Lithium Americas (LAC) is set to make considerable strides in the lithium market, a vital component for electric vehicle batteries, with a $2.26 billion loan approval from the U.S. Department of Energy and a significant joint venture with General Motors (GM). These developments will fund the construction of lithium processing facilities at Thacker Pass in Nevada. The company is progressing with project planning and execution, advancing Thacker Pass to the production stage, which is anticipated to kick off in 2027.
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It is an intriguing option for long-term investors interested in exposure to the surging lithium market.
Lithium Americas Acquires Significant Funding
In October 2023, Lithium Americas was divided into two public companies, Lithium Americas (Argentina) Corp and Lithium Americas. The latter is now focusing solely on the Thacker Pass project, located in northern Nevada, the largest Measured and Indicated (M&I) lithium resource in the U.S.
The Company recently secured a $2.26 billion loan from the U.S. Department of Energy’s Loan Programs Office to finance the construction of processing facilities at Thacker Pass, designed to produce 40,000 tonnes of battery-grade lithium carbonate per year. Detailed engineering and procurement packages for essential equipment are well underway as part of a strategy to eliminate project risk. Necessary earthworks for the Workforce Hub’s housing units have been completed, with further contracts for utilities and other construction to be awarded soon.
In October, the company entered a joint venture agreement with GM to fund, develop, and operate Thacker Pass. This deal will bring a cash influx and letters of credit amounting to $625 million from GM, who will also acquire a 38% stake in Thacker Pass. This recent agreement resulted in the termination of the previous second tranche subscription agreement.
Lithium Americas’ Recent Financial Results
The company recently reported financial results for the third quarter. Expenses increased from $13.9 million in 2023 to $17.4 million in 2024. There has been a significant shift in net income, with a recorded net loss of $20.3 million in 2024 compared to a net income of $9.0 million in 2023. Earnings per share (EPS) turned from a gain of $0.06 per share in 2023 to a loss of $0.10 per share in 2024.
As of the quarter’s end, the company reported a substantial increase in cash and cash equivalents, from $195.5 million at the end of 2023 to $341.2 million. Total assets rose from $439.5 million to $693.0 million in the same period. Total long-term liabilities increased slightly from $7.5 million to $9.1 million.
What Is the Price Target for LAC Stock?
The stock has recently been trending upward, climbing over 84% in the past three months. It trades near the middle of its 52-week price range of $2.02 – $7.86 and shows positive price momentum as it trades above the 20-day (3.71) and 50-day (3.25) moving averages. The P/B ratio of 1.3x suggests a bit of an undervaluation compared to the Industrial Metals & Mining industry average of 1.9x.
Analysts following the company have been constructive on LAC stock. For example, BMO Capital recently resumed coverage of Lithium Americas with a Market Perform rating and $3.50 price target, noting the company is “on the cusp” of building one of the most significant U.S. lithium operations.
Based on eight analysts’ recent recommendations, Lithium Americas is rated a moderate buy overall. The average price target for LAC stock is $4.99, representing a potential upside of 27.95% from current levels.
Bottom Line on LAC
Lithium Americas is set to make significant inroads into the lithium market, thanks to a sizable loan from the U.S. Department of Energy and an important collaboration with General Motors. Despite recent financial results highlighting increased expenses and a shift from net income to net loss, the considerable increase in cash and cash equivalents suggests sufficient financial stability to reach production in 2027. With the stock showing positive price momentum and analysts predicting future growth, LAC offers a promising opportunity for long-term investors seeking exposure to the burgeoning lithium market.
