IFC project financing proposal for US$200 million for Sal de Vida

BRISBANE, Australia, October 6, 2022 (GLOBE NEWSWIRE) — Allkem Limited (ASX|TSX: AKE, “Allkem” or the “Company”) and the International Finance Corporation (“IFC”) have agreed to a non-binding term sheet for a project finance facility (“IFC loan”) for the Sal de Vida Project wholly owned by Allkem located in the Province of Catamarca, Argentina.

STAND OUT

  • IFC has proposed a US$200 million project finance facility to support the development of Allkem’s Sal de Vida Stage 1
  • IFC’s environmental and social performance requirements are recognized globally and will complement the ESG standards already adopted at Sal de Vida by Allkem
  • Subject to completion of commercial terms and other key pending items, including final Board approval by IFC and Allkem, the facility is expected to reach financial close by the end of FY2022.

CEO and CEO, Martín Pérez de Solay, said: “We are already in a strong financial position to self-finance the Sal de Vida project, however, we saw an opportunity to further improve Sal de Vida’s financial structure and partner with IFC, an institution with decades of experience providing financing and sustainable business solutions. . in the mining area.

“Sal de Vida is expected to deliver significant economy-wide benefits that will improve the fiscal outlook, economic performance, and social outcomes at the national, regional, and local community levels.”

PROJECT FINANCING

IFC’s proposed investment comprises a US$200 million debt package, including up to US$100 million from IFC for up to 9 years and the remainder financed by a syndicate of commercial banks.

The IFC loan and its key terms reflect current market conditions for this facility type, loan size, term, and region.

IFC’s proposed financing structure will provide Sal de Vida with a diversified group of international lenders in an asset-level syndicated loan arrangement and help de-risk the project’s capital structure.

IFC’s Performance Standards are globally recognized as a benchmark for environmental and social risk management in the private sector. IFC has eight Performance Standards: Risk Management, Labor, Resource Efficiency, Community, Land Resettlement, Biodiversity, Indigenous Peoples, and Cultural Heritage.

IFC conducted a robust and detailed environmental assessment, including brine extraction and water use assessment and associated monitoring and mitigation plan. Allkem’s technical teams participated in the process and will work to implement IFC’s Environmental and Social Action Plan (ESAP).

IFC’s technical assessment through senior consulting firms validated the scope, cost, and schedule of the project and provided a detailed risk analysis to ensure adequate mitigation plans are in place.

Next steps

Subject to completion of the terms of the facility, legal due diligence, Allkem Board approval, IFC Management approval and the World Bank Group Board of Directors, the facility is expected to close before end of 2022.

ABOUT IFC

IFC, a member of the World Bank Group, is the largest global development institution focused on the private sector in emerging markets. Working in more than 100 countries, IFC uses its capital, experience, and influence to create markets and opportunities in developing countries. In fiscal year 2022, IFC committed a record $32.8 billion to private companies and financial institutions in developing countries, harnessing the power of the private sector to end extreme poverty and boost shared prosperity as economies grow. they face the impacts of current world problems. For more information, visit www.ifc.org.

SALT OF LIFE PROJECT

The Sal de Vida Stage 1 Project is designed to produce 15ktpa of predominantly battery grade lithium carbonate. The 2022 Feasibility Study estimated a capital expenditure of US$271 million and cash operating costs of US$3,612 per ton. Construction began in January 2022.

Stage 1 project economics include a pre-tax net present value of $1.23 billion at a 10% discount rate, a 50% pre-tax internal rate of return, and a payback period of 1.75 years from the start of commercial production.

As of June 30, 2022, Allkem had $664 million of free cash and cash equivalents available for the development of Sal de Vida and its other growth projects.

This communication was authorized by Mr. Martín Pérez de Solay, CEO and General Manager of Allkem Limited.

IMPORTANT NEWS

This version of the ASX/TSX inverter (Release) has been prepared by Allkem Limited (ACN 112 589 910) (the Company either Allkem). It contains general information about the Company as of the date of this Communication. The information contained in this Communication should not be considered exhaustive or inclusive of all the material that a potential shareholder or investor in the Company may need to determine whether to deal in Allkem Shares. The information in this Communication is of a general nature only and is not intended to be complete. It should be read in conjunction with the Company’s periodic and ongoing disclosure announcements which are available on allkem.co and with the Australian Stock Exchange (asx) announcements, which are available at www.asx.com.au.

This Communication does not take into account the financial situation, investment objectives, tax situation or the particular needs of any person and nothing in this Communication constitutes investment, legal, tax, accounting or other advice, nor does it contain all the information that would be required in an informative document or prospectus prepared in accordance with the requirements of the Companies Act 2001 (Cth) (Corporations Law). Readers or recipients of this Communication should, before making any decision in relation to their investment or potential investment in the Company, consider the suitability of the information in light of their own individual investment objectives and financial situation and seek their own professional investment , legal, tax and accounting advice appropriate to your particular circumstances.

This Communication does not constitute or form part of any offer, invitation, solicitation or recommendation to acquire, purchase, subscribe, sell or otherwise dispose of or issue Shares or any other financial product. Furthermore, this Release does not constitute a financial product, investment advice (including tax, accounting, or legal advice), or a recommendation, and neither it nor any part thereof or the fact of its distribution shall form the basis of, or be relied upon in it in connection with , any contract or investment decision.

Distribution of this Communication in other jurisdictions outside of Australia may also be restricted by law and any restrictions must be observed. Any failure to comply with such restrictions may constitute a violation of applicable securities laws.

Past performance information provided in this Release is provided for illustrative purposes only and should not be (and is not) taken as an indication of future performance.

Forward-looking statements
Forward-looking statements are based on current expectations and beliefs and, by their nature, are subject to a number of known and unknown risks and uncertainties that could cause actual results, performances and achievements to differ materially from future results, performances or achievements. expected. achievements expressed or implied by such forward-looking statements, including, without limitation, the risk of further changes in government regulations, policies or laws; the risks associated with the continued implementation of the merger between the Company and Galaxy Resources Ltd, the risks that further financing may be required, but not available, for the continued development of the Company’s projects; fluctuations or decreases in commodity prices; uncertainty in the estimation, economic viability, recoverability and processing of mineral resources; risks associated with the development of the Company’s Projects; unexpected increases in capital or operating costs; uncertainty of meeting anticipated schedule milestones on the Company’s Projects; risks associated with investing in publicly traded companies, such as the Company; and risks associated with general economic conditions.

Subject to any continuing obligation under applicable law or the relevant ASX listing rules, the Company disclaims any obligation or undertaking to disclose any update or revision of any forward-looking statement in this Release to reflect any change in expectations in relation to any future. forward-looking statements or any changes in events, conditions or circumstances on which such statements are based. Nothing in this Release, under any circumstances (including the fact that this Release remains available and is not superseded or superseded by any other Release or posting with respect to the subject matter of this Release), shall create an implication that there has been no change in the affairs of the Company from the date of this Communication.

Competent Person Statement
Any information in this announcement relating to Sal de Vida scientific or technical information, production targets, or anticipated financial information derived from a production target is taken from the ASX Announcement entitled “Sal de Vida Capacity Increased to 45ktpa in Two stages” published on April 4, 2022 which is available to view at www.allkem.co and www.asx.com.au. The Company confirms that all material assumptions underlying the scientific or technical information, production targets or forecast financial information derived from a production target in the original market announcement continue to apply and have not materially changed.

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