Lithium Americas Corp

Lithium Americas Corp. (NYSE: LAC), formerly Western Lithium USA Corp., is a resource company. The Company is concentrating on the development of two lithium development projects: the Cauchari-Olaroz project in Argentina's Jujuy region and the Lithium Nevada project in the United States' northwestern Nevada. Organoclay, Lithium Nevada, Cauchari-Olaroz, and Corporate are the company's segments. Canada, the United States, Germany, and Argentina are its geographical parts.

Key Highlights

• For a total consideration of about USD360 million, the Company finalized the acquisition of Millennial and the 100% owned Pastos Grandes project on January 25, 2022.
• The Company applied to the US Department of Energy for funds to be used at Thacker Pass under the Advanced Technology Vehicles Manufacturing Loan Program on April 14, 2022.
• Green Technology Metals Limited, a North American-focused lithium exploration and development company with hard rock spodumene assets in north-west Ontario, Canada, entered into a private placement agreement with the Company on April 28, 2022, for a total consideration of USD10 million, or approximately 5% after the closing of the share placement.
• The company is still developing its projects and does not make any money from them.
• An increase in Thacker Pass exploration and evaluation expenditures related to engineering efforts, an increase in general and administrative expenses due to an increase in insurance, legal, and consulting fees, and increased finance costs due to amortization of convertible senior notes liability resulted in a net loss of USD 46.1 million in Q1FY22 compared to USD 10 million in Q1FY21.
• On March 31, 2022, there were CAD5,611 in cash and short-term deposits in (December 31, 2021 – CAD4,393), and USD486,736 (December 31, 2021 – USD506,214). Interest rates on cash and short-term deposits range from 0.2 percent to 0.3 percent each year.
• Total assets and liabilities increased in Q1 2022, owing to the acquisition of Millennial and a USD50.3 million increase in the fair value of convertible senior notes derivative liability, which was partially offset by the repayment of a USD24.7 million limited recourse loan facility balance and accrued interest.

Stock Recommendation

Over the past three months, LAC's share price has corrected by 36.33%. The stock is currently leaning towards the lower end of its 52-week range of USD 12.56 to USD 41.56. The current price is below both the short-term (50-day) SMA and long-term (200-day) SMA, with an RSI of 45.87.

Considering the strong fundamentals, technical analysis, and robust top-line results, we give a "Watch" recommendation on the stock at the current price of USD 21.87, as of June 24, 2022, at 12:20 pm PDT.

1-Year Technical Chart, as of June 24, 2022. Data Source: REFINITIV, Analysis by Kalkine Group

Technical Analysis Summary:

*Current Price as of June 24, 2022, at 12:20 pm PDT.

Technical Indicators Defined: -

Support: A level where-in the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest.

Resistance: A level where-in the stock prices tend to find resistance when they are rising, and the uptrend may take a pause due to profit booking or selling interest.

Stop-loss: It is a level to protect further losses in case of unfavorable movement in the stock prices.

Note 1: The reference data in this report has been partly sourced from REFINITIV.  

Note 2: Investment decisions should be made depending on the investors’ appetite for upside potential, risks, holding duration, and any previous holdings. Investors can consider exiting the stock if the Target Price mentioned as per the Valuation has been achieved and subject to the factors discussed above. 

Note 3: The report publishing date is as per the Pacific Time Zone.