Name and Location
Tesla gigafactory project, Nevada, US.

Client
Tesla Motors.

Project Description
The project involves the construction of the world’s largest and most advanced lithium battery factory.

The factory will cover ten-million square feet, an area equal to 174 football fields.

The factory will produce 50 GWh/y in battery production by 2020, enough for 500 000 Tesla cars, which are powered by renewable energy.

The factory is a key part of Tesla’s plan to lower battery prices enough – and to produce enough of them – to launch its Model 3, a mass-market electric car, in the next two to three years.

The Model 3, expected to cost about $35 000, will join luxury sedan Model S and the upcoming sports utility vehicle
Model X, as part of Tesla’s line-up.

Value
The factory will cost an estimated $5-billion to build.

Duration
The factory is expected to open in 2017, with full production expected in 2018.

Latest Developments
Tesla has selected the northern Mexico-located Sonora lithium project to supply lithium hydroxide for its Gigafactory.

Partners TSX-V-listed Bacanora Minerals and LSE-listed Rare Earth Minerals (REM) has finalised a conditional long-term lithium hydroxide supply agreement with Tesla, a deal that will result in the project partners working to develop a mineral-rich, lithium-bearing clay deposit into a planned low-cost, sustainable and environmentally conscious mining operation.

Internal estimates of Bacanora have showed that the Sonora project will have an initial production capacity of about 35 000 t of lithium compounds, with the scaling potential of up to 50 000 t/y.

On condition that, over the next two years, the Sonora project reaches certain performance milestones and successfully passes product specification qualifications, Tesla – or its authorised purchasers – will buy lithium hydroxide to feed the Gigafactory. One of the key milestones will be to confirm that the Sonora project will be able to supply lithium hydroxide in the volumes and timeframes to be established by Tesla.

The initial five-year supply agreement has an option to be extended for a further five years.

During the initial term and subject to certain terms and conditions related to project execution, product quality, pricing and timing of delivery, Tesla will buy agreed minimum tonnages, with estimated forecast maximum deliveries to be determined following delivery of future production orders from Tesla.

The company will buy minimum quantities according to an agreed pricing formula, below current market pricing, with actual prices and volumes that can only be finalised during the development phase in due course. The forecast tonnages and delivery dates are structured to coincide with Tesla's forecast Gigafactory production. This agreement will form a portion of its expected lithium-based feedstock needs, the remainder of which is expected to come from other lithium peers.

To meet Tesla's minimum and forecast tonnages and timelines, and any other potential market demands, the Sonora project partners will need to design and build a suitable mining and processing operation. This will require them to secure significant financing through debt and/or equity. Tesla has the right to participate in any such financing or other capital transactions, Bacanora advised.

Bacanora and REM will pursue next steps to raise finances to achieve this goal.

The partners are currently engaged with development work to be used for the prefeasibility study (PFS) for the Sonora project. The PFS, together with additional studies, will establish a revised estimate of capital and operating costs, taking into account the new product mix that will be required to service Tesla's expected demands and those of any additional potential customers.

Key Contracts and Suppliers
None stated.

On Budget and on Time?
Not stated.

Contact Details for Project Information
Tesla Motors, tel +1 650 681 5000 or email press@teslamotors.com.