Since bottoming out at $1.92 in March 2020, shares of Lithium Americas (LAC) rocketed to a recent high of $7.75. All on news of a potential lithium supply shortage.
According to Reuters, “A new demand surge is already looming in the form of the multiple ‘green stimulus’ packages as governments try and kick-start locked-down economies. You don’t have to be a market genius to see that another price boom is coming sooner or later as an under-powered supply chain has to catch up with the next demand surge.”
Electric vehicles are helping, as demand grows much faster than anyone expected.
In fact, according to a new study from the Boston Consulting Group, by 2025, EVs could account for a third of all auto sales. By 2030, EVs could surpass internal combustion engine vehicles with a market share of 51%.
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But for that to happen, the world needs far more lithium, which is where LAC comes into play.
In addition, Lithium Americas just completed its transaction with Chinese partner, Ganfeng Lithium regarding ownership structure of the Cauchari-Olaroz lithium project under development in Argentina. Reportedly, this project is one of the few large-scale lithium operations that are currently in development, and is expected to begin production in 2021.
“With an additional $40 million in cash on our balance sheet and over $200 million in available capital to fund our share of Cauchari-Olaroz, Lithium Americas remains in a strong financial position as we advance both of our projects,” says President and CEO Jon Evans.
Earnings are Fueling Upside
Earlier this month, Lithium Americas posted a second quarter loss of seven cents a share. However, that fell within the range analysts were looking for.
The better news is that Lithium Americas is moving forward with two projects that could generate solid revenue, and hopefully a profit. Those include the Cauchari-Olaroz project in Argentina, and the Thacker Pass project in Reno, Nevada.
“With respect to the Thacker Pass lithium project in Nevada, we continue to make significant progress with the recent release of the draft Environmental Impact Statement by the Bureau of Land Management,” added Evans.
Ian Cooper’s Personal Position in LAC: None