KEY POINTS
- Anson secures $193m UIPA incentive.
- Green River plant needs $569m.
- GOED tax support decision due September 10.
ASX-listed lithium developer Anson Resources has secured a $193-million business incentive from the Utah Inland Port Authority (UIPA) to support the development of its Green River lithium project in Utah, US.
The incentive was approved by the UIPA board and has been granted to Anson’s US subsidiary, A1 Lithium.
The approval represents a significant step for Anson as it works to assemble the financing required to develop its planned lithium carbonate production facility at Green River.
The $193-million incentive is based on the additional property tax revenue that UIPA expects the Green River project to generate over its operating life.
Under the proposed arrangement, Anson would receive the incentive as a tax rebate over a 20-year period once the project is operational.
This would amount to approximately $8-million a year, providing Anson with a potential long-term source of financial support during the project’s production phase.
The structure is intended to support the development of the project while allowing UIPA to participate in the future economic benefits expected from the investment.
UIPA has also offered an alternative structure under which the approved incentive could support bonds that Anson can draw against to finance public infrastructure required for the project.
The infrastructure could include extensions to electricity, water and gas utilities, as well as improvements or extensions to road and rail networks.
However, any such infrastructure programme would require agreement from the relevant local authorities and approval from the UIPA board.
Anson could also combine the tax-rebate arrangement with the infrastructure financing option.
Green River plant requires $569m investment
Anson is now discussing these financing structures with UIPA because the Green River development will require substantial infrastructure investment.
The company plans to build a lithium carbonate production plant with an initial production capacity of 10,000 tonnes a year.
According to the scoping study completed in March, the proposed plant is expected to require total capital investment of approximately $569-million.
Infrastructure supporting utilities and transportation will form an important part of the development requirements.
Any future increase in production capacity would also require additional investment in utility infrastructure and transportation networks.
Anson said its discussions with UIPA do not affect the board’s approval of the $193-million incentive or the company’s separate discussions with other Utah government agencies.
The company is also seeking additional support through the Governor’s Office of Economic Development (GOED).
Anson’s application for consideration of a tax reduction for the Green River project is expected to be considered at GOED’s next board meeting on September 10.
This means the UIPA incentive is one component of a broader effort by Anson to secure government support and build a viable financing package for the project.
Anson chairperson and CEO Bruce Richardson described the UIPA arrangement as complicated but important to the company’s efforts to assemble the financing required for the Green River plant.
Richardson said the company is examining several financing structures designed to limit dilution for existing shareholders.
The company is also working on pre-production financing arrangements while exploring ways to improve the project’s expected financial returns.
According to Richardson, strengthening the projected returns would help Anson attract debt financing and strategic investment.
The UIPA approval gives Anson greater flexibility as it works to finance one of the key stages of the Green River development.
Rather than relying solely on conventional project financing, the company is examining a combination of tax incentives, infrastructure-backed financing, debt and strategic investment.
The ability to potentially direct part of the approved incentive towards essential infrastructure could also reduce the immediate financial burden associated with connecting the project to power, water, gas, rail and road networks.
For Anson, the next steps will centre on finalising the most suitable financing structure, securing additional government support and advancing the development of the planned 10,000-tonne-a-year lithium carbonate facility.
