December 2020

LITHIUM AMERICAS CORP. (LAC): A PRE-PRODUCTION FIRM POISED TO BE THE NEXT LITHIUM MAJOR
A Stock Research Report

Introduction

Lithium Americas Corp. (LAC) is the strongest junior lithium miner in the world today. It is poised to accelerate from a pre-production company to a mining major over the next decade. By 2024, we believe LAC will be worth $35 per share, a 250% return. Within the decade, there are multiple paths forward for that return to grow further.

Global electrification places enormous pressure on illiquid mineral markets. International automaker product roadmaps suggest a need for lithium 6x the current global supply size within a decade. LAC will lead the new entrants in delivering critical greenfield development supply to the market.

Missed in the race to grow volume is the importance of quality. Lithium is not a commodity; it is a specialty chemical. Value will accrue to the firms that own or feed mid-stream processing facilities capable of delivering the material required by Tier 1 battery manufacturers. Impurity (quality) differences in lithium sold in the third quarter of 2020 resulted in 3x price differentials.

By the middle of this decade, we expect LAC to be producing 70,000 tons of lithium carbonate equivalent (LCE) per annum (tpa). By the end of the decade, production will exceed 100,000 tpa. For perspective, that would place LAC on par with Albemarle Corp.’s (ALB) production and earnings capacity in 2019, a company that has a 15x market cap compared to LAC currently.

Key near term catalysts that drive the investment thesis include:

  1. A final investment decision and release of the definitive feasibility study for the most advanced lithium deposit development in the United States, Thacker Pass.

  2. Production start at LAC’s Argentinean asset Caucharí-Olaroz.

  3. The market for battery-grade lithium chemicals tightens considerably from 2022–2025.

  4. LAC’s free float increases, putting the firm in a position to receive sizeable passive investment flows.

We expand upon each point in detail throughout the report.

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