EX-99.1 2 lac-ex991_6.htm EX-99.1 lac-ex991_6.htm

 

Exhibit 99.1

 

Lithium Americas CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2020(Expressed in US Dollars)

 

 


LITHIUM AMERICAS CORP.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF FINANCIAL POSITION

(Unaudited)

(Expressed in thousands of US dollars)

 

 

 

 

 

June 30,

 

 

December 31,

 

 

 

Note

 

2020

 

 

2019

 

 

 

 

 

$

 

 

$

 

CURRENT ASSETS

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents¹

 

 

 

 

49,719

 

 

 

83,614

 

Receivables, prepaids and deposits

 

 

 

 

2,710

 

 

 

2,595

 

Deferred financing costs

 

 

 

 

1,022

 

 

 

1,190

 

Inventories

 

 

 

 

552

 

 

 

1,236

 

 

 

 

 

 

54,003

 

 

 

88,635

 

Assets held for sale

 

 

 

 

3,958

 

 

 

4,279

 

 

 

 

 

 

57,961

 

 

 

92,914

 

 

 

 

 

 

 

 

 

 

 

 

NON-CURRENT ASSETS

 

 

 

 

 

 

 

 

 

 

Restricted cash

 

 

 

 

150

 

 

 

150

 

Loans to Joint Operation

 

4

 

 

43,204

 

 

 

37,959

 

Property, plant and equipment

 

5

 

 

214,473

 

 

 

158,924

 

Exploration and evaluation assets

 

 

 

 

3,852

 

 

 

3,852

 

 

 

 

 

 

261,679

 

 

 

200,885

 

TOTAL ASSETS

 

 

 

 

319,640

 

 

 

293,799

 

 

 

 

 

 

 

 

 

 

 

 

CURRENT LIABILITIES

 

 

 

 

 

 

 

 

 

 

Accounts payable and accrued liabilities

 

 

 

 

10,745

 

 

 

11,879

 

Current portion of long-term liabilities

 

6

 

 

3,440

 

 

 

3,111

 

 

 

 

 

 

14,185

 

 

 

14,990

 

LONG-TERM LIABILITIES

 

 

 

 

 

 

 

 

 

 

Credit and loan facilities

 

6

 

 

117,842

 

 

 

83,043

 

Joint Operation borrowings

 

6

 

 

33,529

 

 

 

28,845

 

Decommissioning provision

 

 

 

 

734

 

 

 

633

 

Foreign withholding tax liability

 

 

 

 

2,358

 

 

 

1,445

 

Other liabilities

 

6

 

 

6,930

 

 

 

5,222

 

 

 

 

 

 

161,393

 

 

 

119,188

 

TOTAL LIABILITIES

 

 

 

 

175,578

 

 

 

134,178

 

 

 

 

 

 

 

 

 

 

 

 

SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

 

 

 

 

Share capital

 

 

 

 

204,267

 

 

 

200,913

 

Contributed surplus

 

 

 

 

28,798

 

 

 

28,404

 

Accumulated other comprehensive loss

 

 

 

 

(3,166

)

 

 

(3,867

)

Deficit

 

 

 

 

(85,837

)

 

 

(65,829

)

TOTAL SHAREHOLDERS’ EQUITY

 

 

 

 

144,062

 

 

 

159,621

 

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

 

 

 

 

319,640

 

 

 

293,799

 

1 Cash and cash equivalents as at June 30, 2020, include the Company’s $12,268 share (December 31, 2019 - $52,495) of the Joint Operation’s cash and cash equivalents of $24,536 and a $20,000 drawdown on one of the credit facilities during the six months ended June 30, 2020 to fund the Joint Operation.

 

Approved for issuance on August 13, 2020

On behalf of the Board of Directors:

 

“Fabiana Chubbs”

 

“George Ireland”

Director

 

Director

 

2

 


LITHIUM AMERICAS CORP.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited)

(Expressed in thousands of US dollars, except for per share amounts; shares in thousands)

 

 

 

 

Three months ended June 30,

 

 

 

Six months ended June 30,

 

 

 

Note

2020

 

 

2019

 

 

 

2020

 

 

2019

 

 

 

 

$

 

 

$

 

 

 

$

 

 

$

 

EXPENSES

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exploration expenditures

 

10

 

(4,283

)

 

 

(2,147

)

 

 

 

(9,688

)

 

 

(3,328

)

General and administrative

 

9

 

(1,527

)

 

 

(2,446

)

 

 

 

(3,616

)

 

 

(4,166

)

Equity compensation

 

7

 

(684

)

 

 

(2,056

)

 

 

 

(3,502

)

 

 

(2,679

)

Share of income of Joint Venture

 

4

 

-

 

 

 

1,713

 

 

 

 

-

 

 

 

3,097

 

 

 

 

 

(6,494

)

 

 

(4,936

)

 

 

 

(16,806

)

 

 

(7,076

)

OTHER ITEMS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Transaction costs

 

 

 

(72

)

 

 

(293

)

 

 

 

(718

)

 

 

(1,050

)

Foreign exchange gain/(loss)

 

 

 

1,321

 

 

 

271

 

 

 

 

(1,050

)

 

 

(625

)

Finance costs

 

 

 

-

 

 

 

(1,329

)

 

 

 

-

 

 

 

(1,969

)

Finance and other income

 

 

 

48

 

 

 

279

 

 

 

 

179

 

 

 

596

 

 

 

 

 

1,297

 

 

 

(1,072)

 

 

 

 

(1,589

)

 

 

(3,048

)

NET LOSS BEFORE TAX

 

 

 

(5,197

)

 

 

(6,008

)

 

 

 

(18,395

)

 

 

(10,124

)

Tax expense

 

 

 

(464

)

 

-

 

 

 

 

(914

)

 

 

-

 

NET LOSS BEFORE DISCONTINUED OPERATIONS

 

 

 

(5,661

)

 

 

(6,008

)

 

 

 

(19,309

)

 

 

(10,124

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LOSS FROM DISCONTINUED OPERATIONS

 

 

 

(331

)

 

 

(646

)

 

 

 

(699

)

 

 

(998

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET LOSS

 

 

 

(5,992

)

 

 

(6,654

)

 

 

 

(20,008

)

 

 

(11,122

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER COMPREHENSIVE INCOME/(LOSS)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ITEMS THAT MAY BE RECLASSIFIED SUBSEQUENTLY TO NET (LOSS)/INCOME

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unrealized (loss)/gain on translation to reporting currency

 

 

 

(1,479

)

 

 

(252

)

 

 

 

701

 

 

 

695

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

TOTAL COMPREHENSIVE LOSS

 

 

 

(7,471

)

 

 

(6,906

)

 

 

 

(19,307

)

 

 

(10,427

)

BASIC AND DILUTED LOSS PER SHARE FROM CONTINUING OPERATIONS

 

 

 

(0.06

)

 

 

(0.07

)

 

 

 

(0.21

)

 

 

(0.11

)

BASIC AND DILUTED LOSS PER SHARE

 

 

 

(0.07

)

 

 

(0.07

)

 

 

 

(0.22

)

 

 

(0.13

)

WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING-

BASIC AND DILUTED

 

 

 

90,206

 

 

 

88,943

 

 

 

 

90,058

 

 

 

88,840

 

 

 

3

 


LITHIUM AMERICAS CORP.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN EQUITY

(Unaudited)

(Expressed in thousands of US dollars and shares in thousands)

 

 

 

Share capital

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Number

 

 

Amount

 

 

Contributed

surplus

 

 

Accumulated

other

comprehensive

income/(loss)

 

 

Deficit

 

 

Shareholders’

equity

 

 

 

of Shares

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

Authorized share capital:

  Unlimited common shares without par value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2018

 

 

88,728

 

 

 

197,991

 

 

 

26,172

 

 

 

(4,293

)

 

 

(137,588

)

 

 

82,282

 

Shares issued on conversion of RSUs and exercise of stock options

 

 

246

 

 

 

591

 

 

 

(280

)

 

 

-

 

 

 

-

 

 

 

311

 

Equity compensation (Note 7)

 

 

-

 

 

 

-

 

 

 

2,689

 

 

 

-

 

 

 

-

 

 

 

2,689

 

DSUs issued in lieu of directors' fees

 

 

-

 

 

 

-

 

 

 

231

 

 

 

-

 

 

 

-

 

 

 

231

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(11,122

)

 

 

(11,122

)

Other comprehensive income

 

 

-

 

 

-

 

 

 

-

 

 

 

695

 

 

 

-

 

 

 

695

 

Balance, June 30, 2019

 

 

88,974

 

 

 

198,582

 

 

 

28,812

 

 

 

(3,598

)

 

 

(148,710

)

 

 

75,086

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance, December 31, 2019

 

 

89,843

 

 

 

200,913

 

 

 

28,404

 

 

 

(3,867

)

 

 

(65,829

)

 

 

159,621

 

Shares issued on conversion of RSUs, DSUs and exercise of stock options

 

 

800

 

 

 

3,354

 

 

 

(3,309

)

 

 

-

 

 

 

-

 

 

 

45

 

Equity compensation (Note 7)

 

 

-

 

 

 

-

 

 

 

3,435

 

 

 

-

 

 

 

-

 

 

 

3,435

 

DSUs issued in lieu of directors' fees

 

 

-

 

 

 

-

 

 

 

268

 

 

 

-

 

 

 

-

 

 

 

268

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(20,008

)

 

 

(20,008

)

Other comprehensive income

 

 

-

 

 

 

-

 

 

 

-

 

 

 

701

 

 

 

-

 

 

 

701

 

Balance, June 30, 2020

 

 

90,643

 

 

 

204,267

 

 

 

28,798

 

 

 

(3,166

)

 

 

(85,837

)

 

 

144,062

 

 

 

 

4

 


LITHIUM AMERICAS CORP.

CONDENSED CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS

(Unaudited)

(Expressed in thousands of US dollars)

 

 

 

Six months ended June 30,

 

 

 

2020

 

 

2019

 

 

 

$

 

 

$

 

OPERATING ACTIVITIES

 

 

 

 

 

 

 

 

Net loss for the period

 

 

(20,008

)

 

 

(11,122

)

Items not affecting cash:

 

 

 

 

 

 

 

 

Equity compensation

 

 

3,502

 

 

 

2,689

 

Depreciation

 

 

342

 

 

 

476

 

Foreign exchange loss

 

 

1,050

 

 

 

625

 

Share of gain in Joint Venture

 

 

-

 

 

 

(3,097

)

Interest (paid)/accrued and other expenses

 

 

(2,001

)

 

 

1,644

 

Changes in non-cash working capital items:

 

 

 

 

 

 

 

 

Increase in receivables, prepaids and deposits

 

 

(55

)

 

 

(209

)

Decrease/(increase) in inventories

 

 

294

 

 

 

(18

)

Increase/(decrease) in accounts payable and accrued liabilities

 

 

307

 

 

 

(324

)

Net cash used in operating activities

 

 

(16,569

)

 

 

(9,336

)

INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

Loans to Joint Venture (Note 4)

 

 

-

 

 

 

(66,250

)

Contribution to Joint Venture

 

 

-

 

 

 

(831

)

Additions to property, plant and equipment

 

 

(51,927

)

 

 

(651

)

Net cash used in investing activities

 

 

(51,927

)

 

 

(67,732

)

FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

Proceeds from stock option exercises

 

 

45

 

 

 

311

 

Drawdowns from the credit facilities (Note 6)

 

 

34,200

 

 

 

66,250

 

Finance lease repayments

 

 

(158

)

 

 

(120

)

Repayment of long-term borrowings

 

 

(71

)

 

 

(71

)

Other (Note 10)

 

 

1,000

 

 

 

500

 

Net cash provided by financing activities

 

 

35,016

 

 

 

66,870

 

EFFECT OF FOREIGN EXCHANGE ON CASH

 

 

(415

)

 

 

70

 

CHANGE IN CASH AND CASH EQUIVALENTS

 

 

(33,895

)

 

 

(10,128

)

CASH AND CASH EQUIVALENTS - BEGINNING OF THE PERIOD

 

 

83,614

 

 

 

41,604

 

CASH AND CASH EQUIVALENTS - END OF THE PERIOD

 

 

49,719

 

 

 

31,476

 

 

Supplemental disclosure with respect to cash flows (Note 12)

 

 

 

 

 

5

 


LITHIUM AMERICAS CORP.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2020

(Expressed in thousands of US dollars, except for per share amounts; shares in thousands)

 

1.

NATURE OF OPERATIONS

Lithium Americas Corp. (“Lithium Americas” or the “Company”) is a Canadian based resource company focused on the advancement of two significant lithium projects: the Cauchari-Olaroz project (“Cauchari-Olaroz”), located in the Jujuy province of Argentina, and the Thacker Pass project (“Thacker Pass”), located in north-western Nevada, USA. Cauchari-Olaroz is a lithium brine project and is owned by a legal entity in Argentina, Minera Exar S.A. (“Minera Exar”). Minera Exar is a joint operation owned 50/50 by the Company and Ganfeng Lithium Co. Ltd. (“Ganfeng”). Thacker Pass is a sedimentary-based lithium property located in the McDermitt Caldera in Humboldt County, Nevada, and is 100% owned by the Company’s wholly owned subsidiary, Lithium Nevada Corp. (“Lithium Nevada”).

The Company’s common shares are listed on the Toronto Stock Exchange and the New York Stock Exchange under the symbol "LAC".

The Company’s head office and principal address is 300-900 West Hastings Street, Vancouver, British Columbia, Canada, V6C 1E5.

To date, the Company has not generated significant revenues from operations and has relied on equity and other financings to fund operations. The underlying values of exploration and evaluation assets and property, plant and equipment 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 permitting, development, and to attain future profitable operations.

2.

BASIS OF PREPARATION AND PRESENTATION

These condensed consolidated interim financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) applicable to the preparation of interim financial statements, including International Accounting Standard (“IAS”) 34, Interim Financial Reporting. These condensed consolidated interim financial statements should be read in conjunction with the annual consolidated financial statements for the year ended December 31, 2019, which have been prepared in accordance with IFRS as issued by the IASB.

These condensed consolidated interim financial statements are expressed in US dollars, the Company’s presentation currency, and have been prepared on a historical cost basis. The Company has used the same accounting policies and methods of computation as in the consolidated financial statements for the year ended December 31, 2019.


 

6

 


LITHIUM AMERICAS CORP.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2020

(Expressed in thousands of US dollars, except for per share amounts; shares in thousands)

 

3.

SIGNIFICANT ACCOUNTING POLICIES

Critical Accounting Estimates and Judgments

The preparation of these condensed consolidated interim financial statements in conformity with IFRS applicable to the preparation of interim financial statements requires judgments, estimates, and assumptions that affect the amounts reported. Those estimates and assumptions concerning the future may differ from actual results. Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The significant estimates and judgments made by management in applying the Company’s accounting policies and the key sources of estimation uncertainty are substantially the same as those that management applied to the consolidated financial statements for the year ended December 31, 2019, except as disclosed below.

COVID-19 Estimation Uncertainty

In March 2020, the World Health Organization declared a global pandemic related to COVID-19. Many countries, including Canada, the United States and Argentina, where the Company operates, announced mandatory emergency measures and restrictions on businesses and individuals to mitigate the spread of the virus. The outbreak and the related mitigation measures have had and will continue to have an adverse impact on global economic conditions as well as on the Company’s activities. The extent to which the COVID-19 outbreak and related mitigation measures may impact the Company’s business activities will depend on future developments, such as the ultimate geographic spread of the disease, the duration of the outbreak, travel restrictions, business disruptions, and the effectiveness of actions taken in Canada, the United States, Argentina and other countries to contain the disease, treat it and develop a vaccine.  COVID-19 resulted in a widespread health crisis that is adversely affecting the economies and financial markets of many countries, resulting in an economic downturn that could further affect the Company’s operations.

As at and for the six months ended June 30, 2020, COVID-19 measures, restrictions and economic effects did not have a significant impact on the Company’s financial position or financial results.

On March 20, 2020, following the Presidential decree for mandatory social isolation in Argentina, construction of the Cauchari-Olaroz lithium project was temporarily suspended. Engineering, procurement and manufacturing of equipment, which was performed offsite, continued. While the project was temporarily moved into care and maintenance, costs associated with the suspension of construction were expensed. Such costs were insignificant during the six months ended June 30, 2020. As significant offsite activities continued during the suspension period interest costs continued to be capitalized.

In April 2020, prior to resuming construction activities after the mandatory quarantine, Minera Exar implemented COVID-19 health and safety protocols, which were approved by Jujuy Province. These approved health and safety procedures were implemented at site and at the Jujuy office. Following this, limited construction activities resumed in mid-April 2020.

By the end of Q2 2020, the number of positive COVID-19 cases had intensified in the Province of Jujuy had increased. As announced in early July as a result of workers at the project testing positive for COVID-19, construction was immediately suspended. During July testing of the entire workforce was completed, and workers were demobilized from the site. Only the minimum required staff remained on-site to oversee care and maintenance activities. Necessary measures are being taken by the Company and Minera Exar to address the situation, working in close cooperation with the Province of Jujuy. All workers remain in good condition and substantially all workers who tested positive have since recovered and have been released from isolation. On-site construction activity remains suspended as of the date of issuance of these financial statements.

 

7

 


LITHIUM AMERICAS CORP.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2020

(Expressed in thousands of US dollars, except for per share amounts; shares in thousands)

 

4.

JOINT OPERATION

The Company and Ganfeng are each a 50% shareholder in Minera Exar, the jointly controlled company that holds the Cauchari-Olaroz project located in the Jujuy province of Argentina. In addition, the Company and Ganfeng are shareholders in Exar Capital B.V.(“Exar Capital” or “Joint Operation”), the jointly controlled company in the Netherlands that provides financing to Minera Exar for the purpose of advancing the construction of the Cauchari-Olaroz project. Exar Capital is owned 62.5% by the Company and 37.5% by Ganfeng.

2019 Project Investment

On August 16, 2019, the Company closed the transaction agreement whereby Ganfeng agreed to subscribe, through a wholly-owned subsidiary, for 141 million newly issued shares of Minera Exar, for cash consideration of $160,000 (such transaction, the “Project Investment”). As a result, Ganfeng increased its direct interest in Minera Exar from 37.5% to 50%, and diluted Lithium Americas’ interest from 62.5% to 50%, each subject to the rights of JEMSE (a company owned by the Government of Jujuy province) to acquire an 8.5% interest in Minera Exar. The Company’s and Ganfeng’s interests in Exar Capital remained unchanged.

On closing of the Project Investment, Minera Exar repaid an $8,000 loan made by the Company, together with accrued but unpaid interest thereon.

Beginning on August 16, 2019, and as at June 30, 2020, the Company recognized its share of the assets and liabilities of Minera Exar and Exar Capital, including its share of Minera Exar’s and Exar Capital’s cash and cash equivalents of $12,268 and its share of Minera Exar’s property, plant and equipment of $212,588.

The Joint Operation’s Cauchari-Olaroz project is in the development phase and accordingly, all costs directly attributable to the project are capitalized, other than costs related to the impact of COVID-19 as discussed in Note 3.

2020 Cauchari Transaction

On February 7, 2020, the Company entered into definitive agreements (the “2020 Cauchari Transaction”) with Ganfeng whereby Ganfeng has agreed to subscribe, through a wholly-owned subsidiary, for newly issued shares of Minera Exar, for cash consideration of $16,000, increasing its interest in the Cauchari-Olaroz project from 50% to 51%, with Lithium Americas holding the remaining 49% interest (each subject to the rights of JEMSE to acquire 8.5% interest in Minera Exar).

In addition, the Company and Ganfeng have agreed to restructure Exar Capital to reflect the parties’ proportionate ownership of Minera Exar. As part of this restructuring, Ganfeng has agreed to provide $40,000 to Exar Capital in non-interest-bearing loans, repayable in 2029 (subject to an additional one-year extension). Proceeds of the loans will be used to repay intercompany loans owing to Lithium Americas.

Upon completion of the 2020 Cauchari Transaction, Ganfeng is expected to become the controlling shareholder of Minera Exar while Lithium Americas is expected to receive fulsome minority shareholder protective rights. The shareholder agreement and related agreements will be amended on the closing of the 2020 Cauchari Transaction to preserve joint approval for various substantive matters involving Minera Exar.

On June 23, 2020, Ganfeng received regulatory approval from the National Development and Reform Commission of the People’s Republic of China in respect to the 2020 Cauchari Transaction. Closing of transaction is subject to receipt of remaining regulatory approvals and other customary closing conditions.

 

8

 


LITHIUM AMERICAS CORP.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2020

(Expressed in thousands of US dollars, except for per share amounts; shares in thousands)

 

4.

JOINT OPERATION (continued)

Investment in Joint Venture

Prior to the closing of the Project Investment on August 16, 2019, Minera Exar and Exar Capital were accounted for as a Joint Venture using the equity method and during the six months ended June 30, 2019, the Company recognized a $3,097 share of income of the Joint Venture.

Loans to Minera Exar and Exar Capital

The Company has entered into the following loan agreements with Minera Exar and Exar Capital, terms of which are summarized below:

 

 

 

$

 

Loans to Minera Exar and Exar Capital, as at December 31, 2018

 

 

12,609

 

Accrued interest

 

 

3,791

 

Loans by the Company to Exar Capital

 

 

66,250

 

Difference between the face value and the fair value of loans to Exar Capital

 

 

(37,423

)

Repayment of loans to Minera Exar and accumulated interest thereon

 

 

(8,778

)

Loans from LAC to Exar Capital prior to the 2019 Transaction

 

 

36,449

 

Elimination of loans as a result of Joint Operation accounting

 

 

(21,731

)

Share of loans from Exar Capital to Minera Exar

 

 

23,241

 

Loans to Joint Operation, as at December 31, 2019

 

 

37,959

 

Accrued interest

 

 

2,496

 

Loans by the Company to Exar Capital

 

 

12,000

 

The difference between the face value and the fair value of loans to Exar Capital

 

 

(6,501

)

Elimination of loans as a result of Joint Operation accounting

 

 

(2,750

)

Loans to Joint Operation, as at June 30, 2020

 

 

43,204

 

Loans by the Company and Ganfeng to Exar Capital are non-interest bearing and are provided to fund the construction of the Cauchari-Olaroz project.

During the six months ended June 30, 2020, Ganfeng and the Company each provided a $12,000 non-interest bearing loan to Exar Capital to fund their respective 50% share of Cauchari-Olaroz construction costs. As at June 30, 2020, $17,000 of proceeds from these loans were held by Exar Capital and $7,000 were provided to Minera Exar to fund the construction. The loans are accounted for initially at fair value and subsequently at amortized cost. The fair value of the loans at inception was calculated using the discounted cash flow valuation method and applying market interest rates. During the six months ended June 30, 2020, $2,750 of the Company’s loans to Exar Capital were eliminated on proportional consolidation.

Joint Operation’s Commitments and Contingencies

As at June 30, 2020, the Company’s 50% share of the Minera Exar’s commitments and contingencies is as follows:

 

Annual royalty of $100 due in May of every year and expiring in 2041;

 

Aboriginal programs agreements with seven communities located in the Cauchari-Olaroz project area have terms from five to thirty years.  The annual fees due are $135 in 2020, $161 in 2021 and $222 between 2022 and 2061, assuming that these agreements will be extended for the life of the project. The annual fees are subject to change. Minera Exar’s obligations to make the payments are subject to continued development of the project and commencement and continuation of production operations on the project.

 

Commitments related to a contract for construction of evaporation ponds and other construction contracts of $9,321.

 

9

 


LITHIUM AMERICAS CORP.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2020

(Expressed in thousands of US dollars, except for per share amounts; shares in thousands)

 

4.

JOINT OPERATION (continued)

Los Boros Option Agreement

On September 11, 2018 Minera Exar exercised a purchase option agreement (“Option Agreement”) with Grupo Minero Los Boros (“Los Boros”), entered into on March 28, 2016, for the transfer of title to Minera Exar of certain mining properties that comprised a portion of the Cauchari-Olaroz project.

Under the terms of the Option Agreement, Minera Exar paid $100 upon signing and exercised the purchase option for total consideration of $12,000 to be paid in sixty quarterly instalments of $200. The first installment becomes due upon occurrence of one of the following two conditions, whichever comes first: the third anniversary of the purchase option exercise date or the beginning of commercial exploitation with a minimum production of 20,000 tons of lithium carbonate equivalent. As security for the transfer of title to the mining properties, Los Boros granted to Minera Exar a mortgage over those mining properties for $12,000. In accordance with the Option Agreement, on November 27, 2018 Minera Exar paid Los Boros a $300 royalty which was due within 10 days of the commercial plant construction start date.  

According to the Option Agreement, a 3% net profit interest royalty will have to be paid to Los Boros by Minera Exar for 40 years, payable in Argentinian pesos, annually within the 10 business days after calendar year end.

Minera Exar can cancel the first 20 years of net profit interest royalties in exchange for a one-time payment of $7,000 and the next 20 years for an additional payment of $7,000.  

JEMSE Arrangement

During 2012 Minera Exar granted a conditional right to Jujuy Energia y Mineria Sociedad del Estado (“JEMSE”), a mining investment company owned by the government of Jujuy Province in Argentina, to acquire an 8.5% equity interest in Minera Exar for one US dollar and the provision of management services as required to develop the project.

If the conditions are met and it exercises its right, JEMSE will be required to provide its pro rata (8.5%) share of the financing requirements for the construction of the Cauchari-Olaroz project.  These funds will be loaned to JEMSE by the shareholders of Minera Exar and will be repayable out of one‑third of the dividends to be received by JEMSE over future years from the project. The distribution of dividends to JEMSE and other shareholders in the project will only be considered once all annual obligations related to the project debt have been met.

 

 

10

 


LITHIUM AMERICAS CORP.

NOTES TO THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2020

(Expressed in thousands of US dollars, except for per share amounts; shares in thousands)

 

5.

PROPERTY, PLANT AND EQUIPMENT

 

 

 

Cauchari-Olaroz1

 

Land

 

 

Buildings

 

 

Equipment

and machinery

 

 

Organoclay

plant

 

 

Other2

 

 

Total

 

 

 

$

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

Cost

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As at December 31, 2018

 

 

-

 

 

386

 

 

 

2,143

 

 

 

5,066

 

 

 

11,471

 

 

 

823

 

 

 

19,889

 

Adjustments on adoption of IFRS 16

 

 

-

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

296

 

 

 

296

 

Restated balance at January 1, 2019

 

 

-

 

 

386

 

 

 

2,143

 

 

 

5,066

 

 

 

11,471

 

 

 

1,119

 

 

 

20,185

 

50% of Minera Exar fixed assets

 

 

124,752

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

124,752

 

Additions

 

 

31,447

 

 

-

 

 

 

-

 

 

 

526

 

 

 

-

 

 

 

1,046

 

 

 

33,019

 

Capitalization of interest

 

 

2,110

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

2,110

 

Disposal of fixed assets

 

 

-

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(60

)

 

 

(60

)

Reclassification to assets held for sale

 

 

-

 

 

(386

)

 

 

(2,143

)

 

 

(4,641

)

 

 

(11,471

)

 

 

(216

)

 

 

(18,857

)

As at December  31, 2019

 

 

158,309

 

 

-

 

 

 

-

 

 

 

951

 

 

 

-

 

 

 

1,889

 

 

 

161,149

 

          Additions

 

 

52,102

 

 

-

 

 

 

-

 

 

 

129

 

 

 

-

 

 

 

76

 

 

 

52,307

 

          Capitalization of interest

 

 

3,854

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

3,854

 

          Disposals

 

 

-

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(83

)

 

 

(83

)

          Foreign exchange

 

 

-

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(51

)

 

 

(51

)

As at June 30, 2020

 

 

214,265

 

 

-

 

 

 

-

 

 

 

1,080

 

 

 

-

 

 

 

1,831

 

 

 

217,176

 

 

 

 

Cauchari-Olaroz1

 

Land

 

 

Buildings

 

 

Equipment

and machinery

 

 

Organoclay

plant

 

 

Other2

 

 

Total

 

 

 

$

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

 

Accumulated depreciation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

As at December 31, 2018

 

 

-

 

 

-

 

 

 

835

 

 

 

1,859

 

 

 

11,471

 

 

 

301

 

 

 

14,466

 

50% of Minera Exar's accumulated depreciation  

 

 

1,260

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

1,260

 

Depreciation for the year

 

 

195

 

 

-

 

 

 

75

 

 

 

425

 

 

 

-

 

 

 

431

 

 

 

1,126

 

Disposals of fixed assets

 

 

-