Lithium Americas (TSE:LAC) (OTCQX:LHMAF) Friday reported its financial and operating results for the first quarter of its fiscal year, a period that saw the release of the definitive feasibility study for its flagship project.
The company is focused on the exploration of lithium, potassium, and other mineral resources in South America.
As at May 31, the company invested a total of $46.6 million in its Cauchari-Olaroz lithium and potash brine project in Argentina.
"From commencement of the project only three years ago and by delivering on every milestone that was set, we are now at the stage where every company aspires to be when they first start their mineral exploration program," said president and CEO Waldo Perez.
During the first quarter, the company incurred $3.6 million in property rights, and reported $3 million in cash and cash equivalents and positive working capital of $0.5 million. Lithium also has an undrawn $10 million stand-by line of credit available to fund current operations.
In June, the company announced the release of its an NI 43-101 compliant definitive feasibility study, achieving a significant milestone.
The Cauchari-Olaroz property has proven and probable reserves sufficient to operate at a production rate of up to 40,000 tonnes per annum (TPA) of lithium carbonate for 40 years, the company said, and up to 80,000 TPA of potash, which would include an initial five year ramp-up period.
The study was prepared by the independent engineering firm ARA WorleyParsons, the hydrogeologic modelling experts AquaResource, a division of Matrix Solutions, and by hydrogeology expert Groundwater Insight.
Highlights of the base case feasibility study included a pre-tax net present value, at an 8 per cent discount rate, of US$738 million and a pre-tax internal rate of return of 23 per cent.
Net cash operating costs per tonne of lithium carbonate were seen at US$1,332. Overall revenue was projected at US$6.6 billion and project EBITDA was pegged at US$4.3 billion.
Initial capital expenditure (capex) for lithium was seen at US$269 million, while initial capex for potash was anticipated at US$45 million.
Revenue generation for the project is due to start in 2015, Lithium Americas said.
An updated reserve and resource summary gave a measured resource of 576,000 tonnes lithium, 3.04 million tonnes lithium carbonate and 9.14 x 10(8) cubic metres of brine. The indicated resource was 1.65 million tonnes lithium, 8.7 million tonnes lithium carbonate and 2.89 x 10(9) cubic metres of brine.
Meanwhile, the potassium reserve and resource summary gave a measured resource of 4.7 million tonnes, 9 million tonnes of potash and 9.14 x 10(8) cubic metres of brine. The indicated resource was 13.8 million tonnes potassium, 26.3 million tonnes potash and 2.89 x 10(9) cubic metres of brine.
"We have a positive feasibility study that confirms our project as one of the most advanced, largest and lowest cost lithium projects in the world, attracted strategic shareholders such as Mitsubishi Corporation (TYO:8058) and Magna International (NYSE:MGA), and the funds to continue to move the project towards production," said Perez.
"We are extremely excited to unlock the tremendous value associated with our project, and are now focussed on our two major milestones of obtaining our Environmental Impact Statement permit, which is the final permit in order to commence production, and securing project finance."
The company also reported its financial results for the quarter, noting that it incurred a net loss of $0.79 million, compared to a loss of $0.81 million in the same period of 2011.
Loss per share for the quarter amounted to one cent, flat compared to the year ago quarter.
General and administrative expenses during the most recent period amounted to $0.45 million, and gains on foreign exchange were $0.54 million, while share-based compensation expense totalled $0.28 million.