LAC shares higher on hope for Biden action


  • Lithium Americas stock rose 11.9% on Wednesday.
  • The Biden administration is considering major investments in battery supply chain.
  • LAC’s Thacker Pass mine in Nevada will begin operations later this year.

Lithium Americas (LAC) stock has added another 1.5% to Wednesday’s 11.9% spike and is now trading at $37.40 on Thursday morning. News emerged on Wednesday that the Biden administration is close to investing as much as $750 million to encourage the production of metals critical for the battery industry, especially lithium.  The lithium miner has seen its share price rise 20% year to date and 157% over the past year.

Lithium Americas Stock News: Biden administration might invest in lithium production

Based on reporting from Bloomberg, the Biden Administration may invoke the Defense Production Act of 1950 to spur greater development and US ownership of various metal sources used to make next-generation batteries, especially those used in the EV industry.

Global demand for lithium currently clocks in at around 320,000 metric tonnes annually, and the US currently imports more than half of its total demand. Forecasts predict that this figure could balloon to 2 million metric tonnes as soon as 2030 however. China also contains much of the world’s rare earth and other metals used in the newest batteries, so experts see this policy focus as part of the US’s overall competitive strategy with regards to China.

The Defense Production Act gives the president the right to utilize $750 million to increase domestic production. This comes on top of $6 billion already allocated in President Biden’s infrastructure bill to improve the country’s domestic battery supply chain. Lithium America’s Thacker Pass mine is slated to enter production later this year, so observers think the producer is most likely to receive funds to speed up development.

The US currently produces about 2% of the world’s lithium, but that should greatly increase once Thacker Pass comes online. Thacker Pass has more than 1 million metric tonnes in economically feasible reserves.

Back in January, Lithium Americas issued 13.2 million shares in order to acquire Millenial Lithium Corp., which owns the Pastos Grandes lithium brine project in Salta, Argentina. That project is expected to produce 24,000 tonnes of lithium carbonate annually. The current price of lithium averaged $76,700 per metric tonne in mid-March, according to Oilprice.com. The price has nearly doubled so far this year and traded at just $13,400 one year ago.

 

LAC key statistics

Market Cap $4.4 billion
Price/Earnings N/A
Price/Sales N/A
Price/Book 8
Enterprise Value $4.2 billion
Operating Margin N/A
Profit Margin

N/A

52-week high $41.56
52-week low $11.84
Short Interest 8%
Average Wall Street Rating and Price Target Buy, $38.93

Lithium Americas Stock Forecast: Resistance at $38 before ATH

From Wednesday and Thursday’s performance, we know that resistance is sticky at and just above $38. This area was also significant during LAC’s last spike last November. November 19 and December 1 of 2021 both had rallies that petered out around $38.30. Above there stands the all-time high at $41.56.

Monday and Tuesday of this week gave short-term support is at $32.20. The 9-month moving average sits at $27.28 and provides medium-term support. Even stronger long-term support sits at $24.

LAC stock chart

LAC 1-day chart

The monthly chart shows LAC stock trading within an upward trending price channel, which makes sense since the price of lithium has been on a tear in the past year. The channel has worked since at least August of 2021. If the price channel keeps working, then investors should expect a high of $52 by 2023.

LAC stock

LAC 1-month chart