Stifel positive on Lithium Americas, General Motors JV agreement

Stifel analyst Cole McGill notes Lithium Americas (LAC) announced that it had entered into a Joint Venture agreement with General Motors (GM) to develop and operate its Thacker Pass lithium project in Nevada. The deal, which replaces the previous $330M Tranche 2 equity commitment from GM, will see the automaker contribute $430M in cash and $195M via an interest-free letter of credit in exchange for a 38% stake in the project. The firm is positive on this news, saying it provides funding at an implied premium to Tuesday’s closing share price, substantially less dilutive than an all-equity alternative. Moreover, Stifel now intimates that the conditions for unlocking the $2.26B Department of Energy funding have now been materially met, substantially de-risking the project from a financing perspective. The company now expects the DoE loan to close in the coming weeks, which would allow for a Final Investment Decision by year-end. The firm has a Buy rating on Lithium Americas shares.