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Lithium Americas on track to feasibility by Q1 2012, ends quarter with $22m in cash

Lithium Americas Corp. (TSE:LAC) (OTCQX:LHMAF) reported Monday financial and operating results for the three months ending May 31, finishing the quarter with more than $22 million of available cash to fund the development of its Cauchari-Olaroz lithium project in Argentina, with the aim of completing a feasibility study by early next year.

At the end of the quarter, $30.9 million was invested in property rights and exploration to date on the project, which was estimated to have an after-tax net present value of a whopping US$715 million, at an 8% discount rate.

The company’s Cauchari-Olaroz Lithium project comprises a significant portion of two adjacent Argentinean salt lakes, Cauchari and Olaroz, covering 82,498 hectares located in the “Lithium Triangle” region of South America. 

This region contains over 80% of the world’s lithium brine reserves, and an independent ranking said Lithium Americas' property was the third largest known lithium brine resource in the world. 

A preliminary economic assessment during the latest three-month period provided for a 40,000 tonne per year lithium carbonate production facility built in two phase of 20,000 tonnes per year, with construction expected to begin in 2012.

The report, which did not include potential additional value of potash or boric acid production, estimated capital costs of US$217 million for the first phase, and cash operating costs of $1,434 per tonne, believed to be one of the lowest in the industry.

During the quarter, $3.4 million was spent to advance the project to the definitive feasibility stage. The company appointed SGS Lakefield to construct an on-site lithium carbonate plant to produce 99.5% pure lithium, with first production expected in the fourth quarter.

"The progress made this quarter keeps us on schedule to achieve our major near-term milestone of a completed Definitive Feasibility Study in the first quarter of 2012,'" said president and CEO, Dr. Waldo Perez.

"With current industry producers recently increasing lithium carbonate prices by 20%, the Cauchari-Olaroz Lithium Project, one of the largest and lowest cost lithium projects in the world, is expected to continue benefiting from significant forecast increases in lithium demand over the foreseeable future."

Indeed, the company is set to capitalize on this demand, with working capital of $21.3 million at quarter-end, and $22.4 million in cash and equivalents.

In December, the Cauchari project was defined as having 5.3 million tonnes of measured and indicated lithium carbonate resources, plus an additional 2.7 million tonnes of inferred resources.

According to the PEA, given the huge size of the resource, the project is expected to have a long 40-year mine life, which at 40,000 tonnes per year of lithium carbonate, would result in the depletion of only 50% of the measured and indicated resource.

With lithium batteries having a growing number of applications, Mitsubishi Corporation and Magna International are shareholders in Lithium Americas, in addition to both companies having off-take arrangements for lithium carbonate production.