Lithium Americas Enters Production in Argentina, Awaits Separation of Businesses

Strategist

Seth Goldstein

Gross Profit, Operating Income, and Net Income as a percentage of Revenue

Gross Margin

Operating Margin

Profit Margin

Margins

An operating expense is an expense a business incurs through its normal business operations. Often abbreviated as OPEX.

Exploration and evaluation expenditures

General and administrative expenses

Equity compensation

Organoclay research and development

Operating Expenses

Year over year growth in Revenue and Operating Expenses.

Revenue Y/Y

OpEx Y/Y

Growth

Shares outstanding refer to a company's stock currently held by all its shareholders, including share blocks held by institutional investors and restricted shares owned by the company's officers and insiders.

Outstanding Shares

Market Cap

Also known as Price/Sales Ratio. Calculated using Average market cap for the quarter / Annualized quarterly revenue.

Revenue Multiple

Lithium Americas aims to become a low-cost pure-play lithium producer. 

The company's first project, Cauchari-Olaroz, has just began commercial production in northwestern Argentina. Pastos Grandes, the company's other lithium brine project that is also located in northwest Argentina, is still in development. The Thacker Pass project, the company's clay resource in the U.S. state of Nevada is under construction.

As electric vehicle adoption increases, we expect maintained double-digit annual growth for lithium demand. Lithium Americas should benefit as there should be more than enough demand for company’s three resources to enter production and expand capacity over time.

At Cauchari-Olaroz, Lithium Americas owns 44.8% of the project, while Ganfeng, one of the world’s largest lithium producers, owns 46.7%. The remaining 8.5% stake is owned by JEMSE, an Argentina state-owned mining company. Once Cauchari-Olaroz ramps to full production, the project should have a similar cost position as other Argentinean brines, such as the resources of narrow-moat Livent and Orocobre. The project is finishing construction on an initial 40,000 metric tons of capacity, with plans for additional expansions.

It owns 100% of the Pastos Grandes project. Located in Argentina, Pastos Grandes is currently under development. LAC also owns a 65% stake in a neighboring project in the same salar. The two projects will likely be consolidated into one.

The firm owns 100% of the Thacker Pass resource, which began construction in early 2023. Thacker Pass would be the first clay-based lithium resource to enter production globally. Currently, all lithium is produced from either brine or hard rock mining. Thacker Pass plans on bringing on 80,000 metric tons of capacity by 2030 with future expansions thereafter.

The firm plans to separate into two businesses by the end of 2023. Current shareholders will receive shares of the second company, which will retain Lithium Americas, be listed in the U.S., and contain Thacker Pass. The existing company will be renamed Lithium Argentina and will contain Cauchari-Olaroz and Pastos Grandes.

Business Strategy & Outlook

We assign Lithium Americas a no-moat rating. The company is currently producing only marginal volumes of lithium as it continues to develop its three projects. However, we view the company’s three lithium production resources as having the potential to generate excess returns on invested capital due to low cost of production.

Globally, lithium has been produced from either the evaporation of brine or the mining of spodumene minerals. Lithium Americas, along with partner Ganfeng, is currently in the construction phase of its lithium brine project in Cauchari-Olaroz in Argentina’s Jujuy province. Cauchari-Olaroz entered production in mid-2023, and should eventually have a similar cost position as other Argentinean brines, such as the resources of narrow-moat Livent and Orocobre. 

The Cauchari-Olaroz project pumps brine from the underground aquifers into reservoir-like evaporation ponds to allow the brine to concentrate. With much of the water evaporated, the remaining salt can be processed into lithium derivatives, including lithium carbonate. In general, producing lithium carbonate from brines in Argentina costs less than when starting from spodumene or other brine resources with the exception of resources in Chile.

While the Cauchari-Olaroz project will have lower concentration levels and less desirable climate conditions than those of Chilean peers, Argentinean lithium brines sit in the bottom quartile of the global lithium cost curve. Despite a higher cash production cost than its Chilean peers, Argentina-based producers benefit from lower total royalties and taxes. The lower total royalties have diminished much of the gap between Argentina and Chile lithium costs. 

While we see the potential for the Cauchari-Olaroz project to become a low-cost resource, we currently assign it a no moat rating as the project is still ramping to full capacity and not at a production level indicative of being a low-cost resource. Development studies indicate the project could warrant a moat based on the cost advantage moat source. However, these estimates could prove significantly different from actual production costs. Should the project ramp up production with a bottom quartile unit cost, we would revisit our moat rating. 

Pastos Grandes is currently in development, and we forecast the project will begin operation in the late-2020s. The Pastos Grandes is located near Cauchari-Olaroz in Argentina and should have similar economics. We currently assign the project a no-moat rating, as the project is not in production, but plan to revisit once the company ramps up production.

Lithium Americas’ Thacker Pass project is in the U.S. state of Nevada, which we project will begin operations in the mid-2020s. Thacker Pass aims to produce lithium from a clay resource. Currently, all global lithium is produced from brine or spodumene resources and a clay-based resource project has never entered production. Based on the company’s plan, the clay production process will be similar to spodumene mining, where clay will be dug out of the ground in an open-pit mine and processed into lithium carbonate. 

The lithium carbonate cost curve has traditionally been set by non-integrated producers who purchase and convert spodumene. Development studies indicate the potential for clay resources to be on the lower half of the cost curve. However, with no comparable resources, clay-based projects carry additional uncertainty as actual production costs could sit much higher on the cost curve. As a result, we see the threat of material value destruction should the project not be able to efficiently process clay into lithium chemicals, which precludes Lithium Americas from a narrow or wide moat rating. 

Further, we see additional uncertainties around project timing, as Lithium Americas faces legal challenges to its permits from opposing activists. While we think Thacker Pass will ultimately be granted all required permits to begin construction, challenges could delay the project indefinitely. We view the potential of an indefinite delay as another threat of material value destruction that would prevent us from awarding Lithium Americas with a narrow or wide moat rating. As a result, we currently assign the Thacker Pass project with a no-moat rating. However, similar to views for the Cauchari-Olaroz and Pastos Grandes projects, we would revisit our moat rating should the project ramp up production with a low unit production cost.

None

Economic Moat

Lithium Americas

Lithium Americas Corp. is a resource company, which engages in lithium development projects. Its projects include: Thacker Pass and Caucharí-Olaroz. The company was founded by Raymond Edward Flood, Jr. on November 27, 2007 and is headquartered in Vancouver, Canada.

Earnings data Q4 2023

Revenue

Cost of revenue

Gross profit

Operating expenses

SG&A

Other

Operating income

EBITDA

Net income

Earnings per share

Total assets

Current assets

Cash & equivalents

Receivables

Inventory

Non-current assets

Net PPE

Intangibles

Total liabilities

Current liabilities

Short term debt

Income tax payable

Non-current liabilities

Long-term debt

Total equity

Stockholders equity

Minority interest

Total liabilities & equity

Total debt

Net debt

Book value per share

Cash from operations

Funds from operations

Change in working capital

Cash from investing

Capital expenditure

Purchase/sale of investments

Purchase/sale of business

Other sources

Cash from financing

Change in stock

Change in debt

Cash dividends paid

Cash from other sources

Net change in cash

Free cash flow

Lithium demand is going through the roof, and one analyst likes this company's prospects.

Why Lithium Americas Stock Just Spiked 13%

VANCOUVER, British Columbia, Nov. 25, 2021 (GLOBE NEWSWIRE) -- Lithium Americas Corp. (TSX: LAC) (NYSE: LAC) ("Lithium Americas" or the "Company") announces that on November 24, 2021 the Company purchased 23,369,003 common shares (the “Arena Shares”) of Arena Minerals Inc. (TSX-V: AN) (“Arena Minerals”) at a price of C$0.54 per share through an alternative market transaction for aggregate consideration of approximately US$10 million (the “Purchase”). The Arena Shares represent 6.3% of the issued and outstanding common shares of Arena Minerals as of close of market on November 24, 2021.

Lithium Americas Increases Strategic Interest in Arena Minerals

Albemarle

Amplify Lithium & Battery Technology ETF

FREYR Battery SA

VanEck Green Metals ETF

Global X Lithium & Battery Tech ETF

Livent Corp

Sociedad Quimica Y Minera De Chile

Tesla

Wesfarmers Ltd

Lithium Miners News For The Month Of November 2021

These lithium stocks could race ahead if they deliver on their growth plans.

2 Lithium Stocks You Can Buy Right Now to Play the EV Boom

AYRO

ChargePoint Holdings

Fisker

Lucid Group

Here are seven top EV stocks growth investors may want to consider, in this volatile and perhaps overvalued market right now. The post 7 EV Stocks Set to Soar as the Infrastructure Bill Passes appeared first on InvestorPlace.

7 EV Stocks Set to Soar as the Infrastructure Bill Passes

Decarbonization Plus Acquisition Corp III

Ford Motor Company

General Motors

Panasonic Holdings Corp

Porsche Automobil Holding SE

QuantumScape

Volvo AB

With interest in more affordable electric vehicles rising exponentially, the market for EV batteries, now worth over $27 billion annually, is expected to sustain double digit-percentage growth over the next decade. The post Investment Opportunity Breakdown: Electric Vehicle Battery Stocks appeared first on InvestorPlace.

Investment Opportunity Breakdown: Electric Vehicle Battery Stocks

Piedmont Lithium

Standard Lithium Ltd

There's no disputing that demand for this material is huge, but some see stock prices getting ahead of themselves.

As Markets Hit Records, Can This Red-Hot Sector Keep Soaring?

One of the lithium industry's leading stocks this year was clobbered Thursday morning following a negative report from a short seller.

Have Lithium Stocks Lost Their Juice?

VANCOUVER, British Columbia, Nov. 17, 2021 (GLOBE NEWSWIRE) -- Lithium Americas Corp. (TSX: LAC) (NYSE: LAC) (“Lithium Americas”) and Millennial Lithium Corp. (TSXV: ML) (A3N2:GR: Frankfurt) (MLNLF: OTCQB) (“Millennial”) are pleased to announce that they have entered into a definitive arrangement agreement dated November 17, 2021 (the “LAC Arrangement Agreement”) pursuant to which Lithium Americas has agreed to acquire all of the outstanding shares of Millennial (each, an “ML Share”) by way of a plan of arrangement (the “LAC Transaction”) for C$4.70 per ML Share, payable in common shares of Lithium Americas (the “LAC Shares”) and C$0.001 in cash per ML Share (collectively, the “Purchase Price”), representing total consideration of approximately US$400 million. Based on Lithium Americas' closing price on November 16, 2021, this consideration would result in Millennial Shareholders owning approximately 9.1% of Lithium Americas.

Lithium Americas Enters into Definitive Agreement to Acquire Millennial Lithium

Trident Royalties PLC (AIM:TRR) welcomed the progress made at the Thacker Pass lithium project in Nevada, US, in which it holds a 60% interest in a gross revenue royalty, Lithium Americas Corp (TSX:LAC, NYSE:LAC) (LAC), the owner of the project, provided an update alongside its third-quarter financial results. Thacker Pass is the largest known lithium resource in the US.

Trident Royalties welcomes progress made at Thacker Pass lithium project in US

POSCO

The 2021 IEA report forecasts lithium demand to increase between 13x to 42x from 2020 to 2040. This gives an opportunity for many small cap lithium juniors to succeed. My top ten speculative lithium juniors (in alphabetical order and under US$340m market cap).

Top 10 Speculative Lithium Juniors To Consider With A Market Cap Under US$340m

VANCOUVER, British Columbia, Nov. 15, 2021 (GLOBE NEWSWIRE) -- Lithium Americas Corp. (TSX: LAC) (NYSE: LAC) (“Lithium Americas” or the “Company”) has reported unaudited financial and operating results for the third quarter ended September 30, 2021.

Lithium Americas Reports Third Quarter 2021 Results

The electric vehicle boom is only accelerating, boosting battery metal stocks. Unfortunately, a shortage could put the brakes on it all.

3 Battery Metal Stocks to Buy as EV Players Fight for Materials

Arbe Robotics Ltd

Romeo Power

Why Lithium Americas, Romeo Power, and Arbe Robotics Stocks Popped Today

Coursera

Caesars Entertainment

TipRanks analyst ranking service pinpoints Wall Street's best-performing stocks, like Ford & Steve Madden

Top Wall Street analysts pick their favorite stocks as earnings season winds down

Why Lithium Americas Stock Just Spiked 10%

NACCO Industries

CLEVELAND, Nov. 3, 2021 /PRNewswire/ --  Third Quarter NACCO Consolidated Highlights: Q3 2021 Operating profit increased to $27.6 million, up from $9.4 million in Q3 2020 due to a $10.3 million contract termination fee, and improved earnings at all three operating segments, most significantly Minerals Management Q3 2021 Net income increased to $24.8 million, up from $8.0 million in Q3 2020 NACCO Industries® (NYSE: NC) today announced consolidated operating profit of $27.6 million and net income of $24.8 million, or $3.47 per diluted share, for the third quarter of 2021 compared with consolidated operating profit of $9.4 million and net income of $8.0 million, or $1.14 per diluted share, for the third quarter of 2020. The Company's contract mining agreement between Bisti Fuels Company and the Navajo Transitional Energy Company ("NTEC") was terminated effective September 30, 2021.

NACCO Industries Announces Third Quarter 2021 Results

Lithium consolidation continues; Lithium Americas outbids CATL. This comes after Neo Lithium was given an offer to be acquired. This trend of smaller companies being gobbled up Pac Man style will continue.

Lithium Americas: An Undervalued Long Term EV Powerhouse

Electric vehicles are shaping up to be an essential piece of the climate change puzzle. Hybrids and EVs are popping up in showrooms and advertizing, promising power and performance without carbon emissions.

Investing in Lithium, a Key Component of Green Energy

(Kitco News) - Lithium Americas (TSX: LAC) (NYSE: LAC) announced Monday that it has submitted an unconditional offer to Millennial Lithium to acquire all of the outstanding shares of Millennial.

Lithium Americas makes $400 million offer to acquire Millennial Lithium, beats CATL offer

VANCOUVER, British Columbia, Nov. 01, 2021 (GLOBE NEWSWIRE) -- Lithium Americas Corp. (TSX: LAC) (NYSE: LAC) ("Lithium Americas" or the "Company") is pleased to announce that it has submitted an unconditional offer to Millennial Lithium Corp. (“Millennial”) to acquire all of the outstanding shares (each, a “Common Share”) of Millennial (the “Offer”). Under the terms of the Offer, on closing, each Millennial shareholder (“Millennial Shareholder”) will receive C$4.70 per Common Share, payable in Lithium Americas common shares and C$0.001 in cash per Common Share (the “Purchase Price”), representing total consideration of approximately US$400 million. Based on the Company's closing price on October 29, 2021, this consideration would result in Millennial Shareholders owning approximately 9.9% of Lithium Americas.

Lithium Americas Makes Offer to Acquire Millennial Lithium

Rio Tinto plc Sponsored

Lithium prices were up strongly again the past month. Lithium market 'desperately short', says bullish Brinsden. BMI - Prices may head to US$40,000/t.

Lithium Miners News For The Month Of October 2021

THIS NEWS RELEASE IS NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

Arena Minerals Announces Closing Second & Final Tranche of Offering With Ganfeng Lithium and Lithium Americas

Share prices for five of the country's top lithium companies have received a nice boost over the past couple of days, thanks to an announced offering of five new mining contracts soon to be available in Chile.

5 US Lithium Miners Getting a Boost From Planned Expansion in Chile

Move over EVs, the revolution in electric small off-road equipment has officially begun.

News for Lithium Americas Stock (LAC)