Lithium Americas (LAC): Made-in-the-USA Lithium Producer; Initiate at Neutral
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Goldman Sachs initiates coverage on Lithium Americas (LAC) with a Neutral rating and a 12-month target price of $4.50, offering 16.9% upside from the current share price of $3.85. LAC's core asset is the Thacker Pass lithium mine in Nevada, poised to become the first large-scale US lithium production site. The project is designed in three phases of 40,000 tonnes LCE capacity each, with a final total capacity reaching 160,000 tonnes LCE. The mine boasts over 14 million tonnes of proven and probable LCE resources and an estimated mine life of roughly 80 years.
Goldman Sachs believes LAC has significantly de-risked the project through financing and partnerships, although construction and operational risks remain. The company has secured over $4.5 billion in financing, far exceeding the latest capital expenditure estimates. General Motors holds a 38% direct equity interest in the mining asset, while the US Department of Energy provided a $2.23 billion ATVM loan. Additionally, Orion Resource Partners contributed a $250 million strategic investment to cover the remaining phase-one funding gap.
Engineering work is over 90% complete and procurement exceeds 70%, but inflation and operational efficiency risks persist. Goldman Sachs expects LAC to generate no revenue through 2027, with 2028 revenue and EBITDA projected at $240 million each. EPS estimates for 2025-2028 remain negative. The valuation relies on a net asset value approach, incorporating the dilution effects of all invested capital.
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