Olemedia
Intro
Years back I quit worrying about short-term price fluctuations be it daily or even monthly outcomes and so should you. Now I look at timeframes that involve years, if not a decade at times. I have been preaching on my lithium grandstand for years that the white metal is the future. Lithium is the new oil of this era.
Once you see the future, it is then only a matter of waiting for the masses to wake up and they are starting to emerge from the slumber as have lithium prices. In this article, we will focus on Lithium Americas (NYSE:LAC) and the relationship with Green Technology Metals (Ticker GT1 on the ASX). We will also glance at the motion concerning Thacker Pass.
A “Miner” Thacker Pass Lawsuit Update
In a past LAC article, my crystal ball foretold that a decision concerning Thacker Pass would not come till Q4 to Q1. I caught a lot of heckling from options traders with that prediction as they thought the decision would come before October.
Granted, no one truly knows, but having been around the court system for a while, I thought the odds were high we would slip. Unfortunately, it appears I was correct in my assumptions of delays. Judge Du will hear “pending motions” on 1/5/2023. Do note the number to call in and listen below. Thankfully, they are muting listeners this time.
| Date Filed | # | Docket Text |
|---|---|---|
| 10/06/2022 | 273 | MINUTE ORDER IN CHAMBERS of the Honorable Chief Judge Miranda M. Du on 10/6/2022. By Deputy Clerk: Peggie Vannozzi.
A hearing on pending motions is set for 1/5/2023 at 10:00 AM in Reno Courtroom 5 before Chief Judge Miranda M. Du. The hearing will be in person. Due to limited seating in the courtroom, members of the public may listen to the proceedings by calling the Court’s AT&T line (1-888-251-2909, code 3803398 and pass code 010523.) All participants on the AT&T line, except for the host line, will be muted so that only the Courtroom can be heard by the participants. |
I do wonder what the schedule for the court case looks like after this hearing, and of course this may be followed by the Court of Appeals.
Lithium Americas And Green Technology Metals
Lithium Americas is by far one of the most aggressive lithium companies on planet Earth and now they are expanding by forming new partnerships. Not content to just have a massive near-completed lithium plant in Argentina, they purchased Millennial Lithium for $400 million (beating out CATL). LAC also invested in Arena Minerals (OTCQX:AMRZF). Next, factor in the mind-numbing, large Thacker Pass project (and the rarely talked about associated areas around TP) and one would think that LAC would be content to develop what they have. Yet, this is not the case.
We now see Lithium Americas pairing up with Australian based Green Technology Metals. LAC has invested $10 million USD in the hard rock miner to acquire roughly 5% of the company. Per the PR from April, we see the intent is:
Key guiding principles of the Framework involve both parties working together in seeking to:
Rapidly advance GT1’s Ontario Lithium Projects and fast-track the Seymour lithium project (80% GT1) into production.
Develop midstream and downstream processing routes for battery-grade lithium chemicals in Ontario and across North America.
Advance development plans and project financing for an integrated lithium chemicals business.
Source downstream offtake partners and deliver an integrated supply chain solution to customers.
Leverage Lithium Americas’ Lithium Technical Development Center in Reno to further test and develop intermediate and final lithium products.”
Reading the highlights as above, we see the intent is to get the project going ASAP via project financing and creating a supply chain for battery-grade lithium chemicals.
Strategic Collaboration
On the 20th of September, we see a follow up agreement between the companies:
HIGHLIGHTS
- Collaboration Agreement executed with GT1, a North American focused lithium exploration and development company with hard rock spodumene assets in north-west Ontario, Canada.
- Builds upon Lithium Americas’ previous strategic equity investment in GT1 of US$10 million and established collaboration framework.
- Provides non-exclusive rights to undertake collaborative activities between the two parties.
- Establishes a Strategic Management Committee for further joint exploration and development opportunities with focus on Canada and the U.S.
As we prepare to commence construction at Thacker Pass, we see an opportunity to further strengthen our role in developing a North American lithium supply chain,” said Jonathan Evans, Lithium Americas’ President & CEO. “On the back of the passing of the Inflation Reduction Act (“IRA”) by U.S. Congress, we are having increased engagement with potential partners and customers focused on North America.”
LAC may try to help GT1 tap into the Inflation Reduction Act and quite possibly other funding sources via the Canadian and U.S. governments. They further state in the PR:
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LAC And The Lithium Tri-Force
Cue the “Legend of Zelda” music as we see LAC creating a lithium tri-force. The first part of this tri-force is LAC mining brine-based lithium in South America. Secondly, Nevada clay-based lithium and lastly, LAC is dipping its toes into rock-based Canadian lithium.
How We Are Playing It
With the clarity from the court case combined with a rather nasty stock market, we are taking a long-term approach to LAC. Mid-term elections might bring some stability, but then we have to contend with December tax loss selling. OPEC just cut oil production by a massive two million barrels, which may result in higher fuel prices and inflation concerns.
Frankly, it will be a rough ride in the markets for some time. Hence, we will continue a mixed strategy of selling puts to acquire common stock and also selling covered calls against a fraction of the common we hold. The bulk of our common is held in reserve for long term.
At $23.11 a share, we view LAC as a good long-term value play given rising lithium prices and the large amount of tonnage LAC can mine from the South American project, Thacker Pass and the surrounding Nevada property. Factor in GT1 and Arena Minerals as wild cards and our assessment is LAC is a value play. Could it go lower? Absolutely in this market. Thus we will continue with our above strategy.
However, it is wise to keep cash reserves in case things get worse from a macro perspective. However, to quote the movie “The Crow”: “It can’t rain all the time.” Eventually, we will get past these stormy waters. The U.S. will emerge from these times, as it often has; the markets will recover. When it does I want a strong basket of EV stocks to ride the euphoria. This basket is LAC, Cypress Development (OTCQX:CYDVF), Nano One (OTCPK:NNOMF), and to a lesser extent dangerous HeliosX Lithium (OTCQB:HXLTF), GT1, LPI on the ASX, Arena Minerals, Electra Battery Metals (ELBM) and Koch-backed Standard Lithium (SLI).
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