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

Despite its recent pullback, this junior lithium miner's stock is up 348% over the last year.

Why Lithium Americas Stock Fell 12% in April

Livent Corp

Piedmont Lithium

Tesla

The best of lithium stocks to hold for the next decade with surging demand from the electric vehicle industry. The post 4 of the Best Lithium Stocks to Buy for the Future appeared first on InvestorPlace.

4 of the Best Lithium Stocks to Buy for the Future

Is (LAC) Outperforming Other Basic Materials Stocks This Year?

Is Lithium Americas (LAC) Outperforming Other Basic Materials Stocks This Year?

Albemarle

Amplify Lithium & Battery Technology ETF

Global X Lithium & Battery Tech ETF

Sociedad Quimica Y Minera De Chile

Lithium prices continued to rise the past month.

Lithium Miners News For The Month Of April 2021

Energizer Holdings

Lithium stocks are a great way to play the EV trend because it aims to solve issues of limited battery life and slow charging times. The post 5 Lithium Stocks Supporting the Future of Tech appeared first on InvestorPlace.

5 Lithium Stocks Supporting the Future of Tech

Bull Of The Day: Lithium Americas Corp (LAC)

Most lithium research focuses on its uses for passenger and commercial EVs. That is only part of the story.

Lithium - Essential For Defense. Here's How To Profit

Is Lithium Americas (LAC) Stock Outpacing Its Basic Materials Peers This Year?

Despite its 2021 pullback, this junior lithium miner's stock is up more than 400% over the last year.

Why Lithium Americas Stock Fell 14% in March

Panasonic Holdings Corp

Romeo Power

Energous

If you're hesitant on the recent volatility of electric vehicles, you should instead consider these relevant battery stocks. The post Grading 7 of the Biggest Battery Stocks as an All-EV Future Looms Larger appeared first on InvestorPlace.

Grading 7 of the Biggest Battery Stocks as an All-EV Future Looms Larger

Volkswagen AG

The U.S. government is going to invest $174 billion into EVs by 2030 via the infrastructure plan. Lithium prices are blasting off, up 88%.

174 Billion Reasons To Invest In Lithium

The miner has two projects, one in Argentina and one in Nevada, that make sound economic sense to B. Riley analyst Lucas Pipes.

Lithium Americas Stock Gets Boost From Wall Street

Lithium prices surged higher the past month.

Lithium Miners News For The Month Of March 2021

QuantumScape

Xcel Energy

EV manufacturers aren't the only way to make money off the growth of electric vehicles.

If Electric Vehicles Take Over, These Energy Stocks Will Be Big Winners

Earnings were released yesterday, and analysts chimed in today.

Why Lithium Americas Stock Dropped Wednesday

VANCOUVER, British Columbia, March 02, 2021 (GLOBE NEWSWIRE) -- Lithium Americas Corp. (TSX: LAC) (NYSE: LAC) ("Lithium Americas" or the "Company") has reported financial and operating results for the fourth quarter and year ended December 31, 2020.

Lithium Americas Reports 2020 Full Year and Fourth Quarter Results

MP Materials

Wall Street analyst sees EVs growing into a $5 trillion industry in 10 years, which could be great news for miners of lithium and the rare earths.

Why Lithium Americas, Piedmont Lithium, and MP Materials Stocks Popped Today

Celestica

Enphase Energy

NextEra Energy

NEW YORK, Feb. 26, 2021 /PRNewswire/ -- Lithium is now a critical metal for Europe. In September 2020, the EU added lithium to its Critical Raw Materials (CRMs) list, warning of the need for a continuous flow of lithium supply for zero-emission mobility. Mentioned in today's commentary...

The 'Oil Of The Future' Is Set To Soar In 2021

Peridot Acquisition Corp.

Lithium prices were up for the past month. Lithium market news - Deutsche Bank sees the lithium market in a deficit from late 2021 out towards 2024, upgrades ALB & SQM.

Lithium Miners News For The Month Of February 2021

These lithium stocks are playing a pivotal role in powering the electric vehicle industry. They are set for major gains in the near future.

7 Lithium Stocks That Are Keeping the EV Revolution Running

With the growth that will outpace EV manufacturers, and more certain futures, I believe that these suppliers are the prime means of capitalizing off of the global transition to EVs. Even as the pandemic has dampened electric vehicle adoption last year, lithium remains a strong market with a ceiling far above its current residence as supply constraints drive prices up.

Invest In EV Suppliers Over Manufacturers

A Wall Street Journal article sets a fire under lithium stocks.

Why Lithium Americas, American Lithium, and Piedmont Lithium Stocks All Popped Today

The Canadian junior lithium miner's stock has continued its 2020 electrifying performance into 2021.

Why Lithium Americas Stock Soared 57% in January

Plug Power

EV stocks have been running wild lately. Here are seven battery stocks that are likely to make it easier to invest in this hot segment.

7 Lithium and Battery Stocks for Big Growth

These undervalued lithium stocks could have a multi-year rally on industry tailwinds. The EV industry is a key trigger for lithium demand.

News for Lithium Americas Stock (LAC)