Lithium Ionic advances project financing with LOI for $266m

Lithium Ionic (TSX: LTH) announced on Wednesday that it has secured preliminary approval for a $266 million loan guarantee from the Export-Import Bank of the United States (EXIM) to support its flagship Bandeira lithium project in Minas Gerais, Brazil.

The funding represents 100% of the project’s initial capital cost as outlined in a May 2024 feasibility study.

Lithium Ionic will now collaborate with EXIM, the official export credit agency of the US, to complete the due diligence process and finalize a definitive financial agreement.

According to the feasibility study, the Bandeira project has an after-tax net present value of $1.3 billion, an internal rate of return of 40% and a payback period of at 3.4 years. The report assumes a spodumene price of $2,277 per tonne.

The underground mine is expected to produce approximately 17.2 million tonnes of lithium carbonate equivalent, grading 5.5% lithium oxide, over a 14-year lifespan. Lithium Ionic anticipates construction and production to commence at Bandeira within the next two years.

Bandeira is located just northeast of Araçuaí, in a region well-connected by logistics and infrastructure. The project’s claims cover 1.6 sq. km, which represents only about 1% of Lithium Ionic’s 141.8-sq.-km land package in the “Lithium Valley,” where the company also owns its Salinas project, approximately 120 km north of Bandeira.

Shares of Lithium Ionic rose 4.3% by 11:40 a.m. in Toronto, giving the company a market capitalization of approximately C$154 million ($110 million).