Pacific Trader: Why Lithium Americas could be a big winner in the EV revolution

Credit: Lithium Americas Corp.

Lithium Americas‘ Caucharí-Olaroz project in Argentina

Forget Tesla. All electric car makers will need a lot of lithium in the foreseeable future, and this Vancouver company is (almost) ready to supply it

The stock: You’d have done well to own stock in Lithium Americas Corp. (TSX, NYSE:LAC) lately. It’s more than doubled in the past year and more than quadrupled in the past five—despite having no revenue or earnings to speak of, just a couple of lithium development projects in Argentina and Nevada. Can this roll continue?

The drivers: Until recently, lithium, a light, silvery-white alkali metal, was a little-used mineral with few commercial suppliers. But demand is expected to soar as production of electric vehicles powered by lithium-ion batteries takes off. Chinese companies have tried to corner the market, heightening the metal’s strategic importance. Still, lithium prices are volatile as the opening of each new mine or brine extraction plant skews the supply-demand balance. Plus, there’s the overarching risk that a different battery technology—or an entirely different automotive propulsion technology, like, say, hydrogen fuel cells—comes to the fore.

But if you believe in the lithium story, Lithium Americas is as good a vehicle as any to ride it out. The Vancouver-based company is about a year away from starting production at its Caucharí-Olaroz project in Argentina, which will use a combination of brine evaporation ponds and chemical processing plants to produce 40,000 tonnes per year to start. It‘s also developing an open-pit mine site called Thacker Pass in Nevada that would be the largest source in the U.S., but there are several hurdles to overcome.

Lithium Americas stock peaked above $36 last January, when the company obtained an important permit for Thacker Pass. It’s since settled back to around $22, giving it a market capitalization approaching $2.5 billion.

Word on the street: “We fully expect LAC to re-rate as its Argentinean brine project, Caucharí-Olaroz, starts production next year,” IA Capital Markets analyst Puneet Singh said in a note last week as he raised his target by $5, to $29, with a “speculative buy” rating.

Coming and going: Restructured digital building supply marketplace BuildDirect.com Technologies started trading on the TSX Venture Exchange on August 18 under the symbol BILD, following a reverse takeover of VLCTY Capital. Founded in 1999, the Vancouver-based company entered creditor protection in 2017 before being refinanced by a group of investors and lenders.