Electric vehicle (EV) industry investors, listen up! You can wager your hard-earned capital on risky EV manufacturing startups, but there’s an alternative. Canada-based Lithium Americas (NYSE:LAC) is a premier mining business, and LAC stock offers exposure to an element that’s essential to the vehicle electrification movement.
Lithium is used in EV batteries, and there are a number of companies with varying degrees of exposure to the lithium market. For pure-play exposure, however, you’d be hard-pressed to do better than an investment in Lithium Americas.
Don’t get the wrong idea here. Mining stocks can be volatile and risky. So, there’s no need to load the boat on LAC stock. However, it’s fine to take a moderately sized position if you’re bullish, as I am, on the lithium industry in the 2020s.
New Nevada Project Should Benefit LAC Stock
Lithium Americas advances lithium projects in Argentina as well as in the U.S. I highly recommend viewing the company’s investor presentation, in which Lithium Americas provides the details on its exploration and production plans.
In Argentina, Lithium Americas expects to commence production at the company’s Caucharí-Olaroz project during this year’s first half. There, Lithium Americas hopes to ramp up its lithium production in 2023, and expects to achieve full production by 2024’s first quarter.
Yet, the most exciting recent operational development for Lithium Americas took place in the U.S. In particular, the company started construction at its Thacker Pass lithium project, which is located in Nevada.
This is no small project. Lithium Americas is targeting 80,000 tonnes per annum (tpa) of battery-quality lithium carbonate at Thacker Pass. Investors will need to be patient, though, as “Phase 1 production is expected to commence in the second half of 2026.”
Lithium Americas Aims for Positive Cash Flow
Mining stock investors will need to accept the reality that many companies in this space have less-than-perfect financials. This is certainly the case with Lithium Americas. However, the company is improving in one important respect.
As of March 30, Lithium Americas anticipates that the company’s “remaining funding requirement” will be “less than $50 million for capital costs, valued added taxes and working capital to reach production and positive cash flow.” In other words, it’s conceivable that Lithium Americas could become cash-flow-positive in the coming quarters.
Again, patience will be the key to success here. Lithium Americas’ Thacker Pass project is still in its early stages. Furthermore, the company envisions its Caucharí-Olaroz project reaching a full production rate of 40,000 tpa of lithium carbonate by the first quarter of 2024.
So, don’t expect Lithium Americas to rake in massive revenue from these projects tomorrow or next week. LAC stock is a long-term buy-and-hold, not something to be flipped for quick gains.
What You Can Do Now
Lithium Americas offers its shareholders direct exposure to the lithium industry, and indirect exposure to the clean energy market. If you expect lithium to be a highly valuable resource in the next few years, this is a great time to invest in Lithium Americas.
Just don’t assume that your share stake in Lithium Americas will yield fabulous results immediately. There will probably be volatility, and you have to accept the risks. With that in mind, feel free to give LAC stock a try with a small long-term position.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
