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Highlights
- Full funding secured for Thacker Pass Phase 1 construction through late 2027.
- Satisfies U.S. Department of Energy loan requirements with first draw expected in Q3 2025.
- Strategic partnership with Orion Resource Partners bolsters future growth potential.
Lithium Americas (NYSE:LAC) has secured a USD 250 million strategic investment from Orion Resource Partners to support the Thacker Pass lithium project in Nevada. The investment package includes USD 195 million in convertible notes, a USD25 million Production Payment Agreement, and a commitment to provide an additional USD 30 million in convertible notes within two years. The deal is slated to close by March 10, 2025, and will fully fund the Phase 1 construction of the project, which is expected to be completed by late 2027.
The structure of the investment includes convertible notes that will mature in 2030, carrying an annual interest rate of 9.875%. The notes have an initial conversion price of USD 3.78 per share. In addition, the Production Payment Agreement entails Orion receiving fixed payments for each tonne of lithium processed, along with a percentage of gross revenue from the project, which is capped at 41,500 tonnes annually. These agreements will provide a steady stream of funding to support the development and production activities at Thacker Pass.
This substantial investment ensures that Lithium Americas is fully funded for the construction of Phase 1, satisfying both the conditions required for the U.S. Department of Energy's USD 2.26 billion loan and those set by General Motors. With the Department of Energy's loan draw expected to begin in Q3 2025, the project is on track to meet its financial and development milestones. The investment also sets the stage for a potential additional USD 500 million in financing for Phase 2 of the Thacker Pass project, further accelerating the company’s plans to scale its operations.
This partnership will help enhance the Thacker Pass project’s viability and foster continued growth as the demand for lithium and other critical minerals rises. The capital infusion also allows the company to expand its operations and drive its corporate vision of becoming a key player in the lithium sector.
However, the deal does come with its challenges. The 9.875% interest rate on the convertible notes presents a significant cost to Lithium Americas over the long term. Furthermore, the revenue-sharing provisions of the Production Payment Agreement could result in significant payouts to Orion as the project reaches production milestones. The potential dilution risk posed by the convertible notes, which could convert at an initial price of USD 3.78 per share, may also impact the company’s stockholders.
