A subsidiary of North American Coal Corp. (NACCO) has entered into a mining agreement to serve as exclusive contract miner for the Thacker Pass lithium project in northern Nevada. Thacker Pass is believed to be the largest-known lithium deposit in the United States and is 100% owned by Lithium Nevada Corp., a subsidiary of Lithium Americas Corp. NACCO formed the subsidiary, Sawtooth Mining LLC, for this project.
Sawtooth will design, construct, operate, and maintain the Thacker Pass surface mine, which will supply Lithium Nevada’s lithium-bearing claystone ore requirements. Consistent with NACCO’s business model, which is focused on long-term management-fee contracts, the mining agreement provides that Lithium Nevada will reimburse Sawtooth for its operating and mine reclamation costs, and pay Sawtooth a management fee per ton of lithium delivered during the 20-year contract term.
During the development of the project, Sawtooth will provide Lithium Nevada $3.5 million in cash to assist in project development and provide certain engineering services related primarily to mine design and permitting. Under the terms of the mining agreement, Lithium Nevada will pay Sawtooth a success fee upon achievement of certain engineering, construction and production milestones.
“We are pleased to partner with Lithium Americas to develop the Thacker Pass project, which we view as a key part of developing a strong lithium battery industry in the United States,” said J.C. Butler, president and CEO, NACCO. “We are highly confident that we can contribute to success at Thacker Pass. We have built five new surface mines for new customers in the last nine years, each providing an integrated solution to customer operations, and we have a strong track record of partnering with our customers for long-term success. This new mining agreement is a significant milestone in our strategic goal to grow and diversify by leveraging skills honed in our core mining operations.”
After Lithium Nevada secures required permits and financing for the project, Sawtooth intends to invest up to $50 million on the initial fleet of mining equipment. Lithium Nevada will reimburse Sawtooth’s equipment investment over a seven-year period from the equipment acquisition date. Lithium Nevada estimates it will secure all major permits by the end of 2020, commence plant construction in 2021 and production of lithium products in 2023.