Lithium Americas' (LAC) Q1 Earnings Beat, Sales Miss Estimates

Lithium Americas Corp. (TO:LAC) incurred net loss of around $4.5 million or 5 cents per share compared with a net loss of roughly $4.6 million or 5 cents in the year-ago quarter. Loss per share was narrower than the Zacks Consensus Estimate of a loss of 6 cents.

Total sales rose 16.8% year over year to roughly $1.3 million. However, the figure trailed the Zacks Consensus Estimate of $1.8 million.

Project Update

Cauchari-Olaroz: The company inked a definitive transaction deal with Ganfeng Lithium Co., Ltd. in April 2019. Per the arrangement, Ganfeng has agreed to subscribe the newly issued 141 million shares of Minera Exar for roughly $160 million. The move enables Ganfeng to raise direct interest in the Cauchari-Olaroz project to 50% from 37.5%. Lithium Americas holds the remaining 50% interest.

Lithium Nevada: The company has submitted environmental baseline data and a conceptual Mine Plan of Operations to the Bureau of Land Management for the Thacker Pass project. The permitting process is underway. Lithium Americas is evaluating potential partnership and financing scenarios for the project.

Financials

As of Mar 31, 2019, cash and cash equivalents were $36.2 million, down 16.8% year over year. Lithium Americas has credit facility of $205 million to finance share of capital expenditures in Minera Exar. Since the credit facility started, the company has drawn $63.1 million.

Outlook

Lithium Americas stated that it focuses on advancing the Cauchari-Olaroz and Thacker Pass projects, which will enable it to address the growing global demand for lithium.

Pond construction for the Cauchari-Olaroz project is per schedule and is slated to complete all evaporation ponds covering during first-quarter 2020. Moreover, the construction of processing plant has started and is expected to be completed in the second half of 2020. The project is on track to reach production per the current development plan in second-half 2020.

Minera Exar is conducting a feasibility study to boost the stated production capacity of the project from 25,000 tons per annum (tpa) to a total of 40,000 tpa of lithium carbonate.

Lithium Americas is also advancing engineering work and mine plan design for the Thacker Pass project in Nevada.

Price Performance

Lithium Americas’ shares have plunged 42.7% in the past year compared with the 32.8% decline of the industry.

Zacks Rank & Key Picks

Lithium Americas currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are Materion Corporation (NYSE:MTRN) , Fortescue Metals Group Ltd. (OTC:FSUGY) and AngloGold Ashanti Limited (NYSE:AU) , all currently sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Materion has an expected earnings growth rate of 23.1% for 2019. The company’s shares have gained 18.2% in the past year.

Fortescue Metals has an expected earnings growth rate of 101.5% for the current year. The company’s shares have surged 58.9% in a year’s time.

AngloGold has an expected earnings growth rate of 86.8% for 2019. Its shares have rallied 38.1% in a year’s time.

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