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Lithium Americas to benefit from potash production at Cauchari-Olaroz

Lithium Americas Corp. (TSE:LAC) (OTCQX:LHMAF) announced Monday that tests at its Cauchari-Olaroz lithium-brine project in Argentina have confirmed that potash production will also be accounted for in the upcoming definitive feasibility study (NYSE:DFS) for the property, adding more value.

Potash output from the project is estimated to be two tonnes of potash per tonne of lithium carbonate, the company said.

"The commercial potential of the Cauchari-Olaroz resource continues to increase as we further define its productive capabilities," said president and CEO, Dr. Waldo A. Perez.

Typically, when lithium is recovered from brine (considered the more economical and environmentally friendly process as opposed to hard rock), brine is pumped from subsurface aquifers, through a circuit of evaporation ponds to increase concentration.

"The inclusion of potash diversifies our production base and is expected to add significant value to the project.  We hope to define the commercial viability of other by-products of the brine production process, such as boron, during the completion of the DFS process," added Dr. Perez. 

The company said it has harvested approximately 1.5 tonnes of potash rich salts from its on-site evaporation ponds, which have now completed a full evaporation cycle at the lithium-brine project. A total of 300 kilograms of the harvested salts have been sent to Saskatchewan Research Council’s laboratories in Saskatoon, where mineralogical analysis and floatation testing will be performed.

The goal is to produce potassium chloride at 95 percent purity, which can then be sold as a fertilizer. Test results are expected in the fourth quarter of 2011, Lithium Americas said, with the definitive feasibility study expected by the second quarter of next year. 

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. The preliminary economic assessment (PEA) on the property from April 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 company is anticipating potash production of roughly 80,000 tonnes per year once both phases are complete.

The PEA, which did not include the 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. The project was estimated to have an after-tax net present value of a whopping US$715 million, at an 8% discount rate.

Mitsubishi Corp and Magna International are shareholders of the company, in addition to them both having off-take arrangements with Lithium Americas.