TLDR
- Lithium Americas stock reached a 52-week high of $7.59 and jumped 23% following government investment announcement
- US Department of Energy acquired 5% stakes in both Lithium Americas and its Thacker Pass joint venture with General Motors
- Company finalized agreement to draw first $435 million from $2.26 billion DOE loan for Nevada mine construction
- Government will acquire stakes through warrants with an exercise price of just one penny
- Thacker Pass mine is set to become the largest lithium source in the Western Hemisphere by 2028
The US government just became a shareholder in Lithium Americas. The Department of Energy took a 5% stake in the company and another 5% in its Thacker Pass joint venture with General Motors.
The Vancouver-based company’s stock jumped 23% to $7.03 on Wednesday. It later touched a 52-week high of $7.59.
The investment marks the latest private sector move by the Trump administration. The government previously made similar equity acquisitions in Intel and MP Materials.
Lithium Americas finalized an agreement with the Energy Department to tap the first $435 million from a $2.26 billion loan. The money will support development of the Thacker Pass mine in Nevada.
The government is getting these stakes through warrants. The exercise price is one penny.
“We greatly appreciate the support of the administration, General Motors and our partners,” said Jonathan Evans, CEO of Lithium Americas. The company has seen its stock surge 154% over the past year.
Renegotiated Loan Terms
Reuters reported last week that administration officials were discussing an equity stake with Lithium Americas. The talks happened as they renegotiated terms of the government loan.
Administration officials initially wanted a guarantee that GM would buy lithium regardless of market conditions. The automaker declined that request.
That led to the equity stake arrangement instead. GM invested $625 million in the mine last year for a 38% stake.
The automaker has the right to buy all lithium from the project’s first phase. It can also purchase a portion from the second phase for 20 years.
“We’re confident in the Thacker Pass project, which will reduce US dependence on imported lithium,” said Shilpan Amin, who oversees GM’s supply chain procurement. The project can support domestic manufacturing across many industries.
Canadian Review Process
Canada’s government will review the deal under the Investment Canada Act. The standard process allows Ottawa to approve or reject transactions based on their benefit to the country.
Lithium Americas is based in Vancouver. “The government welcomes foreign direct investment that benefits Canada’s economy,” a government spokesperson said.
Reviews of foreign investments in critical minerals will be conducted in the best interests of Canadians. The review is a standard procedure for cross-border deals.
As part of the agreement with Washington, GM will allow Lithium Americas to sell unallocated future production to other parties. Lithium Americas also agreed to fund a loan reserve account with $120 million within 12 months of the first draw.
Both Republicans and Democrats have promoted the Thacker Pass project. They view it as a way to boost US critical minerals production.
The goal is to cut reliance on China. China is the world’s largest lithium processor.
China produces more than 40,000 metric tons of lithium each year. That makes it the third-largest producer after Australia and Chile.
In refining, China’s dominance is even greater. The country processes over 75% of the world’s lithium into battery-grade material.
The US currently produces less than 5,000 metric tons of lithium at a Nevada facility owned by Albemarle. Thacker Pass is under construction and set to open by 2028.
The mine’s first phase is expected to produce 40,000 metric tons of battery-quality lithium carbonate per year. That’s enough for up to 800,000 electric vehicles.
The company maintains a strong financial position with a current ratio of 9.88. It holds more cash than debt on its balance sheet.
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