(Kitco News) - Lithium producer Allkem (TSX: AKE) announced today that the company and the International Finance Corporation ("IFC") have agreed a non-binding term sheet for a project financing facility ("IFC loan") for the Sal de Vida lithium project located in Argentina.
According to the company's statement, IFC's proposed investment comprises a US$200 million debt package, including up to US$100 million from IFC for a tenor of up to 9 years and the remainder funded by a syndicate of commercial banks.
"The IFC loan and its key terms reflect current market conditions for this facility type, loan size, tenor and region. IFC's proposed financing structure will provide Sal de Vida with a diversified international lender group in a syndicated loan agreement at the asset level and will help de-risk the capital structure of the project," Allkem said in a statement.
Importantly, the company added that subject to finalization of facility terms, legal due diligence, approval from the Allkem Board of Directors, approval by IFC Management and World Bank Group Board of Directors the facility is expected to close before the end of 2022.
The Sal de Vida Stage 1 Project is designed to produce 15ktpa of predominately battery grade lithium carbonate. The 2022 Feasibility Study estimated capital expenditure to be US$271 million and cash operating costs of US$3,612 per tonne.
Construction commenced in January 2022.
Stage 1 project economics include pre-tax Net Present Value of US$1.23 billion at a 10% discount rate, pre-tax internal rate of return of 50% and a payback period of 1.75 years from the start of commercial production.
Allkem is a specialty lithium chemicals company with a global portfolio of diverse projects. The company's portfolio includes lithium brine and borax operations in Argentina, a hard-rock lithium operation in Australia and a lithium hydroxide conversion facility in Japan
IFC—a member of the World Bank Group—is the largest global development institution focused on the private sector in emerging markets. In fiscal year 2022, IFC committed a record $32.8 billion to private companies and financial institutions in developing countries.
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