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Vancouver-based Lithium Americas has entered into definitive agreements with China’s Ganfeng Lithium to alter the ownership structure of their joint venture (JV) company Minera Exar, the holding company for the Caucharí-Olaroz lithium brine project in Jujuy, Argentina.

Pursuant to the agreements, Ganfeng will pay $16 million to subscribe for new shares in Minera Exar to increase its share in the project from 50% to 51%, while Lithium Americas will retain a 49% stake and receive $40 million cash.

The Caucharí-Olaroz project remains on schedule to start production at 40,000 t/y of battery-quality lithium carbonate early next year.

The move helps Lithium Americas to cut its debt – up more than eight times in the past year – and also reduce its exposure to recession-hit Argentina while it continues to develop the $400 million Thacker Pass project in Nevada.

The deal also helps Ganfeng, which counts BMW, Tesla and LG Chem as key customers, expanding its dominance over the EV supply chain. The revised structure of the JV will also improve Ganfeng’s financial flexibility and position regarding regulatory approvals in China.

The deal – set to close before August – represents a U-turn for Lithium Americas, which maintained that it had no interest in selling more than 50% of its stake in the flagship lithium project since last year.

A few weeks ago, Ganfeng approached the company with the restructuring proposal, which was approved by the Lithium Americas board late last week.

Shares of Lithium Americas rose more than 18% by market close Monday. The company has a market capitalization of C$583.2 million.