VANCOUVER, British Columbia - Lithium Americas Corp. (TSX: NYSE:LAC) (NYSE: LAC) has announced an agreement with General Motors Holdings LLC (NYSE:GM) to extend the deadline for a second tranche investment until December 31, 2024. This extension will support the development of the Thacker Pass project, known as North America's largest lithium resource.
Jonathan Evans, President and CEO of Lithium Americas, highlighted the collaborative effort with GM to establish a strong domestic lithium supply chain. The company is in the process of finalizing the Department of Energy (DOE) Loan and GM's investment before making the final investment decision later this year.
The second tranche, amounting to $330 million, is contingent on various conditions, including the execution of a loan agreement for a $2.26 billion loan from the DOE under the Advanced Technology Vehicles Manufacturing (ATVM) Loan Program. Lithium Americas has agreed not to unilaterally close the second tranche investment until December 20, 2024, allowing time for discussions on alternative investment structures.
Previously, on January 30, 2023, GM committed to a $650 million equity investment in two tranches to fund the construction and development of Thacker Pass. The first tranche of $320 million closed on February 16, 2023. Following a corporate reorganization on October 3, 2023, the agreement for the second tranche was transferred to the newly formed Lithium Americas from the former entity, Old LAC.
Lithium Americas is progressing towards the production phase of Thacker Pass Phase 1, aiming for a capacity of 40,000 tonnes per annum of lithium carbonate, with Phase 2 targeting an additional 40,000 tonnes. The construction phase is expected to generate approximately 1,800 direct jobs.
This news is based on a press release statement and contains forward-looking information that involves risks and uncertainties. These statements are not guarantees of future performance, and actual results may differ materially. Lithium Americas' shares are traded on both the Toronto Stock Exchange and the New York Stock Exchange under the symbol LAC.
In other recent news, Lithium Americas Corp. has undergone a series of analyst adjustments. Deutsche Bank (ETR:DBKGn) has revised its price target for the company to $2.50, maintaining a hold rating, while TD Cowen continues to support the firm with a buy rating and a $5.00 price target. Meanwhile, Scotiabank reduced its price target to $3.00, maintaining a sector perform rating, and Piper Sandler initiated coverage with a neutral rating and a $3.90 price target.
These recent developments follow the company's successful raise of $263 million in net proceeds from an April offering, which meets the financial requirements for General Motors' second investment tranche of $330 million and the anticipated $2.26 billion loan from the Department of Energy. Both the investment and the loan are expected to be finalized in the latter half of 2024.
Canaccord Genuity reaffirmed its buy rating on Lithium Americas' stock after evaluating the company's Q1 financial performance, suggesting that the company's net asset value per share and EBITDA projections are consistent with previous estimates. Lithium Americas Corp. is making strides in enhancing its operational capabilities, with additional funding from the Department of Defense bolstering its infrastructure prospects.
The company is also advancing its site work, with major construction expected to commence in the second half of 2024. Despite a delay in expected funding from the Department of Energy and General Motors, Deutsche Bank believes this is a more reasonable forecast.
These recent developments underscore the analysts' confidence in Lithium Americas Corp.'s future prospects. However, it's important to note that the company's production schedule is not expected to increase until 2028.
InvestingPro Insights
As Lithium Americas Corp. (LAC) extends its investment timeline with General Motors and advances towards the production phase at Thacker Pass, financial metrics and market performance provide a broader context for investors. Notably, LAC's market capitalization currently stands at approximately $567.57 million, reflecting the company's valuation in the market. Despite the challenges of a negative P/E ratio of -17.6, indicating that the company is not currently profitable, the company's balance sheet holds a silver lining. An InvestingPro Tip highlights that LAC maintains more cash than debt, providing a cushion for its capital-intensive development projects.
However, the road ahead for Lithium Americas may not be without its bumps. The company's stock performance has seen a significant decline over the past year, with a 74.43% drop in the 1-year price total return. Another InvestingPro Tip draws attention to the company's cash burn rate, which could be a concern for investors as LAC works towards bringing Thacker Pass into production. Additionally, the company's valuation implies a poor free cash flow yield, which is an important factor to consider when evaluating the company's financial health and future prospects.
For investors seeking a deeper dive into Lithium Americas Corp.'s financials and market performance, InvestingPro offers a comprehensive list of tips, with 10 additional tips available that provide insights into the company's financial position and stock performance. These tips can be found at https://www.investing.com/pro/LAC, offering valuable information for making informed investment decisions.
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