lac-ex991_10.htm

CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31, 2020 (Expressed in US Dollars)

		March 31,			December 31,
	Note	2020			2019
		$			$
CURRENT ASSETS
Cash and cash equivalents¹			82,122			83,614
Receivables, prepaids and deposits			3,251			2,595
Deferred financing costs			982			1,190
Inventories			1,035			1,236
			87,390			88,635
Assets held for sale			4,075			4,279
			91,465			92,914

NON-CURRENT ASSETS
Restricted cash			150			150
Loans to Joint Operation	4		41,926			37,959
Property, plant and equipment	5		188,699			158,924
Exploration and evaluation assets			3,852			3,852
			234,627			200,885
TOTAL ASSETS			326,092			293,799

CURRENT LIABILITIES
Accounts payable and accrued liabilities			15,256			11,879
Current portion of long-term liabilities	6		1,490			3,111
			16,746			14,990
LONG-TERM LIABILITIES
Credit and loan facilities	6		117,432			83,043
Joint Operation borrowings	6		32,534			28,845
Decommissioning provision			692			633
Foreign withholding tax liability			1,894			1,445
Other liabilities	6		6,090			5,222
			158,642			119,188
TOTAL LIABILITIES			175,388			134,178

SHAREHOLDERS’ EQUITY
Share capital			201,157			200,913
Contributed surplus			31,079			28,404
Accumulated other comprehensive loss			(1,687	)		(3,867	)
Deficit			(79,845	)		(65,829	)
TOTAL SHAREHOLDERS’ EQUITY			150,704			159,621
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY			326,092			293,799

¹Cash and cash equivalents as at March 31, 2020, include the Company’s share ($36,842) of the Joint Operation’s cash and cash equivalents of $73,684 and a $20,000 drawdown on one of the credit facilities during the three months ended March 31, 2020 to fund the Joint Operation.

(Expressed in thousands of US dollars, except for per share amounts; shares in thousands)

		Three months ended March 31,
	Note	2020			2019
		$			$
EXPENSES
Exploration expenditures	10		(5,405	)		(1,181	)
General and administrative	9		(2,089	)		(1,720	)
Stock-based compensation	7		(2,818	)		(623	)
Share of income of Joint Venture	4		-			1,384
			(10,312	)		(2,140	)
OTHER ITEMS
Transaction costs			(646	)		(757	)
Foreign exchange loss			(2,371	)		(896	)
Finance costs			-			(640	)
Finance and other income			131			317
			(2,886	)		(1,976	)
NET LOSS BEFORE TAX			(13,198	)		(4,116	)
Tax expense			(450	)		-
NET LOSS BEFORE DISCONTINUED OPERATIONS			(13,648	)		(4,116	)

LOSS FROM DISCONTINUED OPERATIONS			(368	)		(352	)

NET LOSS			(14,016	)		(4,468	)

OTHER COMPREHENSIVE INCOME
ITEMS THAT MAY BE RECLASSIFIED SUBSEQUENTLY TO NET INCOME/(LOSS)
Gain on translation to reporting currency			2,180			947

TOTAL COMPREHENSIVE LOSS			(11,836	)		(3,521	)
BASIC AND DILUTED LOSS PER SHARE FROM CONTINUING OPERATIONS			(0.15	)		(0.05	)
BASIC AND DILUTED LOSS PER SHARE			(0.16	)		(0.05	)
WEIGHTED AVERAGE NUMBER OF COMMON SHARES OUTSTANDING- BASIC AND DILUTED			89,912			88,735

	Share capital
	Number		Amount		Contributed surplus			Accumulated other comprehensive income/(loss)			Deficit			Shareholders’ equity
	of Shares		$		$			$			$			$
Authorized share capital: Unlimited common shares without par value
Balance, December 31, 2018		88,728		197,991		26,172			(4,293	)		(137,588	)		82,282
Shares issued on conversion of RSUs		8		30		(30	)		-			-			-
Stock-based compensation (Note 7)		-		-		628			-			-			628
DSUs issued in lieu of directors' fees		-		-		115			-			-			115
Net loss		-		-		-			-			(4,468	)		(4,468	)
Other comprehensive income		-		-		-			947			-			947
Balance, March 31, 2019		88,736		198,021		26,885			(3,346	)		(142,056	)		79,504

Balance, December 31, 2019		89,843		200,913		28,404			(3,867	)		(65,829	)		159,621
Shares issued on conversion of RSUs and exercise of stock options		161		244		(199	)		-			-			45
Stock-based compensation (Note 7)		-		-		2,751			-			-			2,751
DSUs issued in lieu of directors' fees		-		-		123			-			-			123
Net loss		-		-		-			-			(14,016	)		(14,016	)
Other comprehensive income		-		-		-			2,180			-			2,180
Balance, March 31, 2020		90,004		201,157		31,079			(1,687	)		(79,845	)		150,704

	Three months ended March 31,
	2020			2019
	$			$
OPERATING ACTIVITIES
Net loss for the period		(14,016	)		(4,468	)
Items not affecting cash:
Stock-based compensation		2,818			628
Depreciation		189			238
Foreign exchange loss		2,371			896
Share of income of Joint Venture		-			(1,384	)
Interest paid and other expenses		(2,436	)		167
Changes in non-cash working capital items:
Decrease/(increase) in receivables, prepaids and deposits		107			(717	)
Increase in inventories		(189	)		(250	)
Increase in accounts payable and accrued liabilities		2,942			339
Net cash used in operating activities		(8,214	)		(4,551	)
INVESTING ACTIVITIES
Loans to Joint Venture (Note 4)		-			(37,500	)
Contribution to Joint Venture		-			(281	)
Additions to property, plant and equipment		(27,665	)		(489	)
Net cash used in investing activities		(27,665	)		(38,270	)
FINANCING ACTIVITIES
Proceeds from stock option exercises		45			-
Drawdowns from the credit facilities (Note 6)		34,200			37,500
Finance lease repayments		(65	)		(65	)
Repayment of long-term borrowings		(35	)		(34	)
Other (Note 6)		500			-
Net cash provided by financing activities		34,645			37,401
EFFECT OF FOREIGN EXCHANGE ON CASH		(258	)		51
CHANGE IN CASH AND CASH EQUIVALENTS		(1,492	)		(5,369	)
CASH AND CASH EQUIVALENTS - BEGINNING OF THE PERIOD		83,614			41,604
CASH AND CASH EQUIVALENTS - END OF THE PERIOD		82,122			36,235

(Expressed in thousands of US dollars, except for per share amounts; shares in thousands)

Lithium Americas Corp. (“Lithium Americas” or the “Company”) is a Canadian based resource company focused on the advancement of two significant lithium projects: the Cauchari-Olaroz project (“Cauchari-Olaroz”), located in Jujuy province of Argentina, and the Thacker Pass project (“Thacker Pass”), located in north-western Nevada, USA. Cauchari-Olaroz is a lithium brine project and is owned by a legal entity in Argentina, Minera Exar S.A. (“Minera Exar”). Minera Exar is a joint operation owned 50/50 by the Company and Ganfeng Lithium Co. Ltd. (“Ganfeng”). Thacker Pass is a sedimentary-based lithium property located in the McDermitt Caldera in Humboldt County, Nevada, and is 100% owned by the Company’s wholly owned subsidiary, Lithium Nevada Corp. (“Lithium Nevada”).

The Company’s common shares are listed on the Toronto Stock Exchange and the New York Stock Exchange under the symbol "LAC".

The Company’s head office and principal address is 300-900 West Hastings Street, Vancouver, British Columbia, Canada, V6C 1E5.

To date, the Company has not generated significant revenues from operations and has relied on equity and other financings to fund operations. The underlying values of exploration and evaluation assets and property, plant and equipment are dependent on the existence of economically recoverable reserves, securing and maintaining title and beneficial interest in the properties, and the ability of the Company to obtain the necessary financing to complete permitting, development, and to attain future profitable operations.

These condensed consolidated interim financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) applicable to the preparation of interim financial statements, including International Accounting Standard (“IAS”) 34, Interim Financial Reporting. These condensed consolidated interim financial statements should be read in conjunction with the annual consolidated financial statements for the year ended December 31, 2019, which have been prepared in accordance with IFRS as issued by the IASB.

These condensed consolidated interim financial statements are expressed in US dollars, the Company’s presentation currency, and have been prepared on a historical cost basis. The Company has used the same accounting policies and methods of computation as in the consolidated financial statements for the year ended December 31, 2019.

(Expressed in thousands of US dollars, except for per share amounts; shares in thousands)

The preparation of these condensed consolidated interim financial statements in conformity with IFRS applicable to the preparation of interim financial statements requires judgments, estimates, and assumptions that affect the amounts reported. Those estimates and assumptions concerning the future may differ from actual results. Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The significant estimates and judgments made by management in applying the Company’s accounting policies and the key sources of estimation uncertainty are substantially the same as those that management applied to the consolidated financial statements for the year ended December 31, 2019, except as disclosed below.

In March 2020, the World Health Organization declared a global pandemic related to COVID-19. Many countries, including Canada, USA and Argentina, where the Company operates, announced mandatory emergency measures and restrictions on businesses and individuals to mitigate the spread of the virus. The outbreak and the related mitigation measures have had and will continue to have an adverse impact on global economic conditions as well as on the Company’s activities. The extent to which the COVID-19 outbreak and the related mitigation measures may impact the Company’s business activities will depend on future developments, such as the ultimate geographic spread of the disease, the duration of the outbreak, travel restrictions, business disruptions, and the effectiveness of actions taken in Canada, USA, Argentina and other countries to contain and treat the disease. COVID-19 resulted in a widespread health crisis that adversely affected the economies and financial markets of many countries, resulting in an economic downturn that could further affect the Company’s operations.

As at and for the quarter ended March 31, 2020, COVID-19 measures, restrictions and economic effects did not have a significant impact on the Company’s financial position or financial results.

On March 20, 2020, following the Presidential decree for mandatory social isolation in Argentina, construction of the Cauchari-Olaroz lithium project was temporarily suspended. As the project has temporarily moved into care and maintenance, capitalization of borrowing costs was ceased and costs associated with the suspension of construction were expensed. Costs to maintain the site and contractors on standby and other costs associated with a potential restart of construction activities will continue to be expensed.

(Expressed in thousands of US dollars, except for per share amounts; shares in thousands)

The Company and Ganfeng are each a 50% shareholder in Minera Exar, the jointly controlled company that holds the Cauchari-Olaroz project located in Jujuy province of Argentina. In addition, the Company and Ganfeng are shareholders in Exar Capital B.V.(“Exar Capital”), the jointly controlled company in the Netherlands that provides financing to Minera Exar for the purpose of advancing the construction of the Cauchari-Olaroz project. Exar Capital is owned 62.5% by the Company and 37.5% by Ganfeng.

On August 16, 2019, the Company closed the transaction agreement whereby Ganfeng agreed to subscribe, through a wholly-owned subsidiary, for 141 million newly issued shares of Minera Exar, for cash consideration of $160,000 (such transaction, the “Project Investment”). As a result, Ganfeng increased its direct interest in Minera Exar from 37.5% to 50%, and diluted Lithium Americas’ interest from 62.5% to 50%, each subject to the rights of JEMSE (a company owned by the Government of Jujuy province) to acquire an 8.5% interest in Minera Exar. The Company’s and Ganfeng’s interests in Exar Capital remained unchanged.

On closing of the Project Investment, Minera Exar repaid an $8,000 loan made by the Company, together with accrued but unpaid interest thereon.

Beginning on August 16, 2019, and as at March 31, 2020, the Company recognized its share of the assets and liabilities of Minera Exar and Exar Capital, including its share of Minera Exar’s and Exar Capital’s cash and cash equivalents of $36,842 and its share of Minera Exar’s property, plant and equipment of $186,835.

The Joint Operation’s Cauchari-Olaroz project is in the development phase and accordingly, all costs directly attributable to the project are capitalized, other than costs during care and maintenance period (Note 3).

On February 7, 2020, the Company entered into definitive agreements (the “2020 Cauchari Transaction”) with Ganfeng whereby Ganfeng has agreed to subscribe, through a wholly-owned subsidiary, for newly issued shares of Minera Exar, for cash consideration of $16,000, increasing its interest in the Cauchari-Olaroz project from 50% to 51%, with Lithium Americas holding the remaining 49% interest (each subject to the rights of JEMSE to acquire 8.5% interest in Minera Exar).

In addition, the Company and Ganfeng have agreed to restructure Exar Capital to reflect the parties’ proportionate ownership of Minera Exar. As part of this restructuring, Ganfeng has agreed to provide $40,000 to Exar Capital in non-interest-bearing loans, repayable in 2029 (subject to an additional one-year extension). Proceeds of the loans will be used to repay intercompany loans owing to Lithium Americas, with $20,000 to be paid on closing of the 2020 Cauchari Transaction and an additional $20,000 payable on August 1, 2020 (or such earlier date as the parties may agree).

Upon completion of the 2020 Cauchari Transaction, Ganfeng will become the controlling shareholder of Minera Exar while Lithium Americas will receive fulsome minority shareholder protective rights. The shareholder agreement and related agreements will be amended on the closing of the 2020 Cauchari Transaction to preserve joint approval for various substantive matters involving Minera Exar.

Closing of the 2020 Cauchari Transaction is subject to receipt of all required regulatory approvals, consent of Lithium Americas’ senior lenders, settlement of an amended and restated shareholder agreement and other definitive agreements, and other customary closing conditions.

(Expressed in thousands of US dollars, except for per share amounts; shares in thousands)

Prior to the closing of the Project Investment on August 16, 2019, Minera Exar and Exar Capital were accounted for as a Joint Venture using the equity method and in Q1 2019 the Company recognized $1,384 as its share of income of the Joint Venture.

The Company has entered into the following loan agreements with Minera Exar and Exar Capital, terms of which are summarized below:

Loans by the Company and Ganfeng to Exar Capital are non-interest bearing and are provided to fund the construction of the Cauchari-Olaroz project.

During the quarter ended March 31, 2020, Ganfeng and the Company each provided a $12,000 non-interest bearing loan to Exar Capital to fund their respective 50% share of Cauchari-Olaroz construction costs. As at March 31, 2020, proceeds from these loans were held by Exar Capital. The loans are accounted for initially at fair value and subsequently at amortized cost. The fair value of the loans at inception was calculated using the discounted cash flow valuation method and applying market interest rates. During the quarter ended March 31, 2020, $2,750 of the Company’s loans to Exar Capital were eliminated on proportional consolidation.

As at March 31, 2020, the Company’s 50% share of Minera Exar’s commitments and contingencies is as follows:

(Expressed in thousands of US dollars, except for per share amounts; shares in thousands)

On September 11, 2018 Minera Exar exercised a purchase option agreement (“Option Agreement”) with Grupo Minero Los Boros (“Los Boros”), entered into on March 28, 2016, for the transfer of title to Minera Exar of certain mining properties that comprised a portion of the Cauchari-Olaroz project.

Under the terms of the Option Agreement, Minera Exar paid $100 upon signing and exercised the purchase option for the total consideration of $12,000 to be paid in sixty quarterly instalments of $200. The first installment becomes due upon occurrence of one of the following two conditions, whichever comes first: the third anniversary of the purchase option exercise date or the beginning of commercial exploitation with a minimum production of 20,000 tons of lithium carbonate equivalent. As security for the transfer of title to the mining properties, Los Boros granted to Minera Exar a mortgage over those mining properties for $12,000. In accordance with the Option Agreement, on November 27, 2018 Minera Exar paid Los Boros a $300 royalty which was due within 10 days of the commercial plant construction start date.

According to the Option Agreement, a 3% net profit interest royalty will have to be paid to Los Boros by Minera Exar for 40 years, payable in Argentinian pesos, annually within the 10 business days after calendar year end.

Minera Exar can cancel the first 20 years of net profit interest royalties in exchange for a one-time payment of $7,000 and the next 20 years for an additional payment of $7,000.

During 2012 Minera Exar granted a conditional right to Jujuy Energia y Mineria Sociedad del Estado (“JEMSE”), a mining investment company owned by the government of Jujuy Province in Argentina, to acquire an 8.5% equity interest in Minera Exar for one US dollar and the provision of management services as required to develop the project.

If the conditions are met and it exercises its right, JEMSE will be required to provide its pro rata (8.5%) share of the financing requirements for the construction of the Cauchari-Olaroz project. These funds will be loaned to JEMSE by the shareholders of Minera Exar and will be repayable out of one‑third of the dividends to be received by JEMSE over future years from the project. The distribution of dividends to JEMSE and other shareholders in the project will only be considered once all annual obligations related to the project debt have been met.

(Expressed in thousands of US dollars, except for per share amounts; shares in thousands)

	Cauchari-Olaroz¹		Land			Buildings			Equipment and machinery			Organoclay plant			Other²			Total
	$		$			$			$			$			$			$
Cost
As at December 31, 2018		-		386			2,143			5,066			11,471			823			19,889
Adjustments on adoption of IFRS 16		-		-			-			-			-			296			296
Restated balance at January 1, 2019		-		386			2,143			5,066			11,471			1,119			20,185
50% of Minera Exar fixed assets		124,752		-			-			-			-			-			124,752
Additions		31,447		-			-			526			-			1,046			33,019
Capitalization of interest		2,110		-			-			-			-			-			2,110
Disposal of fixed assets		-		-			-			-			-			(60	)		(60	)
Reclassification to assets held for sale		-		(386	)		(2,143	)		(4,641	)		(11,471	)		(216	)		(18,857	)
As at December 31, 2019		158,309		-			-			951			-			1,889			161,149
Additions		28,311		-			-			60			-			10			28,381
Capitalization of interest		1,793		-			-			-			-			-			1,793
Disposals		-		-			-			-			-			(83	)		(83	)
Foreign exchange		-		-			-			-			-			(90	)		(90	)
As at March 31, 2020		188,413		-			-			1,011			-			1,726			191,150

	Cauchari-Olaroz¹		Land		Buildings			Equipment and machinery			Organoclay plant			Other²			Total
	$		$		$			$			$			$			$
Accumulated depreciation
As at December 31, 2018		-		-		835			1,859			11,471			301			14,466
50% of Minera Exar's accumulated depreciation		1,260		-		-			-			-			-			1,260
Depreciation for the year		195		-		75			425			-			431			1,126
Disposals of fixed assets		-		-		-			-			-			(50	)		(50	)
Reclassification to assets held for sale		-		-		(910	)		(2,087	)		(11,471	)		(109	)		(14,577	)
As at December 31, 2019		1,455		-		-			197			-			573			2,225
Depreciation for the period		123		-		-			60			-			96			279
Disposals		-		-		-			-			-			(53	)		(53	)
As at March 31, 2020		1,578		-		-			257			-			616			2,451

	Cauchari-Olaroz¹		Land		Buildings		Equipment and machinery		Organoclay plant		Other²		Total
	$		$		$		$		$		$		$
Net book value
As at December 31, 2019		156,854		-		-		754		-		1,316		158,924
As at March 31, 2020		186,835		-		-		754		-		1,110		188,699

¹Cauchari-Olaroz Project includes the Company’s 50% share of the Cauchari-Olaroz project construction costs and project-related costs incurred directly by the Company.

² Other category includes right of use assets with $1,057 cost and $278 accumulated depreciation as at March 31, 2020.

(Expressed in thousands of US dollars, except for per share amounts; shares in thousands)

	As at March 31,		As at December 31,
	2020 $		2019 $
Current portion of long-term borrowings
Accrued interest		1,109		2,662
Other liabilities		381		449
		1,490		3,111
Long-term borrowings
Credit facility (net of financing costs)		95,232		83,043
Limited Recourse Loan Facility		22,200	-
Share of Joint Operation borrowings		32,534		28,845
Other liabilities		6,090		5,222
		156,056		117,110
		157,546		120,221

During the three months ended March 31, 2020, the Company drew $12,000 on its $205,000 senior credit facility, comprised of $7,800 from Ganfeng and $4,200 from BCP Innovation Pte Ltd. (“Bangchak”). The total drawn under the facility as at March 31, 2020, was $95,750. The credit facility has a term of six years from August 8, 2018, with an interest rate of 8.0% for the first three years that increases to 8.5% in year four, 9.0% in year five and 9.5% in year six. Repayments of borrowings made under the credit facility must start on August 8, 2022, being the fourth anniversary of the first drawdown date, in an amount equal to 75% of Minera Exar’s Free Cash Flow (as defined in the credit facility agreement). As security for the facility, the Company granted to the lenders a first priority security interest in all assets except those that represent its ownership interest in the Cauchari-Olaroz project.

In October 2018, Ganfeng provided Lithium Americas with a $100,000 unsecured, limited recourse, subordinated loan facility (the “Limited Recourse Loan Facility”) bearing an interest rate of 6-month LIBOR plus 5.5% (subject to an aggregate maximum interest rate of 10% per annum). The loan facility is repayable in an amount equal to 50% of Minera Exar’s Free Cash Flows (as defined in the credit facility agreement). Repayment will start once the Company’s obligations with respect to repayments of the $205,000 senior credit facility are met. During the three months ended March 31, 2020, the Company drew $20,000 on the Limited Recourse Loan Facility to fund the development expenditures on the Cauchari-Olaroz project and drew an additional $2,200 to fund payment of interest under the $205,000 senior credit facility.

The $205,000 senior credit facility and the Limited Recourse Loan Facility contain operating and reporting covenants, which the Company was in compliance with as at March 31, 2020.

The Company recognized its 62.5% share of Exar Capital loans received from Ganfeng. The loans are non-interest bearing and have a $32,534 carrying value (discounted, net of finance costs) and a $65,761 face value as at March 31, 2020. During the three months ended March 31, 2020, Ganfeng provided a loan with a face value of $12,000 and discounted value of $5,489, 50% ($2,744) of which was recognized in the Company’s consolidated interim statement of financial position as at March 31, 2020.

(Expressed in thousands of US dollars, except for per share amounts; shares in thousands)

Other liabilities consist of lease liabilities, $2,000 mining contractor liability (Note 10) and the Company’s share of Minera Exar long-term liabilities recorded in the quarter ended March 31, 2020, as a result of joint operation accounting, including a $2,308 long-term payable for certain mining properties that comprised a portion of the Cauchari-Olaroz project, acquired by Minera Exar in 2018 upon exercise of the Los Boros option agreement (Note 4).

The Company has an equity incentive plan (“Plan”) in accordance with the policies of the TSX whereby, from time to time, at the discretion of the Board of Directors, eligible directors, officers, employees and consultants are: (1) granted incentive stock options exercisable to purchase common shares (“Stock Options”); (2) awarded restricted share units (“RSUs”) and performance share units (“PSUs”) that, subject to a recipient’s deferral right in accordance with the Income Tax Act (Canada), convert automatically into common shares upon vesting; and (3) for independent directors, awarded deferred share units (“DSUs”) which the directors are entitled to redeem for common shares upon retirement or termination from the Board. Under the Plan, common shares reserved for issuance of Stock Options, RSUs, PSUs and DSUs shall not exceed 10% of the outstanding shares from time to time. Subsequently to the quarter ended March 31, 2020, the Company amended the Plan from a “rolling 10% plan” to a “fixed plan” pursuant to which the aggregate number of common shares to be issued shall not exceed 16% of the Company’s issued and outstanding common shares as of April 1, 2020. The amended plan was approved by the shareholders of the Company at the annual meeting held on May 7, 2020. The exercise price of each stock option is based on the fair market price of the Company’s common shares at the time of the grant. The options can be granted for a maximum term of five years.

During the three months ended March 31, 2020, the Company granted 788 RSUs (2019 – nil) to its executive officers, consultants and employees. The total estimated fair value of the RSUs was $2,018 (2019 - nil) based on the market value of the Company’s shares on the grant date. During the three months ended March 31, 2020, stock-based compensation expense related to RSUs of $2,384 was charged to operating expenses (2019 - $97). As at March 31, 2020, $664 of the fair value of RSUs previously granted but not yet vested remains to be expensed in fiscal 2020, $397 in 2021 and $137 in 2022.

(Expressed in thousands of US dollars, except for per share amounts; shares in thousands)

During the three months ended March 31, 2020 the Company granted 38 DSUs (2019 – 39) with the total estimated fair value of $123 (2019 - $115) to the Company’s independent directors in lieu of cash payment of directors’ fees.

No stock options were granted by the Company during the three months ended March 31, 2020 and 2019. Stock options outstanding and exercisable as at March 31, 2020 are as follows:

The weighted average share price at the time of exercise of options during the three months ended March 31, 2020, was CDN$6.88 (three months ended March 31, 2019 – no options were exercised).

(Expressed in thousands of US dollars, except for per share amounts; shares in thousands)

During the three months ended March 31, 2020, stock-based compensation expense related to stock options of $nil (2019 - $209) was charged to operating expenses and $nil was charged to loss from discontinued operations (2019 – $4).

No PSUs were granted by the Company during the three months ended March 31, 2020 and 2019. As at March 31, 2020, $1,303 of the fair value of PSUs previously granted but not yet vested remains to be expensed in fiscal 2020, $1,251 in 2021, and $346 in 2022. During the three months ended March 31, 2020, stock-based compensation expense related to PSUs of $434 was charged to operating expenses (2019 - $317).

Minera Exar entered into the following transactions with companies controlled by the family of its President, who is also a director of the Company:

During the three months ended March 31, 2020, the Company’s 50% share of director’s fees paid by Minera Exar to its President, who is also a director of the Company, was $9.

The amounts due to related parties arising from transactions with related parties are unsecured, non-interest bearing and have no specific terms of payment.

In consideration for Bangchak (a related party of the Company, by virtue of its position as a shareholder and a lender under the $205,000 senior credit facility) providing its consent to the Project Investment, following the Company’s approval of the expansion of the stated production capacity of the Cauchari-Olaroz project from its previously targeted production of 25,000 tonnes per annum (“tpa”) to 40,000 tpa, and entry into an amended off-take agreement with Bangchak, the Company provided incremental off-take rights in favour of Bangchak to acquire up to an additional 3,500 tpa of lithium carbonate, up to an aggregate maximum of 6,000 tpa of lithium carbonate (at a 40,000 tpa project capacity) at market prices.

(Expressed in thousands of US dollars, except for per share amounts; shares in thousands)

In addition, the consent includes a commitment from Bangchak to provide up to $50,000 of additional debt financing on substantially the same terms as the Company’s existing senior credit facility; however, the proceeds of such financing will be available for general corporate purposes.

Should the Company elect to pursue this additional debt financing in the future, such financing will be subject to negotiation of definitive documentation and consent of the Company’s other lender, Ganfeng, under the $205,000 senior credit facility and the Limited Recourse Loan Facility. There can be no assurances that the Company will be able to realize on such additional debt financing, including the terms and timing thereof.

Transactions with Ganfeng, a related party of the Company by virtue of its position as a shareholder and a lender to the Company, are disclosed in Notes 4 and 6.

Key management includes the directors of the Company and the executive management team. The remuneration of directors and members of the executive management team was as follows:

The following table summarizes the Company’s general and administrative expenses:

(Expressed in thousands of US dollars, except for per share amounts; shares in thousands)

The following tables summarize the Company’s exploration expenditures related to the Thacker Pass project:

During the three months ended June 30, 2019, Lithium Nevada entered into a mining design, consulting and mining operations agreement with a mining contractor on its Thacker Pass project. According to the agreement, Lithium Nevada will receive $3,500 from the mining contractor in seven consecutive equal quarterly instalments, of which $1,500 was received in 2019 and $500 during the three months ended March 31, 2020, and recorded in other liabilities. Lithium Nevada will pay a success fee to the mining contractor of $4,650 payable upon achieving commercial mining milestones or will repay $3,500 without interest if a final project investment decision is not made by 2024.

The Company operates in three operating segments and three geographical areas. The Thacker Pass project is in the exploration stage and the Cauchari-Olaroz project is in the development stage. Since August 16, 2019, the Cauchari-Olaroz project has been accounted for as a joint operation; it was previously accounted for as a joint venture using the equity method. The organoclay segment is classified as a discontinued operation.

	Organoclay $			Thacker Pass $			Cauchari- Olaroz $			Corporate $			Total $
As at March 31, 2020
Property, plant and equipment	-				1,103			182,932			4,664			188,699
Assets held for sale		4,075		-			-			-				4,075
Exploration and evaluation assets	-				3,852		-			-				3,852
Total assets		4,755			6,543			263,630			51,164			326,092
Total liabilities		(694	)		(6,276	)		(46,982	)		(121,436	)		(175,388	)
For the three months ended March 31, 2020
Property, plant and equipment additions					66			28,311			4			28,381
Loss from discontinued operations		(368	)	-			-			-				(368	)
Net (loss)/income		(368	)		(6,078	)		(458	)		(7,112	)		(14,016	)
Exploration expenditures	-				5,405		-			-				5,405
Depreciation		-			111			123			45			279

(Expressed in thousands of US dollars, except for per share amounts; shares in thousands)

	Organoclay $			Thacker Pass $			Cauchari- Olaroz $			Corporate $			Total $
As at December 31, 2019
Property, plant and equipment		-			1,147			156,854			923			158,924
Assets held for sale		4,279		-			-			-				4,279
Exploration and evaluation assets	-				3,852		-			-				3,852
Total assets		5,621			5,817			248,821			33,540			293,799
Total liabilities		(1,207	)		(3,325	)		(42,431	)		(87,215	)		(134,178	)
For the three months ended March 31, 2019
Property, plant and equipment additions	-				522		-				1,083			1,605
Loss from discontinued operations		(352	)	-			-			-				(352	)
Net (loss)/income		(352	)		(1,371	)		1,384			(4,129	)		(4,468	)
Exploration expenditures	-				1,137		-				44			1,181
Depreciation		158			53		-				27			238

The Company’s non-current assets and revenues of the discontinued operation are segmented geographically as follows:

	Canada $		United States $		Argentina $		Total $
Non-current assets ⁽¹⁾
As at March 31, 2020		815		4,956		186,835		192,606
As at December 31, 2019		923		5,000		156,853		162,776
Revenue of the discontinued operation
For the three months ended March 31, 2020	-			644	-			644
For the three months ended March 31, 2019	-			1,280	-			1,280

¹Non-current assets attributed to geographical locations exclude deferred income tax assets and financial and other assets.

Supplementary disclosure of the Company’s non-cash transactions is provided in the table below:

(Expressed in thousands of US dollars, except for per share amounts; shares in thousands)

Financial instruments recorded at fair value on the consolidated statements of financial position are classified using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels:

Level 1 – Unadjusted quoted prices in active markets for identical assets or liabilities;

Level 2 – Inputs other than quoted prices that are observable for assets or liabilities, either directly or indirectly; and

Level 3 – Inputs for assets and liabilities that are not based on observable market data.

The fair value hierarchy requires the use of observable market inputs whenever such inputs exist. A financial instrument is classified to the lowest level of the hierarchy for which a significant input has been considered in measuring fair value. The Company did not have any financial instruments measured at fair value on the statement of financial position. As at March 31, 2020, the fair value of financial instruments not measured at fair value approximates their carrying value.

The Company may be exposed to risks of varying degrees of significance which could affect its ability to achieve its strategic objectives. The Company manages risks to minimize potential losses. The main objective of the Company’s risk management process is to ensure that the risks are properly identified and that the capital base is adequate in relation to those risks. The principal risks to which the Company is exposed are described below.

Credit risk is the risk of loss associated with a counterparty’s inability to fulfill its payment obligations. Financial instruments that potentially subject the Company to a concentration of credit risk consist primarily of cash, cash equivalents, restricted cash, receivables and loans to the Joint Operation. The Company’s maximum exposure to credit risk for cash, cash equivalents and receivables is the amount disclosed in the consolidated statements of financial position. The Company limits its exposure to credit loss by placing its cash and cash equivalents with major financial institutions and invests only in short-term obligations that are guaranteed by the Canadian government or by Canadian and US chartered banks. The Company and its subsidiaries, including its joint operation, Minera Exar, may from time to time make short-term investments into Argentinian government securities, financial instruments guaranteed by Argentinian banks and other Argentine securities. These investments may or may not realize short term gains or losses.

Included in the receivables, prepaids and deposits are sales receivables of $503.

Management believes that the credit risk concentration with respect to financial instruments included in cash, cash equivalents, restricted cash, receivables and loans to the Joint Operation is minimal.

Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company’s approach to managing liquidity is to evaluate current and expected liquidity requirements under both normal and stressed conditions to ensure that it maintains sufficient reserves of cash and cash equivalents to meet its liquidity requirements in the short and long term. As the industry in which the Company operates is very capital intensive, the majority of the Company’s spending is related to its capital programs. The Company prepares annual budgets, which are regularly monitored and updated as considered necessary.

(Expressed in thousands of US dollars, except for per share amounts; shares in thousands)

As at March 31, 2020, the Company had a cash and cash equivalents balance of $82,122 (December 31, 2019 - $83,614) to settle current liabilities of $16,746 (December 31, 2019 - $14,990). Cash and cash equivalents balance as at March 31, 2020, includes the Company’s share ($36,842) (December 31, 2019 – $52,495) of the Joint Operation’s cash and cash equivalents of $73,684 (December 31, 2019 – $104,989).

The following table summarizes the maturities of the Company’s financial liabilities on an undiscounted basis:

			Years ending December 31,
	2020		2021		2022 and later		Total
	$		$		$		$
Credit facility¹		3,809		7,652		161,342		172,803
Joint Operation borrowings¹		-		-		65,761		65,761
Accounts payable and accrued liabilities		15,256	-		-			15,256
Obligations under office leases¹		213		158		457		828
Other obligations¹		172		228		9,194		9,594
Total		19,450		8,038		236,754		264,242

^¹ Credit facility, Joint Operation borrowings, Obligations under office leases and Other obligations include principal and interest/finance charges.

Market risk incorporates a range of risks. Movement in risk factors, such as market price risk and currency risk, affect the fair values of financial assets and liabilities.

The Company’s operations in foreign countries are subject to currency fluctuations and such fluctuations may affect the Company’s financial results. The Company reports its financial results in United States dollars (“US$”) and incurs expenditures in Canadian dollars (“CDN$”) and US$ with the majority of the expenditures being incurred in US$ by the Company’s subsidiaries.

The Company’s parent entity has a CDN$ functional currency. As at March 31, 2020, this entity held $43,947 of the Company’s US$ denominated cash and cash equivalents, $41,929 of the Company’s US$ denominated loans to Joint Operation and has drawn $117,950 under its US$ denominated credit facilities. Strengthening/(weakening) of a US$ exchange rate versus CDN$ by 10% at March 31, 2020 would have resulted in a foreign exchange (loss)/gain for the Company of $3,207, respectively.

	$
Loans to Minera Exar and Exar Capital, as at December 31, 2018		12,609
Accrued interest		3,791
Loan by the Company to Exar Capital		66,250
Difference between the face value and the fair value of loans to Exar Capital		(37,423	)
Repayment of loan to Minera Exar and accumulated interest thereon		(8,778	)
Loans from LAC to Exar Capital prior to the 2019 Transaction		36,449
Elimination of loans as a result of Joint Operation accounting		(21,731	)
Share of loans from Exar Capital to Minera Exar		23,241
Loans to Joint Operation, as at December 31, 2019		37,959
Accrued interest		1,218
Loans by the Company to Exar Capital		12,000
Difference between the face value and the fair value of loans to Exar Capital		(6,501	)
Elimination of loans as a result of Joint Operation accounting		(2,750	)
Loans to Joint Operation, as at March 31, 2020		41,926

	Number of RSUs (in 000's)
Balance, RSUs outstanding as at December 31, 2018		1,668
Converted into common shares		(206	)
Granted		955
Forfeited		(20	)
Cancelled		(9	)
Balance, RSUs outstanding as at December 31, 2019		2,388
Converted into Common shares		(43	)
Granted		788
Balance, RSUs outstanding as at March 31, 2020		3,133

	Number of DSUs (in 000's)
Balance, DSUs outstanding as at December 31, 2018		128
Granted		135
Converted into common shares		(35	)
Balance, DSUs outstanding as at December 31, 2019		228
Granted		38
Balance, DSUs outstanding as at March 31, 2020		266

Range of Exercise Prices CDN$	Number outstanding and exercisable as at March 31, 2020 (in 000's)		Weighted Average Remaining Contractual Life (years)		Weighted Average Exercise Price CDN$
$1.50 - $2.35		714		0.9		2.22
$4.55 - $5.00		1,027		2.0		4.89
$8.05 - $12.34		1,798		2.5		8.32
		3,539		2.0		6.10

	Number of Options (in 000's)			Weighted Average Exercise Price, (CDN$)
Balance, stock options outstanding as at December 31, 2018		5,152			5.02
Exercised		(1,203	)		(2.60	)
Expired		(218	)		(6.41	)
Balance, stock options outstanding as at December 31, 2019		3,731			5.94
Exercised		(147	)		(1.63	)
Expired		(45	)		(8.05	)
Balance, stock options outstanding as at March 31, 2020		3,539			6.10

	Number of PSUs (in 000's)
Balance, PSUs outstanding as at December 31, 2017	-
Granted	699
Balance, PSUs outstanding as at December 31, 2018	699
Forfeited		(12	)
Granted		323
Balance, PSUs outstanding as at December 31, 2019 and March 31, 2020		1,010

	For the three months ended March 31,
	2020 $		2019 $
Stock-based compensation		517		416
Salaries, bonuses, benefits and directors' fees included in general and administrative expenses		2,474		545
Salaries, bonuses and benefits included in exploration expenditures		154		77
Salaries and benefits capitalized to Investment in the Joint Venture		-		122
Salaries, bonuses and benefits capitalized to PP&E		401		-
		3,546		1,160

“Fabiana Chubbs”		“George Ireland”
Director		Director