Lithium Americas' subsidiary Hectatone Inc. Announces a Technical Assistance and Royalty Agreement with Delmon in Saudi Arabia and Provides Business Update
November 22, 2016
Hectatone Announces Name Change to RheoMinerals Inc.
VANCOUVER, Canada: Lithium Americas Corp. (the “Company” or “LAC”; TSX: LAC; OTCQX: LACDF) is pleased to announce the re-branding of its Hectatone Inc. clay minerals business as RheoMinerals Inc. (“RMI”). RMI operates a “state-of-the-art” manufacturing facility in Fernley, Nevada from which it supplies a full line of organophilic clay mineral products. The company forecasts revenues in 2017 to be derived primarily from the environmental, industrial coatings, animal feed, and drilling fluid markets.
Frank B Wright Jr, President & CEO of RMI, comments “The RMI team has proven to be remarkably creative and nimble in adapting to changing market conditions to successfully pursue growth opportunities through product innovation and industry collaboration. The new branding completes a successful business transition to a broader range of markets in the aftermath of challenging market conditions in the energy sector”.
Delmon Group Announcement
RMI is also pleased to announce that it has entered into a Technical Assistance and Royalty Agreement (the “Agreement”) with Delmon Co Ltd., part of The Delmon Group of Companies (“Delmon”) in Saudi Arabia. Delmon has business interests spanning wide market segments of products and services, and is a leading local supplier of oilfield minerals and chemicals to Aramco. Under this agreement, RMI will collaborate with Delmon in the design and construction of a manufacturing facility (the “Delmon Plant”) for specialty additives used in oil based drilling fluids. The initial product offering will include organophilic bentonite and organophilic lignite products.
As consideration for technical assistance, RMI will receive US$1.2 million in progress payments upon Delmon achieving certain construction and operational milestones in addition to the reimbursements of expenses and costs of technical personnel. Under the Agreement, RMI will also receive royalties from the future Delmon Plant production. Delmon and RMI expect to commission the new facility in January, 2018.
Jerry McNamara, Vice-President of Operations of RMI, will act as the co-project manager for the project. Mr. McNamara commented “We are pleased to join The Delmon Group in this endeavor. We look forward to introducing our organophilic bentonite and lignite manufacturing technology to Delmon as we combine efforts to become the leading supplier of these products to the region.” Mr. Wright further commented that “this opportunity is a milestone development for RMI. We are proud to partner with Delmon in contributing to the National Transformation Program 2020’s initiatives’. Ahmed Alghunaim, Managing Director for Delmon, said “We are excited about this project, as the products to be produced complement our existing product portfolio.” Mr. Alghunaim also commented that “the state-of-the-art manufacturing facility will be located in the 2nd Dhahran Industrial Park and will have sufficient capacity and flexibility to support a broad range of product offerings to the oilfield as well to other markets. RheoMinerals Inc.’s market experience is diverse and we expect additional opportunities to emerge for The Delmon Group and RMI. The RMI team have built their reputation on their uncompromising approach to quality, and we hope that this project can contribute to the goals set by the In-Kingdom Total Value Add Program (IKTVA), and National Transformation Programs”.
TOLSA Progress Update
Earlier in 2016, RMI entered into a strategic partnership with TOLSA S.A. (“TOLSA”), a world leader in clay technologies with decades of development and operating experience, a distribution network in ninety countries and a strong team in research and development. TOLSA is launching high purity hectorite products manufactured in Spain using Lithium Americas Corp.’s hectorite from their deposit in Humboldt County, Nevada. RMI has completed successful manufacturing trials of several low-shear rheology modifiers using high purity clays from TOLSA. These products provide innovative and cost effective solutions that improve rheology management in demanding drilling environments. Wright commented “the alliance with TOLSA continues to unfold new opportunities by combining resources from each company and through joint collaboration with other industry leaders. We are extremely pleased with this progress and we anticipate product revenues beginning in Q1, 2017.”
About Delmon Group
The Delmon Group of Companies is one of the major manufacturing, engineering, trading and marketing groups in the Kingdom of Saudi Arabia. It is a leading local supplier of oilfield minerals and chemicals to Saudi Arabian Oil Company (“Aramco”).
For further information contact:
Lithium Americas Corp.
Suite 1100 – 355 Burrard Street
Vancouver, BC, V6C 2G8
Statements in this release that are forward-looking information are subject to various risks and uncertainties concerning the specific factors disclosed here and elsewhere in the Company's periodic filings with Canadian securities regulators. Forward-looking information in this news release includes: the timing or ability to generate revenue from the sale of organophilic clay minerals, the timing and results of the development plan at the Delmon Plant, the receipt of future payments and royalties from Delmon pursuant to the terms of the Agreement and becoming a leading supplier of organophilic clay mineral products. When used in this document, the words such as “anticipate”, “explore,” “believe”, “intent”, “schedule”, and similar expressions is forward-looking information. Information provided in this document is necessarily summarized and may not contain all available material information.
All such forward-looking information and statements are based on certain assumptions and analyses made by Lithium Americas management in light of their experience and perception of historical trends, current conditions and expected future developments, as well as other factors management believes are appropriate in the circumstances. These statements, however, are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking information or statements. Important factors that could cause actual results to differ from these forward-looking statements include those described under the heading "Risks Factors" in the Lithium America's most recently filed Annual Information Form and other continuous disclosure filings. The Company does not intend, and expressly disclaims any obligation to, update or revise the forward-looking information contained in this news release, except as required by law. Readers are cautioned not to place undue reliance on forward-looking