Lithium Americas agrees to first draw terms on DOE loan

Mr. Jonathan Evans reports LITHIUM AMERICAS REACHES AGREEMENT WITH GM AND U.S. DOE REGARDING FIRST DRAW ON DOE LOAN Lithium Americas Corp., together with General Motors Holdings LLC, its joint venture partner in the Thacker Pass lithium project, has reached a non-binding agreement in principle with the U.S. Department of Energy to advance the first draw of $435-million on the previously announced $2.26-billion DOE loan. (All amounts are in U.S. dollars unless otherwise indicated.) The key provisions of the first draw terms include: The DOE has agreed to defer $182-million of debt service over the first five years of the DOE loan. The DOE will receive: A 5-per-cent equity stake in the company through warrants to purchase common shares of the company at an exercise price of one cent per share; and A 5-per-cent economic stake in the JV through warrants to purchase non-voting, non-transferable equity interest of the JV with an exercise price of one cent per unit. The company will post an additional $120-million to DOE loan reserve accounts, to be financed within 12 months of the DOE advancing first draw. GM will provide additional support to the project by amending its lithium offtake agreement with the JV to permit the JV to enter into additional third party offtake agreements for certain remaining production volumes not forecasted to be purchased by GM. Jonathan Evans, president and chief executive officer of Lithium Americas, said: "We greatly appreciate the support of the administration, General Motors and our partners in advancing this vital world-class project. Together, we are onshoring large-scale U.S. lithium production, strengthening America's supply chain, creating exceptional jobs, and enhancing our long-term energy security and prosperity." Shilpan Amin, senior vice-president and global chief procurement and supply chain officer of General Motors, said: "We're confident in the Thacker Pass project, which will reduce U.S. dependence on imported lithium and can support domestic manufacturing across many industries, such as aerospace, defence and electrical grid resiliency, in addition to automotive. We are pleased to see it move forward and appreciate the administration's support as GM continues to build a secure, resilient supply chain." As contemplated by the first draw terms, in the event that the DOE exercises the JV warrants in full, the JV economic interests will (prior to financing of the additional $120-million reserve accounts discussed above) be 59 per cent held by Lithium Americas, which will continue to be the manager of the project, 36 per cent by GM and 5 per cent by the DOE, with voting interest in the JV remaining 62 per cent for Lithium Americas and 38 per cent for GM. GM will have a call right to purchase, or cause the JV to purchase, the JV warrants or, if the JV warrants have been exercised by the DOE, the DOE's JV units following Thacker Pass achieving substantial completion if a price can be agreed upon between GM and the DOE at the time of the call right. If GM and the DOE cannot agree on the price to exercise the call right, the JV warrants or the DOE's JV units, as applicable, will be exchanged for common equity in the company pursuant to a conversion ratio agreed upon by the DOE, GM and the company. The DOE will have a put right to cause GM to elect to either: (i) purchase, or cause the JV to purchase, the DOE's JV warrants or the DOE's JV units, as applicable, at fair market value; or (ii) cause the DOE's JV warrants or the DOE's JV units, as applicable, to convert to shares of common equity in the company at the then applicable LAC warrant conversion rate. The DOE will also be granted the right to have an appointed representative as an observer at the JV board meetings for so long as the DOE holds JV warrants or JV units. The expected total DOE loan amount decreased to $2.23-billion. The DOE loan principal of $1.97-billion remains the same while the estimated capitalized interest during construction decreased to $256-million due to a lower projected interest rate of 5.0 per cent. The interest rate that will be applied to amounts drawn under the DOE loan remains unchanged at the applicable long-dated U.S. Treasury rate from the date of each draw with 0-per-cent spread. The DOE loan tenor remains approximately 24 years from the date of first draw. The first draw of $435-million is expected in fourth quarter 2025. GM's existing offtake agreement allows GM to purchase up to 100 per cent of production volumes from phase 1 and up to 38 per cent of total production volumes of Thacker Pass for 20 years. GM retains the right of first offer on remaining phase 2 production volumes and, following expiration of its offtake agreements, life-of-mine offtake rights, at market price, for a percentage of all volumes from phase 1 and phase 2 of the project. The offtake agreement will be updated to allow the JV to enter into firm volume commitments with third parties for certain remaining phase 1 production volumes not forecasted to be purchased by GM. The first draw terms are preliminary in nature. In each case, the first draw terms remain subject to negotiation, and completion of definitive agreements, corporate approvals and other customary conditions. There can be no assurances that definitive documentation memorializing the first draw terms will be completed on the terms currently contemplated or at all. The company intends to rely upon the exemption set forth in Section 602.1 of the Toronto Stock Exchange company manual, which provides that the TSX will not apply its standards to certain transactions involving eligible interlisted issuers on a recognized exchange. Transaction advisers Goldman Sachs & Co. LLC is serving as financial adviser while Vinson & Elkins LLP is serving as U.S. legal counsel, and Cassels, Brock & Blackwell LLP is serving as Canadian legal counsel to Lithium Americas. About Lithium Americas Corp. Lithium Americas is developing Thacker Pass located in Humboldt county in northern Nevada, which hosts the largest known measured lithium resource (measured and indicated) and reserve (proven and probable) in the world. Thacker Pass is owned by a joint venture between Lithium Americas (holding a 62-per-cent interest and is the manager of the project) and GM (holding a 38-per-cent interest). The company is focused on advancing phase 1 of Thacker Pass toward production, targeting nominal design capacity of 40,000 tonnes per year of battery-quality lithium carbonate. The company and its engineering, procurement and construction management contractor, Bechtel, entered into a national construction agreement (project labour agreement) with North America's Building Trades Unions for construction of Thacker Pass. Construction is expected to create nearly 2,000 direct jobs, including 1,800 skilled contractors. Lithium Americas' shares are listed on the Toronto Stock Exchange and New York Stock Exchange under the symbol LAC. We seek Safe Harbor.