Thacker Pass lithium project in Nevada. Image from Lithium Americas.

Lithium Americas (TSX: LAC; NYSE: LAC) plans to separate its North American and Argentine businesses into two independent public companies by the end of the year, it said on Thursday.

The new Lithium Americas company will own the Thacker Pass lithium project in Nevada and investments in Green Technology Metals (ASX: GT1) and Ascend Elements, according to a company statement. Lithium Americas’ president and chief executive officer, Jonathan Evans, will stay in that position for the new company.

The other new company, Lithium International, will focus on the Argentine assets, the parent company said. These include the 44.8% interest in the Caucharí-Olaroz lithium brine project in Jujuy, which is advancing towards first production; the full interest in the Pastos Grandes lithium brine project in Salta, and the 17% investment in Arena Minerals (TSXV: AN). The CEO of Lithium International wasn’t named.

“Separating the North American and Argentine businesses will facilitate unlocking the full potential of their significant asset base to deliver maximum value to our shareholders and other stakeholders,” Evans said in the release. “Upon completion of the separation, Lithium Americas shareholders will retain ownership in two leading lithium businesses.”

Demand for lithium is soaring as companies try to secure sources of the element for electric vehicle batteries, mobile phones and other modern technology to lower emissions. Tesla faces increased competition for the metal as traditional car companies switch over to electric vehicle production. Western nations are promoting and protecting domestic lithium producers, and other mineral industries deemed critical, from control by countries such as China and Russia.

According to the separation plan, each shareholder is to keep its proportionate interest in shares of the parent company, which would become Lithium International, and receive newly issued stock of Lithium Americas in proportion to its then-current ownership of the parent company.

The separation still needs approvals from the board, shareholders, stock exchanges and the Canada Revenue agency, among others, the company said.

Thacker Pass is moving towards production with all federal and state permits needed to commence construction while it awaits a Record of Decision appeal ruling expected early next year, the company said. The company is planning the open-pit project’s production capacity to reach 60,000 tonnes a year of battery-grade lithium carbonate over a 46-year mine life, according to a 2018 pre-feasibility study.

Measured and indicated resources at Thacker Pass total 385 million tonnes averaging 2,917 parts per million (ppm) lithium for 6 million tonnes of lithium carbonate equivalent (LCE). Inferred resources are 147 million tonnes averaging 2,932 ppm for 2.3 million tonnes of LCE.

Lithium International intends to bring lithium carbonate output at Caucharí-Olaroz to 40,000 tonnes per year in the first half of 2023 before a 20,000-tonne-per-year expansion at the site. The mine life is projected at 40 years. The project has proven and probable reserves of 3.64 million tonnes of LCE grading 607 milligrams lithium per litre in 1.1 billion cubic metres brine for 682,920 tonnes contained metal.

The Argentine unit is also working to advance Pastos Grandes and a collaboration with Arena Minerals, the company said. Pastos Grandes has proven and probable reserves of 943,000 tonnes LCE grading 439 mg lithium per litre in 734,000 cubic metres brine for 177,000 tonnes contained metal.

Shares in Lithium Americas shot up nearly 5% by late morning Thursday in Toronto to C$34.52, valuing the company at C$4.64 billion ($3.38bn).