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Lithium Americas: U.S. Judge Upholds Approval on Thacker Pass Mine

On September 3, U.S. District Court Judge Miranda Du issued a second consecutive constructive ruling regarding Lithium Americas Corp.’s (TSX:
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This article was originally published by The Deep Dive

 

On September 3, U.S. District Court Judge Miranda Du issued a second consecutive constructive ruling regarding Lithium Americas Corp.’s (TSX: LAC) Thacker Pass lithium mine site in Nevada. Judge Du refused three tribes’ request for a preliminary injunction that would block trenching and excavation work on the project. 

The tribes assert that their ancestors were massacred in the late 1800’s at the prospective mine site and that digging would desecrate an area that contains bones and artifacts. Thacker Pass could become the largest U.S. source of lithium, a key element in most electric vehicle batteries.

Judge Du wrote that she was “not unpersuaded by the tribes’ broader equitable and historical arguments,” but there was no evidence that the U.S. Bureau of Land Management (BLM) acted unreasonably when it approved the project in January 2021. The tribes did not show that digging will cause sufficient “specific irreparable harm.”

In July, Judge Du rejected a similar preliminary injunction request by environment groups to stop Thacker Pass excavation. The environmentalists alleged the digging would destroy the habitat for the sage grouse, an imperiled ground-dwelling bird, and other wildlife.

In her early September ruling, Judge Du reiterated that she pledged to rule on the overall issue of BLM’s approval of Thacker Pass before Lithium Americas begins construction at the site in early 2022. Thacker Pass may produce 60,000 tonnes of battery-grade lithium carbonate per year for 46 years.

Lithium Carbonate Prices Have Soared

According to Benchmark Minerals, lithium carbonate prices have more than doubled since December 2020, reaching US$14,386 per tonne in August, up from US$6,124. This commodity price movement has been a key reason for the ~60% increase in Lithium Americas’ share price over the last month. The market values of the world’s top lithium producers have similarly rocketed higher over the last few weeks.

Source: The Wall Street Journal

Lithium Americas’ Cauchari-Olaroz Flagship Lithium Brine Project

Lithium Americas’ Cauchari-Olaroz lithium brine project in Argentina remains on track to begin production in mid-2022. Lithium Americas owns 49% of the project in Argentina, and China’s largest lithium company, Ganfeng Lithium, owns the balance, or 51%. The Argentine facility is forecast to produce 40,000 tonnes of battery-grade lithium carbonate annually for 40 years.

As of June 30, 2021, Lithium Americas and Ganfeng have together spent US$471 million, or 73%, of the US$641 million of the budgeted capital expenditures on Cauchari-Olaroz. This compares with cumulative spending of US$426 million and US$388 million as of March 31, 2021 and December 31, 2020, respectively. This rapid pace of quarterly capex spending seems consistent with Lithium Americas’ production commencement target of mid-2022.

Cash Burn Rate Quite Modest

Lithium Americas’ cash burn was only about US$23 million (US$8.6 million of negative operating cash flow and US$14.7 million of Cauchari-Olaroz capex) in 2Q 2021. In turn, the company’s cash balance edged down only slightly to US$505 million from US$514 million on March 31, 2021. Debt rose moderately to US$153 million at the end of June from US$135 million as of March 31, 2021.

(in thousands of US $, except for shares outstanding) 2Q 2021 1Q 2021 4Q 2020 3Q 2020 2Q 2020
Operating Income ($13,043) ($8,759) ($8,065) ($5,743) ($6,494)
Operating Cash Flow ($8,631) ($11,416) ($7,108) ($7,204) ($8,355)
Cauchari-Olaroz Capex ($14,700) ($16,170) ($14,710) ($9,343) ($24,262)
Cash – Period End $505,241 $514,205 $148,070 $71,888 $49,719
Debt – Period End $153,729 $134,961 $121,221 $122,294 $151,371
Shares Outstanding (Millions) 119.9 119.9 101.1 91.4 90.6

It is possible that despite her constructive preliminary injunction decisions, Judge Du could issue a comprehensive ruling in January 2022 that the BLM erred in approving Thacker Pass. If so, Lithium Americas’ stock could suffer.

The constructive legal news on Thacker Pass, plus continued strength in lithium pricing, could allow Lithium Americas’ shares to continue to perform well. Furthermore, if and as investors grow more confident that Cauchari-Olaroz will commence production in mid-2022, the stock could get an additional lift.

Lithium Americas Corp. last traded at C$23.10 on the TSX Exchange.


Information for this briefing was found via Sedar and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

The post Lithium Americas: U.S. Judge Issues Second Constructive Decision on Thacker Pass Mine appeared first on the deep dive.

Energy & Critical Metals

Lightning eMotors Stock Is a Buy on More Than Just Its Berkshire Connection

The electric vehicle (EV) revolution isn’t just about cars. It also involves zero-emission buses, powertrains and charging products. Lightning eMotors (NYSE:ZEV)…

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The electric vehicle (EV) revolution isn’t just about cars. It also involves zero-emission buses, powertrains and charging products. Lightning eMotors (NYSE:ZEV) provides all of these and more, which makes ZEV stock one of the more interesting plays in the EV space.

Source: BigPixel Photo / Shutterstock.com

Besides, that’s not the only angle worth pursuing here. As InvestorPlace contributor Chris MacDonald pointed out and William White reaffirmed, Lightning eMotors appears to be a prime short-squeeze target.

We’ll certainly explore ZEV stock’s potential as a short-squeeze candidate. However, there are other reasons to take a long position in Lightning eMotors.

Among those reasons are a pair of deals valued in the millions of dollars. Better yet, one of those deals involves a holding company whose CEO should be very familiar to many investors.

Let’s rewind the clock to April 21, which is when shell company GigCapital3’s stockholders approved a special purpose acquisition company (SPAC) merger with Lightning eMotors.

GigCapital3 fulfilled its purpose and ZEV stock was born on May 7. The share price was around $8.67 at that time.

By Aug. 9, the stock had drifted down to $6 and change. However, the bearish price trajectory would soon be reversed.

On Aug. 10, ZEV stock suddenly shot up to $11.60. Was this because of a Reddit-fueled short-squeeze raid?

More likely, it was spurred by a value-added deal involving a well-known holding company – but we’ll get to that in a moment.

At the same time, we can’t ignore the short-squeeze potential with Lightning eMotors. Not long ago, MacDonald observed that ZEV stock’s short percent of float was extremely high, at around 35%. He also noted the company’s high borrow fee rate of 87%, which could make it difficult for short sellers to hold their positions for a long period of time.

In any case, ZEV stock has settled at $8 and change today, well below the pre-SPAC-deal-announcement price, so there may be a bargain here.

The Buffett Connection

If anything makes Berkshire Hathaway (NYSE:BRK.A, NYSE:BRK.B) special, it’s the renown afforded to its legendary CEO, Warren Buffett.

Anytime a smaller company gets a Buffett connection, investors perk up and take notice.

This is exactly what happened with Lightning eMotors as Forest River, a Berkshire Hathaway company and North America’s largest shuttle bus manufacturer, entered into a strategic partnership in August.

According to the press release, Lightning eMotors has been tasked with delivering up to 7,500 zero-emission Class 4 and Class 5 buses across the U.S. and Canada between 2021 and 2025.

This should keep the company busy and flush with capital as the deal has a potential estimated value of up to $850 million. Lightning eMotors CEO Tim Reeser is ecstatic about this arrangement, no doubt.

“This has the potential to be the largest contract ever in the electric shuttle bus market,” he said.

Another Power-Packed Deal

Just in case the $850 million Berkshire-backed agreement isn’t enough for you, here’s another deal to augment the bull thesis for ZEV stock.

On Aug. 31, the company announced a strategic partnership to manufacture and deploy zero-emission, all-electric Type A school buses.

This partnership is with  Collins Bus, a leader in manufacturing Type A School Buses and a subsidiary of Rev Group (NYSE:REVG).

Collins Bus is highly experienced in this niche market. In fact, the company has deployed over 70,000 buses over the past 50 years across the U.S. and Canada.

Moreover, this partnership should help Lightning eMotors move further into the school bus electrification market.

“Electrifying school buses just makes sense,” said Chief Revenue Officer Kash Sethi. “With predictable routes, dedicated overnight parking at school bus depots, fuel and maintenance savings, all-electric school buses now make a lot of operational and financial sense as well.”

The Bottom Line

There certainly could be short-squeeze potential here if Lightning eMotors becomes a target of the Reddit crowd.

Yet, that’s not the only reason to put ZEV stock on your radar.

With a Buffett-backed deal and a foray into the electric school bus market, Lightning eMotors could be the next EV business to ride to the top.

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.

David Moadel has provided compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.

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Energy & Critical Metals

GM’s Battery Supplier Resumes Production

General Motors’ (GM) battery supplier LG Corporation has resumed production at its plants located in Hazel Park and Holland, Michigan. The supplier is…

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General Motors' (GM) battery supplier LG Corporation has resumed production at its plants located in Hazel Park and Holland, Michigan. The supplier is also to add capacity to produce more battery cells to meet the automaker's needs. Shares of the automaker fell 3.82% to close at $49.37 on Monday.

LG ramping up production should allow General Motors to begin shipping “replacement battery modules” as early as mid-October. The battery supplier has already implemented a new manufacturing process and enhanced its quality assurance programs to address the issue of battery fires that have recently raised concerns. (See General Motors stock charts on TipRanks)

Meanwhile, GM is to prioritize Chevy Bolt EV and EUV customers whose batteries were faulty and susceptible to catching fire. The automaker has already established a notification process to inform affected customers about the availability of battery replacement modules.

The new batteries will come with an extended limited battery warranty of 8-year/100,000-mile. Additionally, GM intends to launch a new diagnostic software package that will increase the currently available battery charging parameters. The diagnostic software will also detect abnormalities in the battery by monitoring its performance.

Recently, Barclays analyst Brian Johnson reiterated a Buy rating on the stock and lowered the price target to $68 from $71, implying 37.7% upside potential to current levels.

According to Johnson, chip shortages in the auto industry continue to impact General Motors' North America wholesales. Further, the analyst expects the company to post results inside its guidance range.

Consensus among analysts is a Strong Buy based on 13 Buys and 1 Hold. The average General Motors price target of $73.36 implies 48.6% upside potential to current levels.

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3 Chinese Growth Stocks to Buy on the Dip

In the wake of China’s crackdown on a number of prominent Chinese companies,  the Street has been very cautious about most China stocks in recent months.
I’ve…

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In the wake of China’s crackdown on a number of prominent Chinese companies,  the Street has been very cautious about most China stocks in recent months.

I’ve previously argued that the repressive measures by Beijing were due to the government’s fear of the influence of large companies on the country’s citizens. As a result. I expected the Chinese Communist Party to primarily focus on weakening major companies that have the ability to affect the minds of many tens of millions of consumers.

And indeed, the brunt of the crackdown has been borne by consumer-oriented companies with huge customer bases and significant amount of cash.  Consequently, the large declines of the Chinese stocks whose issuers shares these characteristics has definitely been justified.

In other words, names like Alibaba (NYSE:BABA), New Oriental Education (NYSE:EDU), Didi (NYSE:DIDI), Tencent (OTCMKTS:TCEHY) and JD.com (NASDAQ:JD) have all deserved the meaningful hits that they’ve taken.

But other Chinese stocks have unjustly plummeted as many large investors, eager to avoid equities viewed as overly risky, have fled to stocks that are widely seen as much less threatening.

Here are 3 Chinese growth stocks to buy on the dip:

  • JinkoSolar (NYSE:JKS)
  • Xpeng (NYSE:XPEV)
  • BYD (OTCMKTS:BYDDF)

Some of today’s unloved Chinese stocks will, because of their continuing strong growth and lack of real exposure to Beijing’s wrath , be embraced by Wall Street once again. These three names make for smart picks.

Chinese Growth Stocks to Buy on the Dip: JinkoSolar (JKS)

Source: Lutsenko_Oleksandr / Shutterstock.com

One of the world’s leading solar energy companies, JinkoSolar is highly unlikely to be targeted by Beijing for two reasons.

First, the company primarily sell its products to utilities, solar developers, large companies and solar-energy retailers, not directly to consumers. Second, the Chinese government is clearly a big fan of the country’s solar sector, as it’s given solar firms many huge incentives and benefits.

China’s JinkoSolar recently signed a major cooperation deal with CATL, a large firm that is also based in the Asian country. According to Reuters, CATL is “China’s top car battery maker with a market value of almost $200 billion.”

CATL and JinkoSolar plan to establish “comprehensive and in-depth cooperation in the field of solar-plus-storage integration.”

As the creator of the world’s most efficient solar panel,  JinkoSolar is obviously a very innovative company. For its part, CATL has “5,000 researchers” and recently launched a groundbreaking sodium-ion battery for electric vehicles, according to Reuters.

In light of the two companies’ trailblazing capabilities, along with CATL’s large research team, I would be surprised if they don’t develop extremely strong solar-plus-storage products. What’s more, CATL can enable JinkoSolar to sell its solar products to China’s leading automakers, and the battery maker could potentially decide to buy JinkoSolar at some point.

And as I’ve mentioned in the past, I expect JinkoSolar to benefit tremendously from the global  embrace of solar power.

In spite of these strong, positive catalysts, JKS stock has sunk over 20% this year. Trading at a tiny forward price-earnings ratio of 9.2, according to Yahoo! Finance, shares are definitely a strong buy for longer-term investors.

Xpeng (XPEV)

Xpeng logo and P7 model in store XPEV stockSource: Andy Feng / Shutterstock.com

Since this company sells upper-end electric vehicles that the vast majority of China’s consumers can’t afford, Xpeng is unlikely to be affected materially by any of the Chinese government’s anti-corporate initiatives. And as with the solar energy sector, Beijing has given EV makers a great deal of aid, indicating that the nation’s leaders are quite upbeat on the space.

Xpeng continues to grow very rapidly, suggesting that its EVs have significant traction in China.  Last month, for example, its deliveries soared 172% YOY. Further, its deliveries have jumped over 330% in the first eight months of the year versus the same period a year earlier.

As I’ve noted in past columns, Xpeng has implemented extremely advanced self-driving technology and is looking to expand to Europe. Since mid-June XPEV stock has tumbled about 20%.

BYD (BYDDF)

A close-up view of the power supply plugged into a vehicle from BYD Company (BYDDF).Source: J. Lekavicius / Shutterstock.com

Since the top customers of BYD, a battery and EV maker,  are automakers, municipalities and ridesharing companies, it shouldn’t be caught up in Beijing’s repressive initiatives at all.

The company’s EV sales more than quadrupled YOY last month, reaching an impressive total of more than 51,400. According to CNBC, “Despite the issues affecting the auto industry, demand for electric vehicles continues to climb in China, as the government pushes development of the sector.”

The rapid growth of EVs, both in China and overseas, should also greatly boost the sales of BYD’s EV batteries.

As of March, Warren Buffett’s Berkshire Hathaway (NYSE:BRK.A,BRK.B) owned a large 8.2% stake in BYD.

Despite BYD’s strong performance and outlook, its shares have declined about 10% since peaking in the beginning of August.

On the date of publication, Larry Ramer held a long position in JKSThe opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Larry Ramer has conducted research and written articles on U.S. stocks for 13 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015.  Among his highly successful, contrarian picks have been GE, solar stocks, and Snap. You can reach him on StockTwits at @larryramer.

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