With the demand for Lithium skyrocketing, give your portfolio a boost by investing in Lithium Americas Corp: (NYSE:LAC)

Lithium Americas Corp. (NYSE: LAC) is dedicated to driving forward lithium projects in Argentina and the United States with a clear focus on achieving production. In the northern region of Argentina, the Caucharí-Olaroz project is making remarkable progress towards its first production milestone. Notably, it stands as the largest new brine operation to emerge in over two decades. Moreover, the Pastos Grandes basin, situated near Caucharí-Olaroz, holds immense potential for regional growth and development.

On another front, Thacker Pass in northern Nevada takes centre stage as the largest known measured and indicated resource of lithium in the United States. Construction has recently commenced at Thacker Pass, following the receipt of a notice to proceed from the Bureau of Land Management. This exciting development solidifies the company’s commitment to expanding its presence in the U.S. market.

The company was founded by Raymond Edward Flood, Jr. on November 27, 2007, and is headquartered in Vancouver, Canada.

Highlights and News Updates

• On June 20^th, 2023, Tribal activists opposed  the Nevada mine, a key to Biden’s clean energy agenda as ‘green colonialism’.

• On June 12^th, 2023, LAC reported the Caucharí-Olaroz project in Jujuy, Argentina produced its first lower-than-battery-quality lithium carbonate as part of commissioning. Additional purification processing equipment necessary to achieve battery-quality lithium carbonate is expected to be completed by the second half of 2023.

• On May 17^th, 2023, The U.S. Interior Department removed one of the last remaining obstacles to Lithium Americas Corp’s Thacker Pass mine project in Nevada by finding that nearly all of the site contains the metal used to make electric-vehicle batteries.

• On My 16^th, 2023, LAC announced that its Board of Directors have unanimously approved the execution of an arrangement agreement providing for the reorganization of the Company that will result in the separation of its North American and Argentine business units into two independent public companies.

• In April 2023, Pablo Mercado joined as Executive Vice President and Chief Financial Officer following Eduard Epshtein’s retirement.

Key Data

First Quarter 2022 Highlights

Cauchari-Olaroz.

• Mechanical construction has been completed to target the first lithium production in June 2023.
• With all key systems to produce the first lithium completed, the commissioning team commenced production testing of the purification, carbonation, and SX systems.
• Additional purification processing equipment necessary to achieve battery-quality lithium carbonate is expected to be completed in H2 2023, following the start of pre-commercial production.
• As of March 31, 2023, US $834 million of the US $979 million total expected capex has been spent .
• Development planning for Stage 2 expansion of at least 20,000 tpa of lithium carbonate continues to progress to align with the completion of Stage 1.

Pastos Grandes Basin

• The Company continues to advance the Pastos Grandes’ US $30 million development plan, targeting completion of the plan and a construction decision in Q4 2023.
• On April 20, 2023, the Company completed its acquisition of Arena Minerals and its 65% ownership interest in the Sal de la Puna project, adjacent to the Pastos Grandes project in Salta, Argentina.

Corporate

• As of March 31, 2023, the Company had US $604 million in cash and cash equivalents and short-term bank deposits, with an additional US $75 million in available credit.
• On January 30, 2023, Lithium Americas entered into a purchase agreement with General Motors Holdings LLC whereby GM agreed to make a US $650 million equity investment in the Company and receive exclusive access to Phase 1 production at Thacker Pass through a binding supply agreement.

Financials

The company is focused on extracting lithium which will be used in making batteries for EVs. As of now, the company doesn’t earn any revenue as the projects are not complete and are still under development to extract lithium. According to the company in Cauchari-Olaroz the mechanical project has been completed and from June 2023, they can start extracting the lithium.

From FY2018 to FY2021, the expenses of the company were somewhat stagnant but in FY2022 the expenses of the company went up by more than 250%. This happened primarily due to the increased share of loss in the Cauchaari-Olaroz project mainly as a result of foreign exchange revaluation of intercompany loans, increase in exploration & evaluation expenditure.

Till now the company was in losses due to exploration expenses but as the project which was under development is on the verge of completion, we can say that company can be profitable in the near future.

As of March 31^st, 2023, the company has assets worth US $1.328 billion including cash of US $522.067 Million and it has total debt of US $207.577 Million. As of now the debt of the company is manageable and it is not concerning.

The quarterly expenses are also declining which is a good sign for investors.

Currently, the EPS of the company is US $-0.70 compared to last year’s EPS of US $-0.32.

Forecast

Right now, the company is trading at US $20.12. The best time to buy the stock is between US $18-20 with a 1-year projected target of around US $41 and a low estimation of US $18; the average price target is US $27.

Technical Analysis

• The stock has corrected more than 50% and now it is expected to bounce up.

• Right now, RSI (39.73) indicator is below 50 which shows it is a good time to invest in this stock as it is trading at a cheap price.

• The stock has the potential to bounce back up to 90% from the current market price. Analysts are bullish on this stock for long-term investment.

Indicators Summary – Buy

• The price action analysis of the stock is indicating a positive uptrend in the stock.

• Analysts are bullish on this stock as the government is pushing EVs further.

• It will be good to enter this stock at US $18-$20.

ESG Factor

Lithium Americas is involved in the extraction of lithium, a key component in battery technology. The company aims to minimize its environmental impact throughout the production process. This includes implementing responsible mining practices, such as reducing water usage, managing waste, and minimizing greenhouse gas emissions.

The company strives to establish positive relationships with indigenous communities, respecting their rights and cultural heritage. It also aims to create employment opportunities and contribute to the local economy in the areas where it operates. While doing construction of some of their projects they will generate 1000 jobs and after completion of the projects they will generate 500 jobs.

Risk factors

Lithium Americas, Corp. is subject to a range of regulatory requirements and permitting processes. Delays or challenges in obtaining necessary permits, complying with environmental regulations, or changes in government policies can impact the company’s ability to develop and operate its projects as planned.

Developing and operating mining projects involves various operational risks such as uncertainties, potential resource depletion, technical difficulties in extraction and processing, and the availability and cost of skilled labour. Any operational challenges or disruptions can impact production levels, project timelines, and profitability. Mining and exploration are also capital intensive, and they require high capital to proceed.

Stock Recommendation

Lithium is a key component in the production of lithium-ion batteries, which are used in EVs, energy storage systems, and other electronics. The demand for lithium is expected to increase significantly in the coming years as the global transition to clean energy accelerates.

Lithium Americas Corp. owns two significant lithium projects. These projects have substantial lithium resources and the potential for large-scale production.

The increasing adoption of electric vehicles, renewable energy storage systems, and other lithium-dependent technologies has created a favorable market environment for lithium producers. Lithium Americas Corp. stands to benefit from these market conditions, especially when governments worldwide are implementing policies and giving incentives to support the transition to clean energy.

MarketFacts gives a “Buy” rating on the stock at the closing price of US $20.12 as of June 23^rd, 2023.

CMP (USD) (June 23, 2023)	US $20.12
Target Price	US $30.50
Recommendation	Buy