On August 9, Lithium Americas Corp. (TSX: LAC) reported its second quarter 2023 financial results. As Lithium Americas is a pre-revenue company and is primarily valued on investor perceptions of the long-term values of its flagship Cauchari-Olaroz (C-O) and Thacker Pass lithium projects, the reported numbers are not headline figures per se, but the company’s 2Q 2023 operating cash flow deficit of only US$12 million and its June 30, 2023 cash balance of US$502 million are both impressive figures.
LITHIUM AMERICAS CORP.
| (in thousands of US $, except for shares outstanding) | 2Q 2023 | 1Q 2023 | 4Q 2022 | 3Q 2022 | 2Q 2022 |
| Operating Income | ($17,134) | ($17,126) | ($31,759) | ($25,262) | ($90,333) |
| Operating Cash Flow | ($11,892) | ($19,027) | ($14,292) | ($16,739) | ($16,242) |
| Cauchari-Olaroz Capital Expenditures | ($24,500) | ($37,730) | ($23,520) | ($26,950) | ($21,854) |
| Cash – Period End | $501,994 | $604,134 | $352,102 | $392,213 | $440,821 |
| Debt – Period End | $197,358 | $209,926 | $204,472 | $235,012 | $212,601 |
| Shares Outstanding (Millions) | 159.9 | 151.0 | 135.0 | 135.0 | 134.6 |
Some key qualitative disclosures Lithium Americas made in its release are summarized in the table below and are compared with the company’s statements when it released 1Q 2023 and full-year 2022 results.
MANAGEMENT’S ESTIMATES OF SELECTED KEY OPERATING PARAMETERS AND TIMING ISSUES
| 8/9/23 | 5/15/23 | 3/31/23 | |
| Status of critical C-O equipment necessary to achieve battery-quality lithium carbonate? | Equipment is being tested. Production quality has exceeded expectations. | Equipment expected to be completed in. 2H 2023. | Equipment expected to be completed in. 2H 2023. |
| When will C-O achieve full Stage 1 annualized capacity of 40,000 tonnes? | Mid-2024 | 1Q 2024 | 1Q 2024 |
| How much lithium carbonate will be produced at C-O in 2023? | 5,000 tonnes | Not discussed | Not discussed |
| Total estimated capital costs of C-O, on a 100% ownership basis | US$979 million | US$979 million | US$852 million |
| Timing of Thacker Pass initial production? | 2H 2026 | 2H 2026 | 2H 2026 |
Lithium Americas’ most constructive comment in the 2Q 2023 release was that the production quality of equipment necessary to achieve battery-quality lithium carbonate at Cauchari-Olaroz has “exceeded expectations.” The equipment is still being tested.
Another positive: Lithium Americas estimates that its share of the remaining capital costs, valued-added taxes, and working capital related to Cauchari-Olaroz, which is in northern Argentina near the Chilean border, is less than US$25 million. Lithium Americas owns 44.8% of the project; it is expected to have a 40-year life.
On the other hand, Lithium Americas pushed back to mid-2024 the timing of Cauchari-Olaroz reaching its full, stage one 40,000 tonne per year lithium carbonate production capacity. In mid-May, the company predicted it would attain that rate in 1Q 2024.
The company previously reported that Cauchari-Olaroz achieved its first lithium production in June 2023. This delay in reaching full capacity likely factors into Lithium Americas’ estimate that Cauchari-Olaroz’s lithium carbonate output will total about 5,000 tonnes in 2023, likely a smaller quantity than many investors would have expected.
Lithium Americas’ separation into two companies — Lithium Argentina and a new Lithium Americas which will own Thacker Pass — is expected to occur in early October. Shareholders overwhelmingly approved the separation in a late July meeting.
The company expects the U.S. Department of Energy to grant conditional approval to Thacker Pass by year-end 2023 for its Advanced Technology Vehicles Manufacturing Loan Program. The program would fund up to 75% of Thacker Pass’ Phase 1 construction costs.
Lithium Americas Corp. last traded at $24.61 on the TSX Exchange.
Information for this briefing was found via Edgar 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.
