Lithium Americas Corp Inc. (NYSE: $LAC) is a Canadian lithium mining company focused on developing lithium production in the Americas. It is currently working on developing production at the Caucharí-Olaroz lithium brine project in Argentina and the Thacker Pass lithium clay project in Nevada, United States. The company aims to supply lithium products critical for electric vehicle batteries.
DOE Grant
On March 14, 2024, Lithium Americas achieved a monumental milestone in establishing a domestic lithium supply chain for the burgeoning electric vehicle industry. The Department of Energy (DOE) has granted the company a conditional commitment for a substantial $2.26 billion loan under the Advanced Technology Vehicles Manufacturing (ATVM) Loan Program. This funding will help build processing facilities for the Thacker Pass lithium project in Humboldt County, Nevada.
The Thacker Pass Project, North America’s largest known lithium resource, aims to produce 80,000 tonnes of battery-grade lithium carbonate per annum (TPA) in two phases of 40,000 each. Phase 1 production is anticipated to commence in 2027. This will support the lithium needs of up to 800,000 electric vehicles annually and position the United States as a leader in the global electrification revolution.
Jonathan Evans, President and CEO of Lithium Americas, expressed enthusiasm for the project’s potential impact, stating, “The United States has an incredible opportunity to lead the next chapter of global electrification in a way that both strengthens our battery supply chains and ensures that the economic benefits are directed toward American workers, companies and communities.”
GM’s Strategic Investment in Lithium Americas
In addition to the DOE’s conditional commitment, Lithium Americas has secured a strategic investment from General Motors (GM). In Jan 2023, GM pledged $650M to Lithium Americas for Thacker Pass, its largest investment in battery raw materials.
GM has exclusive rights to all Phase 1 lithium production for 15 years and first dibs on Phase 2. The first tranche of $320 million has already closed, with the remaining $330 million expected to be finalized before or in connection with the closing of the DOE Loan.
Together, the expected DOE Loan and GM’s investment are anticipated to provide the vast majority of the capital necessary to fund the construction of Phase 1, solidifying Lithium Americas’ position as a key player in the domestic lithium supply chain.
Thacker Pass Project: Local Employment Boost
The Thacker Pass project is expected to create approximately 1,800 direct jobs during its three-year construction period and an additional 360 jobs in operations over its 40-year mine life. An economic impact assessment by the University of Nevada, Reno, estimated that every direct job created by Lithium Americas’ construction investment would generate an additional 1.5 local jobs during construction.
To ensure a skilled workforce, Lithium Americas and its main contractor, Bechtel, entered into a Project Labor Agreement (PLA) with North America’s Building Trades Unions (NABTU). This agreement aims to minimize construction risk, provide skilled labor, and prioritize employing local and regional skilled craft workers, including members of underrepresented communities.
Lithium Americas’ Eco-Friendly Initiatives
Lithium Americas has strongly emphasized sustainable development and minimizing its environmental footprint. The Thacker Pass project aims to avoid harming habitats and uses advanced environmental tech for a low carbon and water impact.
By leveraging filtration, evaporation, and centrifuge technologies, the project aims to maximize water reuse and recycling, limiting the need for water from natural sources.
Additionally, Thacker Pass is designed to be a zero-liquid discharge facility, ensuring no industrial wastewater is discharged into the environment. Phased reclamation and filtered tailings support the stable restoration of native vegetation during and after the operation.
DOE Approval and Infrastructure Advancements
The DOE’s Conditional Commitment follows an extensive due diligence process, during which the agency thoroughly reviewed all key aspects of the Thacker Pass project and completed term sheet negotiations. While this commitment represents a significant milestone, certain technical, legal, and financial conditions, including the negotiation of definitive financing documents, must be satisfied before the loan is finalized.
Lithium Americas has completed site preparation activities for the construction phase, including clearing the site, commissioning a water supply system, and improving site access and infrastructure. To facilitate efficient transportation during operations, the company has leased a parcel of land in the nearby City of Winnemucca for a transloading terminal (TLT). The TLT will provide direct access to the mainline railroad and an interstate highway, reducing transportation costs and minimizing Scope 3 emissions.
Thacker Pass Phase 1: Construction Update
In collaboration with Bechtel and other major contractors, Lithium Americas has updated the Thacker Pass Phase 1 capital cost estimate to $2.93 billion. This revised estimate reflects the company’s efforts to de-risk construction, including achieving a higher degree of engineering, increasing project contingency, securing temporary housing for construction workers, and adjusting procurement package prices to match current market conditions.
The company plans to finish Thacker Pass Phase 1 construction within three years, aiming for mechanical completion by 2027. Major construction is scheduled to begin in the latter half of 2024, contingent upon the closure of the DOE Loan and the issuance of a full notice to proceed (FNTP). The company anticipates a commissioning and ramp-up period of six to twelve months to achieve full-capacity production in 2028.
LAC Stock Performance
The market responded favorably to the recent news with LAC’s stock price rising over 9.6% to $6.28 per share on Thursday. Despite this positive reaction, it is still down 48.24% in the past 52-weeks, while the S&P500 index experienced a 30.43% gain. LAC’s 52-week high and low are $11.50 and $3.81, respectively.
Over the past 10 days, the stock’s 50-day moving average is $4.94, with an average trading volume of 3.65 million shares. The company has 161.31 million outstanding shares and a 200-day moving average of $6.13. Considering these figures, Lithium Americas Corp. boasts a market capitalization of $1.034 billion. The company’s earnings per share (EPS) for the trailing twelve months (TTM) is $-0.091, resulting in a price-to-earnings (P/E) ratio of -$61.80.
Should You Buy $LAC Stock?
The Thacker Pass lithium project is significant for the United States’ ambitions to establish a robust domestic supply chain for critical materials essential to the electric vehicle and renewable energy industries. By securing the DOE’s conditional loan commitment and strategic partnerships, Lithium Americas is poised to be a critical player in meeting rising demand for lithium chemicals while fostering economic growth, job creation, and environmental sustainability.
Analyst perspectives on LAC stock are mixed, with an average $8.61 price target suggesting a 33.49% upside potential. Three analysts recommend a “Buy”, and three advise “Hold” LAC stock. The high forecast of $15.00 indicates significant potential for growth, while the low forecast of $5.54 suggests caution.
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