What’s the long term Investment Opportunity in this Lithium Producer: Lithium Americas Corp ( TSE:LAC)
Lithium Americas (TSE: LAC) is developing three lithium production assets, two brine resources located in northwestern Argentina and a clay resource in Nevada, U.S. While the company has no current lithium production, company expects the first Argentina resource, Cauchari-Olaroz, to enter production in late 2022. Lithium Americas plans for all three resources to be fully integrated, selling into the lithium chemical market.
Highlights:
Recent Acquisition: January 25, 2022 – Vancouver, Canada: Lithium Americas Corp. (TSX: LAC) & Millennial Lithium Corp. announce the completion of the previously announced plan of arrangement whereby Lithium Americas has acquired all of the issued and outstanding shares of Millennial. Millennial owns 100% of the Pastos Grandes lithium brine project in Salta, Argentina.
Lithium Americas has acquired 100% of the issued and outstanding shares of Millennial and Millennial shareholders are entitled to receive 0.1261 of a common share of Lithium Americas and $0.001 in cash in exchange for each Millennial Share held immediately prior to closing of the Arrangement. The share ratio was calculated by valuing the Lithium Americas shares at a price equal to the volume-weighted average share price of Lithium Americas for the 20 trading days ending two business days prior to closing, and by valuing the Millennial common shares at a price of C$4.70 per share. In aggregate, the Company issued approximately 13,200,000 Lithium Americas common shares under the Arrangement to former Millennial securityholders as consideration for their respective Millennial Shares and convertible securities.
Increased Demand: The growing demand for lithium may reach a boiling point, leading Lithium Americas (TSX: LAC) stock to climb as demand outpaces supply.The price of lithium soared to worth about 430,000 yuan, eight times higher than it was at the start of 2021 and 47% higher than the beginning of 2022. The biggest driver is that there simply isn’t enough lithium to meet the incredible increase in demand — not just this year, but in the last few years. And that’s only set to increase in the years to come. The biggest producer and consumer of lithium remains China, where electric vehicle production has skyrocketed over the past few years.
Quick Look at important Numbers
| Fiscal Year ends in Sep USD in Millions except per share data | 21-Sep | 21-Jun | 21-Mar | 20-Dec | 20-Sep |
| Total Assets | 716.17 | 708.63 | 707.89 | 326.72 | 232.56 |
| Current Assets | 484.55 | 508.39 | 518.03 | 154.34 | 78.43 |
| Cash Equivalents and Short-Term Investments | 482.14 | 505.24 | 514.21 | 148.07 | 71.89 |
| Cash And Cash Equivalents | 482.14 | 505.24 | 514.21 | 148.07 | 71.89 |
| Cash | 33.92 | 57.33 | 47.48 | 148.07 | — |
| Cash Equivalents | 448.23 | 447.92 | 466.73 | — | — |
| Short Term Investments | — | — | — | — | — |
| Receivables | 1.82 | 2.31 | 2.85 | 1.25 | 1.57 |
| Accounts Receivable | 1.82 | 2.31 | 2.85 | 1.25 | 1.57 |
Last 1 year Chart: Company shares have grown by 45% over last 12 months and over 500% % in last 5 years.
Stock Recommendation: The lithium outlook on a global scale remains mixed among analysts. It could be as much as 60,000 tones, or as little as 26,000. Either way, it’s an improvement on this year’s production as demand surges. For Lithium Americas stock, the company aims to substantially increase lithium production. This comes from adding from acquisitions and investments in lithium producers as well as currently running mines.
MarketFacts gives a “Buy” rating on the stock at the closing Price of $31.35 as of January 28th, 2022.
| CMP (CAD) (28th Jan 2022) | $31.35 |
| Target Price (CAD) | $42.50 |
| Recommendation | Buy |
