Lithium Americas Shares Surge As GM Commits $625M To Thacker Pass Project

Lithium Americas Corp. (NYSE:LAC) shares are trading higher after the company announced it inked a new investment deal with General Motors Company (NYSE:GM) to establish a joint venture (JV) for developing and operating the Thacker Pass lithium project in Nevada.

Under the deal, General Motors will provide $625 million in cash and letters of credit to Thacker Pass, in addition to a conditional $2.3 billion loan commitment from the U.S. Department of Energy announced earlier this year.

In particular, General Motors will acquire a 38% ownership stake in Thacker Pass for a total of $625 million, including $430 million in direct cash to fund Phase 1 construction and a $195 million letter of credit facility for collateral in reserve accounts under the DOE loan.

This marks the largest publicly announced investment by a U.S. OEM in a lithium carbonate project, underscoring the strategic significance of Thacker Pass in establishing a domestic supply chain for critical minerals.

This new JV agreement replaces the previous $330 million Tranche 2 equity investment from General Motors announced in January 2023.

The JV Transaction adds to GM’s February 2023 Tranche 1 investment of $320 million, which gave GM around 15 million Lithium Americas shares. GM has also extended its offtake agreement for up to 100% of Phase 1 production from Thacker Pass for 20 years to align with the DOE loan.

After the JV closes, GM will enter into a new 20-year offtake agreement for up to 38% of Phase 2 production and maintain its right of first offer on the remaining Phase 2 volumes.

Lithium Americas is working closely with the DOE and expects to finalize the DOE loan in the coming weeks.

Both the companies aim to make the final investment decision (FID) and issue full notice to proceed for Thacker Pass by the end of the year, after the DOE loan and JV transaction are completed.

Investors can gain exposure to the stock via Sprott Lithium Miners ETF (NASDAQ:LITP).

Price Action: LAC shares are up 19.2% at $3.18 at last check Wednesday.

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Image created using artificial intelligence via Midjourney.